                        T.C. Summary Opinion 2018-31



                        UNITED STATES TAX COURT



                 LONNIE D. JOHNSON, JR., Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 11767-16S.                       Filed June 6, 2018.



      Beverly Winstead, Richard Ochran (student), and Jose Montalvo (student),

for petitioner.

      Elizabeth M. Shaner, for respondent.



                             SUMMARY OPINION


      ARMEN, Special Trial Judge: This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect when the
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petition was filed.1 Pursuant to section 7463(b), the decision to be entered is not

reviewable by any other court, and this opinion shall not be treated as precedent

for any other case.

      Respondent determined a deficiency in petitioner’s Federal income tax of

$3,362 for 2014. The issues for decision are whether petitioner is entitled to:

(1) dependency exemption deductions for his two children, (2) a child tax credit or

an additional child tax credit, and (3) an earned income tax credit.

                                    Background

      Some of the facts have been stipulated, and they are so found. The Court

incorporates by reference the parties’ stipulation of facts and accompanying

exhibits.

      Petitioner resided in the State of Maryland when his petition was filed with

the Court.

      Petitioner was previously married to Jamene Johnson. The couple had two

children, a son, who was born in 1999, and a daughter, who was born in 2000

(collectively, the children).




      1
        Unless otherwise indicated, all subsequent section references are to the
Internal Revenue Code in effect for the year in issue. All Rule references are to
the Tax Court Rules of Practice and Procedure.
                                        -3-

      Petitioner and Ms. Johnson were divorced in or about 2008. The divorce

proceeding transcript of the Circuit Court for Montgomery County, Maryland

Family Division reflects a support and custody agreement (agreement) that was

entered into freely and voluntarily by petitioner and Ms. Johnson, who each

affirmatively stated to the family court that the agreement was in the children’s

best interest. Insofar as custody was concerned, the agreement called for

petitioner and Ms. Johnson to have joint legal custody of the children, with Ms.

Johnson having sole physical custody but with petitioner having “access to the

children” for one weekend per month, for one month during the summer school

vacation, and on Christmas, New Year’s, and Easter in “odd” years and on

Thanksgiving in “even” years. In addition, the agreement provided that “every

year, the children’s birthday shall be spent with Mom if it’s during school or

during the week. And, if it happens to fall on a weekend, then Dad has a right to

have the children on the children’s birthday.” Finally, the agreement provided that

“Mother’s Day will always be spent with Mom; Father’s Day with Dad.”

      At trial petitioner testified that although there were no formal modifications

made to the aforementioned agreement by, or under the auspices of, the

Montgomery County family court, he and Ms. Johnson informally made

“adjustments as needed” between themselves. Petitioner (as well as his son, who
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was no longer a minor at the time of trial) testified that the children stayed with

their mother during the school week but that the children otherwise stayed with

petitioner every weekend and holiday and throughout summer vacation. As far as

the school week was concerned, the testimony was that the children were picked

up after school on Friday and dropped off Sunday night. Petitioner acknowledged

that “every once in a while” the children “might go to California for a holiday with

their mother”; that they did see their mother during the summer, although “very

rarely”; and that he had the children for “the majority” of the holidays, and thus

not every holiday, although (according to petitioner) it was “a very rare occasion”

when he did not.

      During 2014 Ms. Johnson lived in Gaithersburg, Maryland, where the

children attended public school. During that year petitioner lived in Baltimore,

Maryland.

      Petitioner filed a Federal income tax return for 2014. On it he reported

wages of $6,948 and unemployment compensation of $1,824, or total income (as

well as adjusted gross income) of $8,772. Also on his 2014 return petitioner

elected “single” filing status, and he claimed dependency exemption deductions

for the children, an additional child tax credit, and an earned income tax credit.
                                         -5-

In support of the latter petitioner attached to his return a Schedule EIC, Earned

Income Credit, on which he represented that the children resided with him for

seven months during the year.

       In a notice of deficiency respondent disallowed petitioner’s claimed

dependency exemption deductions, additional child tax credit, and earned income

tax credit, thereby determining the deficiency of $3,362 for 2014 that is at issue in

this case.

                                     Discussion

I. Burden of Proof

      Generally, the Commissioner’s determinations are presumed correct, and the

taxpayer bears the burden of proving that those determinations are erroneous.

Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Deductions and

credits are a matter of legislative grace, and the taxpayer bears the burden of

proving that he or she is entitled to any deduction or credit claimed. Deputy v.

du Pont, 308 U.S. 488 (1940). Compare section 7491(a), which does not serve to

effect any burden-shifting in the present case given petitioner’s failure to raise the

matter, much less demonstrate that the prerequisites for the application of the

section have been satisfied. Accordingly, petitioner bears the burden of proof in

this case.
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II. Dependency Exemption Deductions

       In computing taxable income section 151(c) allows as a deduction an

exemption for each dependent of a taxpayer. Section 152(a) defines “dependent”

to include a “qualifying child”. In order to be a taxpayer’s “qualifying child”, an

individual must: (A) bear a specified relationship to the taxpayer; (B) have the

same principal place of abode as the taxpayer for more than one-half of the taxable

year; (C) satisfy certain age requirements; (D) have not provided more than

one-half of his or her own support for the year; and, if married, (E) have not filed a

joint return (other than only for a claim of refund) with his or her spouse. Sec.

152(c)(1).

      Respondent concedes that all but the second of the foregoing requirements

are satisfied in the present case. Thus, the parties’ dispute centers on whether the

children had the same principal place of abode as petitioner for more than one-half

of 2014.

      Petitioner contends that the children spent both a majority of hours and a

majority of days with him in 2014. However, the record in this case is much too

wanting to support an analysis by hours, as any such analysis requires supposition

and assumption. Rather, the Court concludes that only an analysis by days is

possible. And at best, given the meager record, any meaningful analysis can be
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based only on the number of nights that the children slept in the home of each

parent.2

      On brief petitioner posits that the children spent every weekend, every

holiday, and the entire summer break with him and that the children were never

with their mother other than during the school week. This strikes us as

improbable.3 The Court is not bound to accept testimony that is improbable,

unreasonable, or questionable. See Demkowicz v. Commissioner, 551 F.2d 929,

931 (3d Cir. 1977), rev’g T.C. Memo. 1975-278; see also Tokarski v.

Commissioner, 87 T.C. 74, 77 (1986). Nevertheless, the Court will indulge

petitioner and proceed with its analysis generally along the lines he advocates;

however, with respect to school holidays that fell in the middle of the school week,

the Court concludes that it was more likely that the children continued to reside

with their mother in order to more conveniently complete the school week, finding



      2
         See and compare sec. 1.152-4(d)(1), Income Tax Regs., cited infra pp. 8-9
in the text in the context of the discussion of the special rule for children of
divorced or separated parents. As applicable, the regulation provides that the
custodial parent is the “parent with whom the child resides for the greater number
of nights during the calendar year”.
      3
        One might wonder why the children, both teenagers in 2014, were so
willing to be away from school friends for so much of the time. And one might
also wonder about the likelihood of the children, a boy and a girl, being so
inseparable that each always slept in the same parent’s home as the other.
                                         -8-

it unlikely that they would have traveled to Baltimore to stay with their father for

just one night.

      Admittedly the number of nights that the children slept in the home of each

parent cannot be decided with certainty or any degree of incontestable precision

on the limited record in this case. Each party has presented an analysis that, while

favoring the offering party, indicates that the issue is exceptionally close.

Likewise, the Court’s independent analysis underscores the closeness of the issue.

However, after weighing all the available evidence, and keeping in mind that

petitioner does bear the burden of proof, the Court concludes that the children

spent 175 nights at petitioner’s home in 2014, as shown in the appendix at the end

of this opinion. Because 175 nights is less than one-half of the calendar year, it

cannot be said that the children had the same principal place of abode as petitioner

for more than one-half of the taxable year. See sec. 152(c)(1)(B).

      However, in the case of divorced or separated parents, section 152(e)

provides a special rule to determine which parent is entitled to a dependency

exemption deduction for a child. Generally, a child who is in the custody of one

or both of the child’s parents for more than one-half of the calendar year and

receives more than one-half of his or her support from parents who are divorced or

separated or who live apart at all times during the last six months of the calendar
                                         -9-

year will be considered the qualifying child of the custodial parent. Sec.

152(e)(1). Section 152(e)(4)(A) defines the custodial parent as “the parent having

custody for the greater portion of the calendar year.” As discussed supra, the

regulations similarly provide that the custodial parent is the “parent with whom the

child resides for the greater number of nights during the calendar year”. Sec.

1.152-4(d)(1), Income Tax Regs. According to the regulations, a child is treated

as residing with a parent for a night if: (1) the child sleeps at the residence of the

parent or (2) if the child sleeps in the company of the parent when the child does

not sleep at a parent’s residence. Id. subdiv. (i) and (ii). Section 152(e)(4)(B)

defines the noncustodial parent as “the parent who is not the custodial parent.” As

discussed above, petitioner is the noncustodial parent.

      Pursuant to section 152(e), a child will be treated as a qualifying child of the

noncustodial parent rather than of the custodial parent when certain requirements

are satisfied. One of the requirements is that the “custodial parent signs a written

declaration (in such manner and form as the Secretary may by regulations

prescribe) that such custodial parent will not claim such child as a dependent for

any taxable year beginning in such calendar year”. Sec. 152(e)(2)(A).

      The declaration required under section 152(e)(2) must be made either on a

completed Form 8332, Release/Revocation of Release of Claim to Exemption for
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Child by Custodial Parent, or on a statement conforming to the substance of Form

8332. Miller v. Commissioner, 114 T.C. 184, 189 (2000), aff’d sub nom. Lovejoy

v. Commissioner, 293 F.3d 1208 (10th Cir. 2002); sec. 1.152-4(e)(1), Income Tax

Regs. Form 8332 provides an effective and uniform way for a custodial parent to

make the declaration required in section 152(e)(2)(A) for the benefit of the

noncustodial parent. Armstrong v. Commissioner, 139 T.C. 468, 472 (2012),

aff’d, 745 F.3d 890 (8th Cir. 2014).

      Petitioner did not obtain a Form 8332, or a similar written statement, from

Ms. Johnson. Without that form, or a similar written statement containing the

information prescribed by section 152(e)(2), the Court is obliged to conclude that

petitioner is not entitled to the dependency exemption deductions pursuant to

section 152(e). See Swint v. Commissioner, 142 T.C. 131, 139 (2014).

      On the basis of the foregoing, neither of the children was petitioner’s

qualifying child within the meaning of section 152(c) for 2014, and respondent’s

disallowance of the dependency exemption deductions is therefore sustained.

III. Child Tax Credit and Additional Child Tax Credit

      Section 24(a) and (c)(1) provides that a taxpayer is entitled to a child tax

credit with respect to each qualifying child, as defined in section 152(c), who has

not attained age 17. Section 24(d) provides that a portion of the credit, commonly
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referred to as the additional child tax credit, may be refundable. As we concluded

that the children are not petitioner’s qualifying children as defined in section

152(c) for 2014, it follows as a matter of law that petitioner is not entitled to either

a child tax credit or an additional child tax credit for that year.

IV. Earned Income Tax Credit

      Section 32(a)(1) allows an earned income tax credit to an eligible

individual. The term “eligible individual” most commonly means an

individual who has a qualifying child for the taxable year. Sec. 32(c)(1)(A)(i).

For purposes of the earned income tax credit, the term “qualifying child”

generally means a qualifying child as defined in section 152(c). Sec. 32(c)(3).

The Court has already held that the children are not petitioner’s qualifying

children as defined in section 152(c) for the year in issue.

      However, an individual who does not have a qualifying child may also be an

eligible individual if certain other requirements are satisfied. Sec. 32(c)(1)(A)(ii).

The earned income tax credit, however, is completely phased out for such a

taxpayer whose earned income equals or exceeds $14,590 for 2014. See Rev.

Proc. 2013-35, sec. 3.06, 2013-47 I.R.B. 537, 540.

      The term “earned income” generally means the sum of the taxpayer’s wages

and earnings from self-employment that are includable in gross income for the
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taxable year. See sec. 32(c)(2). On the other hand, earned income excludes

unemployment compensation. See sec. 1.32-2(c)(2), Income Tax Regs. Petitioner

had earned income within the meaning of section 32(c) of $6,948 for 2014 and

would appear to satisfy the other requirements to qualify for an earned income

credit without regard to a qualifying child. The parties shall determine that matter

and compute the allowable amount of the earned income credit as part of their

Rule 155 computation.

      To reflect the foregoing,


                                                     Decision will be entered

                                                under Rule 155.
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                                   APPENDIX

    Nights that petitioner’s children
       spent at his home in 2014                 Number of nights per stay
Fri. Jan. 3 S Sat. Jan. 4                                   2
Fri. Jan. 10 S Sat. Jan. 11                                 2
Fri. Jan. 17 S Mon. Jan. 20                                 4
Fri. Jan. 24 S Sat. Jan. 25                                 2
Fri. Jan. 31 S Sat. Feb. 1                                  2
Fri. Feb. 7 S Sat. Feb. 8                                   2
Fri. Feb. 14 S Sun. Feb. 16                                 3
Fri. Feb. 21 S Sat. Feb. 22                                 2
Fri. Feb. 28 S Sat. Mar. 1                                  2
Fri. Mar. 7 S Sat. Mar. 8                                   2
Fri. Mar. 14 S Sat. Mar. 15                                 2
Fri. Mar. 21 S Sat. Mar. 22                                 2
Thurs. Mar. 27 S Sat. Mar. 29                               3
Fri. Apr. 4 S Sat. Apr. 5                                   2
Fri. Apr. 11 S Sat. Apr. 19                                 9
Fri. Apr. 25 S Sat. Apr. 26                                 2
Fri. May 2 S Sat. May 3                                     2
Fri. May 9 S Sat. May 10                                    2
Fri. May 16 S Sat. May 17                                   2
Fri. May 23 S Sun. May 25                                   3
Fri. May 30 S Sat. May 31                                   2
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Fri. Jun. 6 S Sat. Jun. 7                 2
Fri. Jun. 13 S Sat. Aug. 23              72
Fri. Aug. 29 S Sun. Aug. 31               3
Fri. Sept. 5 S Sat. Sept. 6               2
Fri. Sept. 12 S Sat. Sept. 13             2
Fri. Sept. 19 S Sat. Sept. 20             2
Fri. Sept. 26 S Sat. Sept. 27             2
Fri. Oct. 3 S Sat. Oct. 4                 2
Fri. Oct. 10 S Sat. Oct. 11               2
Thurs. Oct. 16 S Sat. Oct. 18             3
Fri. Oct. 24 S Sat. Oct. 25               2
Fri. Oct. 31 S Sat. Nov. 1                2
Fri. Nov. 7 S Sat. Nov. 8                 2
Fri. Nov. 14 S Sat. Nov. 15               2
Fri. Nov. 21 S Sat. Nov. 22               2
Wed. Nov. 26 S Sat. Nov. 29               4
Fri. Dec. 5 S Sat. Dec. 6                 2
Fri. Dec. 12 S Sat. Dec. 13               2
Fri. Dec. 19 S Sat. Dec. 20               2
Tues. Dec. 23 S Wed. Dec. 31              9
 Total                                   175
