                  T.C. Summary Opinion 2003-106



                     UNITED STATES TAX COURT



                WILLIAM T. ELLIOTT, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent




     Docket No. 12262-01S.              Filed July 25, 2003.




     Tommy E. Swate, for petitioner.

     Daniel N. Price, for respondent.




     DEAN, 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.   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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The decision to be entered is not reviewable by any other court,

and this opinion should not be cited as authority.

     Respondent determined a deficiency of $2,530 in petitioner’s

Federal income tax for 2000.   The only issue for decision is

whether petitioner is entitled to the earned income credit he

claimed.1

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein by reference.    At the time the petition was

filed petitioner resided in Corpus Christi, Texas.

     In 2000, petitioner lived with Glennie Huff and her two

sons, Ashton Huff and Marquin Huff.    Petitioner and Ms. Huff were

never married in an official marriage ceremony, nor were they

issued a valid marriage license.    Petitioner is not the

biological father of Ashton or Marquin, and no State placed them

with him as foster children.

     Petitioner filed his Federal income tax return as head of

household claiming dependency exemption deductions for Ashton and

Marquin and an earned income credit naming Ashton and Marquin as

qualifying children.   Respondent issued a notice of deficiency


     1
       The Court need not address whether petitioner is entitled
to head of household filing status or dependency exemption
deductions because, with the standard deduction and a single
personal exemption, petitioner had zero taxable income and zero
tax liability for the year in issue. As a result, neither
petitioner's filing status nor any deductions bear on the outcome
of this case.
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determining that petitioner is not entitled to deductions for

dependency exemptions, head of household filing status, and

earned income credit because he failed to provide substantiation

for his claims.

     Taxpayers generally bear the burden of proving that the

Commissioner’s determination is incorrect.    Rule 142(a); Welch v.

Helvering, 290 U.S. 111 (1933).    Under section 7491(a)(1),

however, the burden of proof shifts to the Commissioner if, among

other requirements, the taxpayer introduces “credible evidence

with respect to any factual issue relevant to ascertaining” his

tax liability.    The Court finds that the burden of proof does not

shift to respondent because petitioner has failed to comply with

the requirements of section 7491(a)(1).

     Under section 32, an eligible individual is allowed a credit

which is calculated as a percentage of the individual's earned

income.   Sec. 32(a)(1).   Section 32(a)(2) and (b) limits the

credit allowed based on whether the eligible individual has no

qualifying children, one qualifying child, or two or more

qualifying children.

     Initially, petitioner argues that because he treated Ashton

and Marquin similarly on previous unchallenged returns, his

consistent treatment should not now be questioned.    Each taxable

year, however, stands alone, and the Commissioner may challenge

in a succeeding year what was condoned or agreed to in a former
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year.   Rose v. Commissioner, 55 T.C. 28 (1970).    Thus, a taxpayer

must follow the reporting requirements in any given taxable year

to be entitled to a credit even if the Commissioner did not

challenge a similarly claimed credit in a prior year.     As a

result, what happened with petitioner's past tax returns is not

relevant to the decision in this case.

     Respondent argues that petitioner had no qualifying children

in 2000 because no individual met the relationship and residency

requirements of section 32(c)(3).

     To be eligible to claim an earned income credit with respect

to a qualifying child, a taxpayer must establish:    (1) The child

bears the relationship to the taxpayer prescribed by section

32(c)(3)(B); (2) the child meets the age requirements of section

32(c)(3)(C); and (3) the child shares the same principal place of

abode as the taxpayer for more than one-half of the taxable year

as prescribed by section 32(c)(3)(A)(ii).

     As is relevant to the relationship test, the definition of a

qualifying child includes a child or a stepchild of the taxpayer.

Sec. 32(c)(3).   Petitioner's position is that Ashton and Marquin

were qualifying children for purposes of the earned income credit

because they are his stepchildren.     Petitioner claims they

qualify as his stepchildren because he and Ms. Huff were in a

valid "common law" marriage pursuant to the laws of the State of
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Texas.   Respondent's position is that their "common law" marriage

does not comport with the requirements of the statute.

     Section 2.401 of the Texas Family Code provides a three part

conjunctive test to determine if a man and a woman are in a valid

"common law" marriage.   The third part of the "common law" test

requires the couple to hold themselves out to others as though

they were married.   Tex. Fam. Code Ann. sec. 2.401 (Vernon 2002).

In McChesney v. Johnson, 79 S.W.2d 658, 659 (Tex. Civ. App. 1934)

the court stated that "the agreement is fundamental and

cohabitation is an element, but the holding out to the public as

being man and wife is the acid test."   A couple's conduct and

actions alone are sufficient to satisfy this element; whereas

spoken words are not necessary to establish marital status.

Winfield v. Renfro, 821 S.W.2d 640, 648 (Tex. App. 1991).     When

questioned by respondent's counsel whether she held herself out

to others as being married to petitioner, Ms. Huff testified that

she did not hold herself out to third parties, or tell anyone,

that she and petitioner were married.

     The Court finds, therefore, that petitioner was not married,

common law or otherwise, to Ms. Huff in 2000.   As a result, the

Court also finds that Ashton and Marquin, for purposes of section

32, were not petitioner's stepchildren.   Because petitioner has

not established that Ashton or Marquin met the relationship test
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established in section 32(c)(3)(B), he has no qualifying children

for purposes of the earned income credit.

     If petitioner had established that he is married, common law

or otherwise, he then would be precluded from claiming the earned

income credit because married persons must file a joint return if

they wish to claim an earned income credit.    Sec. 32(d).

     Petitioner is, however, eligible for an earned income credit

as an individual with no qualifying children under section

32(c)(1)(A)(ii) because his adjusted gross income in 2000 was in

excess of the threshold phaseout amount but below the complete

phaseout amount prescribed by section 32(a)(2).    The earned

income credit begins to phaseout for individuals with no

qualifying children and adjusted gross income in excess of $5,770

for 2000.   See sec. 32(a) and (b); see also Rev. Proc. 99-42,

1999-2 C.B. 568.   The earned income credit is completely phased

out for individuals with no qualifying children and adjusted

gross income in excess of $10,380 for 2000.    See sec. 32(a) and

(b); see also Rev. Proc. 99-42, 1999-2 C.B. 568.    Petitioner had

adjusted gross income of $6,347 in 2000.    The Court holds,

therefore, that petitioner is entitled to an earned income credit

as an individual with no qualifying children.
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    Reviewed and adopted as the report of the Small Tax Case

Division.

    To reflect the foregoing,

                                        Decision will be entered under

                                Rule 155.
