                  T.C. Summary Opinion 2001-116



                     UNITED STATES TAX COURT



                  JOANN S. ALLEN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 3196-00S.              Filed July 31, 2001.


     Joann S. Allen, pro se.

     Ross M. Greenberg, for respondent.



     PANUTHOS, Chief Special Trial Judge:   This case was heard

pursuant to the provisions of section 7463 of the Internal

Revenue Code in effect at the time the petition was filed.    The

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

this opinion should not be cited as authority.    Unless otherwise

indicated, subsequent section references are to the Internal

Revenue Code 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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     Respondent determined a deficiency in petitioner’s Federal

income tax of $2,929 for tax year 1996.   The issues for decision

are: (1) Whether petitioner qualifies for head-of-household

filing status; and (2) whether petitioner is entitled to the

earned income credit under section 32.

Background

     Some of the facts have been stipulated, and they are so

found.   The stipulation of facts and the attached exhibits are

incorporated herein by this reference.    At the time of filing her

petition, petitioner resided in Odessa, Florida.

     Petitioner’s first husband, Terry Sherouse, died in a

boating accident in September 1991.    In November 1991, petitioner

began dating a neighbor, Kevin Allen (Mr. Allen).     Mr. Allen’s

house was foreclosed upon and he moved in with petitioner.

During the 1996 tax year, petitioner and Mr. Allen resided

together at petitioner’s home for the entire year.1    Petitioner

and Mr. Allen were married in September 1997.

     Petitioner has three children: James Dewey, born in 1984;

Joseph Sherouse, born in 1989; and Jonathan Sherouse, born in


     1
          The parties entered into a stipulation pursuant to Rule
91, in which petitioner stipulated that she resided with Mr.
Allen during 1996 for the entire year. At trial, Mr. Allen
testified that he moved in with petitioner at some time in 1996.
There is other evidence including canceled checks from a joint
checking account of petitioner and Mr. Allen that demonstrates
that they lived together for the entire year. Based on the
record, there is no basis to find facts different from those
stipulated by the parties.
                                - 3 -

1991.    Mr. Allen has two children.    The older child graduated

college in 1996, and the younger child was in high school in

1996.    After Mr. Allen moved in with petitioner in 1996, Mr.

Allen’s daughter, son-in-law, and grandson moved into the

household.

     Petitioner reported wages of $14,412 and taxable pensions

and annuities of $1,180 for 1996.      Petitioner also received

Social Security benefits of $2,177.      Petitioner’s three children

each received Social Security benefits of $4,246.30 in 1996.

     Petitioner owned the residence where the family resided.

Mr. Allen did not contribute to the expenses of the household or

support of petitioner’s children, with the exception of paying

for groceries.    Mr. Allen did not care for petitioner’s children

as his own.

     Mr. Allen earned wages of $48,897.12 in 1996.      Mr. Allen

paid child support to his former wife for his son.      Mr. Allen

also supported his daughter, son-in-law, and grandson.

     On her 1996 Federal income tax return, petitioner claimed

the earned income credit under section 32.2     She also filed her

return claiming head-of-household filing status.

     On December 14, 1999, respondent mailed a notice of

deficiency to petitioner for tax year 1996.      Respondent


     2
          The record does not reflect which of her children were
claimed by petitioner as qualifying children.
                                 - 4 -

determined that petitioner’s filing status should be single,

asserting that petitioner did not furnish more than one-half of

the cost of maintaining the household.     Further, respondent

disallowed the earned income credit, determining that

petitioner’s sons were qualifying children for Mr. Allen, and,

since Mr. Allen had a higher adjusted gross income, petitioner is

not entitled to the credit.

Discussion

     1. Filing Status

     In order to qualify for head-of-household filing status, a

taxpayer must satisfy the requirements of section 2(b).     Pursuant

to that section, and as relevant herein, an individual qualifies

as a head of household if the individual is not married at the

close of the taxable year and maintains as her home a household

that constitutes for more than one-half of the taxable year the

principal place of abode of a son or daughter of the taxpayer.

Sec. 2(b)(1)(A)(i).     A taxpayer is considered as maintaining a

household only if over half of the cost of maintaining the

household during the taxable year is furnished by the taxpayer.

Sec. 2(b)(1) (flush language).     The cost of maintaining a

household includes property taxes, mortgage interest, rent,

utility charges, upkeep and repairs, property insurance, and food

consumed on the premises.     Sec. 1.2-2(d), Income Tax Regs.    The

cost of maintaining a household does not include the cost of
                                 - 5 -

clothing, education, medical treatment, vacations, life

insurance, and transportation.     Id.

     Petitioner’s children each received funds from Social

Security, and Mr. Allen purchased food for the household.

Considering these funds were available for support of the

household, we conclude that petitioner did not furnish over half

the cost of maintaining the household.      Therefore, we sustain

respondent’s determination.

     2. Earned Income Credit

     On her 1996 income tax return, petitioner claimed an earned

income credit.   In the case of an eligible individual, section

32(a) allows an earned income credit against the individual’s

income tax liability.    As relevant herein, an “eligible

individual” is defined as an individual who has a “qualifying

child” for the taxable year.    Sec. 32(c)(1)(A).

     The record reflects that each of petitioner’s sons qualifies

as a “qualifying child” pursuant to the requirements set forth in

section 32(c)(3)(A)(i through iv).       In this regard, each of the

three sons satisfies the relationship test, see sec.

32(c)(3)(A)(i) and (B)(i)(I), the residency test, see sec.

32(c)(3)(A)(ii), and the age test, see sec. 32(c)(3)(A)(iii) and

(C)(i).   Finally, petitioner satisfied the identification

requirement under section 32(c)(3)(C)(A)(iv) and (D)(i) for each

of the three children.
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     Respondent contends that petitioner’s children also qualify

as Mr. Allen’s foster children, and, therefore, petitioner does

not qualify for the earned income credit, as her modified

adjusted gross income for 1996 was lower than Mr. Allen’s.       See

sec. 32(c)(1)(C).     However, Mr. Allen fails the relationship test

with respect to petitioner’s children.     An eligible foster child

is defined as an individual who the taxpayer cares for as the

taxpayer’s own child, and has the same principal place of abode

as the taxpayer for the taxpayer’s entire taxable year.       Sec.

32(c)(3)(B)(iii).3    The record reflects that Mr. Allen did not

care for petitioner’s children as his own.     Mr. Allen’s

involvement with petitioner’s children was limited to the

purchase of groceries.     Petitioner’s children do not qualify as

Mr. Allen’s foster children.     As such, petitioner is not

disqualified as an “eligible individual”.

         We hold that petitioner is entitled to the earned income

credit for 1996.

     Reviewed and adopted as the report of the Small Tax Case

Division.




     3
          Although Congress recently amended the definition of an
eligible foster child, see Ticket to Work and Work Incentives
Improvement Act of 1999, Pub. L. 106-170, sec. 412, 113 Stat.
1917, the amended definition does not apply herein because it is
effective for tax years beginning after Dec. 31, 1999.
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To reflect the foregoing,

                                              Decision will be

                                    entered under Rule 155.
