                  T.C. Summary Opinion 2007-88



                      UNITED STATES TAX COURT



                 MANUEL R. CHAVEZ, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 20682-04S.                Filed May 31, 2007.



     Manuel R. Chavez, pro se.

     Daniel Price, for respondent.


     WHERRY, Judge:   This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect

when the petition was filed.1    Pursuant to section 7463(b), the

decision to be entered is not reviewable by any other court, and




     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as in effect for the year in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
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this opinion shall not be treated as precedent for any other

case.

     This case is before the Court on a petition for judicial

review of a notice of deficiency.   Respondent determined a $5,116

deficiency for petitioner’s 2003 taxable year.     The issues for

decision are whether petitioner is entitled to the following:

(1) Two dependency exemption deductions; (2) head of household

filing status; (3) a child tax credit; and (4) the earned income

credit.

                             Background

     Some of the facts have been stipulated by the parties.     The

stipulations, with accompanying exhibits, are incorporated herein

by this reference.   At the time the petition was filed petitioner

resided in El Paso, Texas.

     Petitioner lived with his mother, Juana Martinez, in 2003.

Petitioner’s sister, Patricia Chavez, and her two daughters, RJM

and CGM,2 also resided with petitioner’s mother.    Petitioner’s

mother was listed as the responsible party on the lease and all

household bills.

     During 2003, petitioner’s sister received State aid,

including food stamps, for herself and RJM and CGM.     RJM and CGM

did not receive any support from their father.



     2
      The Court will refer to the minor children by their
initials.
                               - 3 -

     Petitioner worked for the Department of Defense and received

wages totaling $14,010 in 2003.   On his 2003 Form 1040A, U.S.

Individual Income Tax Return, which was prepared by H&R Block,

petitioner listed RJM and CGM, his nieces, as dependents.

Petitioner filed his Federal tax return as head of household and

claimed a standard deduction in the amount of $7,000.3

Petitioner claimed three exemptions, one for himself and

dependency exemptions for RJM and CGM, totaling $9,150.

Petitioner also claimed an earned income credit in the amount of

$4,142, and a child tax credit in the amount of $351.    According

to petitioner and H&R Block’s calculations, petitioner was

entitled to a $4,790 refund.

     The notice of deficiency was sent to petitioner on August

30, 2004.   In the notice of deficiency, respondent:

(1) Disallowed the dependency exemptions for petitioner’s nieces;

(2) changed petitioner’s filing status from head of household to

single and adjusted the standard deduction accordingly;

(3) disallowed the child tax credit; and (4) disallowed the

earned income credit.   As a result, respondent determined a

deficiency of $5,116.   Petitioner timely petitioned this Court,

and a trial was held on February 6, 2006, in El Paso, Texas.




     3
      The standard deduction for single or married filing
separately for the taxable year 2003 was $4,750.
                                - 4 -

                              Discussion

     Deductions are a matter of legislative grace, and the

taxpayer must maintain adequate records to substantiate the

amounts of any deductions or credits claimed.      Sec. 6001;

INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992);

sec. 1.6001-1(a), Income Tax Regs.      As a general rule, the

Commissioner’s determination of a taxpayer’s liability in the

notice of deficiency is presumed correct, and the taxpayer bears

the burden of proving that the determination is improper.        See

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

However, pursuant to section 7491(a)(1), the burden of proof on

factual issues that affect the taxpayer’s tax liability may be

shifted to the Commissioner where the “taxpayer introduces

credible evidence with respect to * * * such issue”.      The burden

will shift only if the taxpayer has, inter alia, complied with

substantiation requirements pursuant to the Internal Revenue Code

and “cooperated with reasonable requests by the Secretary for

witnesses, information, documents, meetings, and interviews”.

Sec. 7491(a)(2).   In the instant case, petitioner did not comply

with the substantiation requirements, and failed to introduce

credible evidence at trial.    Accordingly, the burden remains on

petitioner.
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I.   Dependency Exemption Deductions

     Section 151 allows a taxpayer to deduct a personal

exemption, as well as dependency exemptions for the taxpayer’s

dependents.   See sec. 151(a), (c).     Section 152(a) defines

“dependent”, in pertinent part, to include “A son or daughter of

a brother or sister of the taxpayer”.      Sec. 152(a)(6).    The

claimed individuals, RJM and CGM, satisfy the definitional

requirement of “dependent” within the meaning of section

152(a)(6) because they are the daughters of petitioner’s sister.

     To qualify as a dependent under section 152(a), the

individual must have received over half of his or her support for

the taxable year from the taxpayer.      For this purpose, “support”

is defined as including “food, shelter, clothing, medical and

dental care, education, and the like.”      Sec. 1.152-1(a)(2)(i),

Income Tax Regs.    Section 1.152-1(a)(2)(i), Income Tax Regs.,

further provides:

     For purposes of determining whether or not an
     individual received, for a given calendar year, over
     half of his support from the taxpayer, there shall be
     taken into account the amount of support received from
     the taxpayer as compared to the entire amount of
     support which the individual received from all sources,
     including support which the individual himself
     supplied. * * *

     In other words, the support test requires the taxpayer to

establish the total support costs for the claimed individual and

that the taxpayer provided over half of that amount.         Archer v.

Commissioner, 73 T.C. 963, 967 (1980); see Cotton v.
                                 - 6 -

Commissioner, T.C. Memo. 2000-333.       Thus, a taxpayer who cannot

establish the total amount of support costs for the claimed

individual generally may not claim that individual as a

dependent.     Blanco v. Commissioner, 56 T.C. 512, 514-515 (1971);

Cotton v. Commissioner, supra.

     Petitioner, petitioner’s sister, and petitioner’s nieces all

lived with petitioner’s mother in 2003.      Petitioner testified

that he was responsible for paying the rent and all household

bills even though the lease and bills were in his mother’s name.

Petitioner explained that he gave his mother cash so that she

could pay the rent and bills.    However, petitioner did not

present any evidence regarding the dollar amount of money he

contributed to the household.

     RJM and CGM received State aid, which included food stamps,

during 2003.    With respect to amounts petitioner provided for RJM

and CGM’s support, petitioner testified that he gave his sister

cash on a regular basis.    Specifically, petitioner testified that

he gave his sister at least $100 per month, and that if his

financial situation permitted, he contributed up to $400 or $500

a month.   Petitioner did not present any independent evidence to

corroborate his testimony.

     The Court finds petitioner’s testimony to be credible as to

the fact that he provided some support for his nieces and

contributed towards household bills.      However, the record is
                                - 7 -

devoid of any reference to the dollar amount of total support

that RJM and CGM received in State aid, and the dollar amount of

support that petitioner provided for his nieces.   Thus,

petitioner has failed to provide the Court with any evidence

establishing the total amount of support that his nieces

received, or that he provided over half of his nieces’ support

during the 2003 tax year.    Accordingly, the Court is constrained

to conclude that petitioner is not entitled to dependency

exemptions for his nieces.

II.   Head of Household Filing Status

      Section 1(b) imposes a special tax rate on an individual

filing his Federal tax return as head of household.   Section 2(b)

defines a “head of household” as an individual taxpayer who is:

(1) Unmarried at the close of the taxable year; and (2) maintains

as his home a household which constitutes for more than one-half

of the taxable year the principal place of abode of a dependent

of the taxpayer with respect to whom the taxpayer is allowed a

deduction under section 151.   Sec. 2(b)(1)(A)(i) and (ii).   This

Court has already concluded that petitioner is not entitled to

dependency exemptions under section 151 for RJM and CGM.

Accordingly, a fortiori, petitioner is not entitled to head of

household filing status.
                                - 8 -

III. Child Tax Credits

      Section 24(a) authorizes a child tax credit with respect to

each “qualifying child” of the taxpayer.    As relevant to these

particular facts, a “qualifying child” means, among other things,

an individual with respect to whom the taxpayer is allowed a

deduction under section 151.    Sec. 24(c)(1)(A).   This Court has

already concluded that petitioner is not entitled to dependency

exemptions under section 151 for RJM and CGM.    Accordingly, RJM

and CGM do not fit within the meaning of “qualifying child” as

defined by section 24(c).    The Court concludes that petitioner is

not entitled to a child tax credit for his nieces.

IV.   Earned Income Credit

      Section 32(a)(1) allows an eligible individual an earned

income credit against the individual’s income tax liability.

Section 32(a)(2) limits the credit allowed through a phaseout,

and section 32(b) prescribes different percentages and amounts

used to calculate the credit.    The limitation amount is based on

the amount of the taxpayer’s earned income and whether the

taxpayer has no children, one qualifying child, or two or more

qualifying children.

      To be eligible to claim an earned income credit with respect

to a child, the taxpayer must establish that the child satisfies

a relationship test, a residency test, and an age test.

Sec. 32(c)(3).   In order for a niece to meet the relationship
                                 - 9 -

requirement under section 32(c)(3)(B), the taxpayer must show

that he cared for the niece as his own child.

Sec. 32(c)(3)(B)(i)(II).    Petitioner has not claimed or offered

any evidence to show that he cared for RJM and CGM as if they

were his own daughters.    Although petitioner did provide

financial support for his nieces, that fact is insufficient to

show that he cared for his nieces as his own children for 2003.

See Mares v. Commissioner, T.C. Memo. 2001-216.

     Although petitioner is not eligible to claim an earned

income credit under section 32(c)(1)(A)(i) for one or more

qualifying children, he may be an “eligible individual” under

section 32(c)(1)(A)(ii).    For 2003, a taxpayer is eligible under

this subsection only if his adjusted gross income was less than

$11,230.   Rev. Proc. 2002-70, 2002-2 C.B. 845.      Petitioner’s

adjusted gross income for 2003 was $14,036.       Accordingly,

petitioner is not eligible for an earned income credit.

     The Court has considered all of petitioner’s contentions,

arguments, requests, and statements.       To the extent not discussed

herein, we conclude that they are meritless, moot, or irrelevant.

     To reflect the foregoing,


                                              Decision will be entered

                                         for respondent.
