                  T.C. Summary Opinion 2006-131



                     UNITED STATES TAX COURT



              KEVIN ORLANDO MCCLAIN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 15948-05S.             Filed August 28, 2006.


     Kevin Orlando McClain, pro se.

     Michael Melone, 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 as in effect for the year at issue, and all Rule

references are to the Tax Court Rules of Practice and Procedure.

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

and this opinion should not be cited as authority.
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     Respondent determined for 2004 a deficiency in petitioner’s

Federal income tax of $5,443.   The issues for decision are

whether petitioner is entitled to:      (1) Dependency exemption

deductions for his cousin and his niece, (2) head of household

filing status,1 (3) an earned income credit, and (4) an

additional child tax credit.

                            Background

     The parties could not reach agreement on a stipulation of

facts.   The exhibits received in evidence are incorporated herein

by reference.   At the time the petition in this case was filed,

petitioner resided in Sacramento, California.

     Petitioner was self-employed as a barber in 2004.      During

2004, petitioner lived in an apartment with his girlfriend Tianna

Logan (Ms. Logan), his cousin DR, and his niece AM.2     AM is the

daughter of petitioner’s brother.    In 2004, DR was in the ninth

grade and AM was in the fourth grade.

     Ms. Logan was employed in 2004.      The apartment that

petitioner and the children lived in during 2004 was leased in

Ms. Logan’s name.




     1
      The Court’s resolution of the issue of petitioner’s filing
status will determine the correct computation of his standard
deduction for 2004.
     2
      The Court will refer to the minor children by their
initials.
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     Petitioner filed a Form 1040, U.S. Individual Income Tax

Return, for 2004, reporting wages of zero, net profit from

business of $16,134, and adjusted gross income of $14,994.

Respondent issued to petitioner a statutory notice of deficiency

determining that petitioner is not entitled to claim head of

household filing status.   Respondent also disallowed dependency

exemption deductions for DR and AM, the earned income credit, and

the additional child tax credit because petitioner failed to

substantiate his claims.

                            Discussion

     The Commissioner’s determinations are presumed correct, and

generally taxpayers bear the burden of proving otherwise.3   Rule

142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933).

Dependency Exemption

     Petitioner claimed dependency exemption deductions for DR

and AM for 2004.   Respondent disallowed the deductions contending

that petitioner has failed to provide any substantiation that he

provided more than half of DR’s and AM’s support during 2004.

     Section 151(c)(1) allows a taxpayer to claim an exemption

deduction for each qualifying dependent.   A daughter of a brother

of the taxpayer is a “dependent” so long as the child’s gross


     3
      Petitioner has not raised the issue of sec. 7491(a), which
shifts the burden of proof to the Commissioner in certain
situations. This Court concludes that sec. 7491 does not apply
because petitioner has not produced any evidence that establishes
the preconditions for its application.
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income for the calendar year in which the taxable year of the

taxpayer begins is less than the exemption amount, and more than

half the child’s support, for the calendar year in which the

taxable year of the taxpayer begins, was received from the

taxpayer.   Secs. 151(c)(1)(A), 152(a)(6).

     Section 151(c) also allows a taxpayer to claim an exemption

deduction for an individual, such as a cousin, whose relationship

with the taxpayer is not specified under section 152(a)(1)-(8).

Sec. 152(a)(9).   An individual is considered a “dependent” if:

(1) The individual’s gross income for the calendar year in which

the taxable year of the taxpayer begins is less than the

exemption amount, (2) more than half the individual’s support,

for the calendar year in which the taxable year of the taxpayer

begins, was received from the taxpayer, and (3) for the taxable

year of the taxpayer, the individual has as his principal place

of abode the home of the taxpayer and is a member of the

taxpayer’s household.   Secs. 151(c)(1)(A), 152(a)(9).

     Although petitioner contends that he provided more than half

of DR’s and AM’s support in 2004, he has failed to offer any

records to corroborate his testimony.    Petitioner and Ms. Logan

shared the expenses for support of the household in 2004.    It is

unclear how petitioner and Ms. Logan allocated the expenses

between them.   It is also unclear how much of the expenses paid

by petitioner related to the children.
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       At trial, petitioner’s father, Jerry McClain (Mr. McClain),

offered testimony relating to the amount of support that

petitioner paid for DR and AM during 2004.       Mr. McClain’s

testimony, however, is not persuasive because he has no personal

knowledge as to any of the matters to which he testified.         Mr.

McClain’s testimony was based entirely on what petitioner told

him.

       The Court concludes that petitioner has not offered

sufficient evidence to show that he provided more than half of

DR’s and AM’s support in 2004.

Head of Household

       In the notice of deficiency, respondent determined

petitioner’s filing status to be single rather than head of

household.

       Section 1(b) imposes a special tax rate on individuals

filing as “heads of households”.    “Head of household” is defined

in section 2(b) to include an unmarried individual who maintained

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

of the taxable year the principal place of abode for persons for

whom the taxpayer is entitled to claim dependency exemption

deductions under section 151.    See sec. 2(b)(1)(A)(ii).     A

taxpayer is considered to be 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).
                               - 6 -
     Petitioner is not entitled to head of household filing

status because he is not entitled to claim dependency exemption

deductions for DR and AM.

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, and section 32(b)

prescribes different percentages and amounts used to calculate

the credit based on whether the eligible individual has no

qualifying children, one qualifying child, or two or more

qualifying children.

     To be eligible to claim an earned income credit with respect

to a qualifying child, a taxpayer must establish, inter alia,

that the child bears a relationship to the taxpayer prescribed by

section 32(c)(3)(B), that the child meets the age requirements of

section 32(c)(3)(C), and that 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).

     A cousin does not meet the relationship test under section

32(c)(3)(B).   Therefore, DR is not a qualifying child for

purposes of the earned income credit.

     In order for a niece to meet the relationship requirement of

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).
                               - 7 -

     Petitioner has not claimed nor offered any evidence to show

that he cared for AM as if she were his own daughter.    Even if

petitioner did provide some financial support for AM, it is

insufficient to show that he cared for AM as his own child in

2004.   This Court has indicated that merely contributing

financially to the support of an individual does not rise to the

level of caring for the individual as one’s own child.    See Mares

v. Commissioner, T.C. Memo. 2001-216; Smith v. Commissioner, T.C.

Memo. 1997-544.

     Although petitioner is not eligible to claim an earned

income credit under section 32(c)(1)(A)(i) for a qualifying

child, he may be an “eligible individual” under section

32(c)(1)(A)(ii).   For 2004, a taxpayer is eligible under this

subsection only if his adjusted gross income was less than

$11,490.   Rev. Proc. 2003-85, sec. 3.06, 2003-2 C.B. 1184, 1187.

Petitioner’s adjusted gross income was $14,994.

     Accordingly, petitioner is not eligible for an earned income

credit.

Additional Child Tax Credit

     For 2004, petitioner did not claim a child tax credit, but

he claimed an additional child tax credit of $637 with DR and AM

as qualifying children.   Respondent determined that petitioner is

not entitled to an additional child tax credit for 2004.
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     Section 24(a) authorizes a child tax credit with respect to

each qualifying child of the taxpayer.   The term “qualifying

child” is defined in section 24(c).    A “qualifying child” means

an individual with respect to whom the taxpayer is allowed a

deduction under section 151, who has not attained the age of 17

as of the close of the taxable year and who bears a relationship

to the taxpayer as prescribed by section 32(c)(3)(B).   Sec.

24(c)(1).

     Since petitioner is not allowed to claim deductions for DR

and AM as dependents under section 151, petitioner does not have

any qualifying children for purposes of the child tax credit.     In

the absence of any qualifying children in 2004, petitioner is not

entitled to claim a child tax credit.

     The child tax credit is a nonrefundable personal credit that

was added to the Internal Revenue Code by the Taxpayer Relief Act

of 1997, Pub. L. 105-34, sec. 101(a), 111 Stat. 796, with a

provision for a refundable credit, the additional child tax

credit, for families with three or more children.   For taxable

years beginning after December 31, 2000, the additional child tax

credit provision was amended to remove the restriction that only

families with three or more children are entitled to claim the

credit.   See sec. 24(d)(1); Economic Growth and Tax Relief

Reconciliation Act of 2001, Pub. L. 107-16, sec. 201(c)(1), 115

Stat. 46.
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     In the absence of other nonrefundable personal credits, a

taxpayer is allowed to claim a child tax credit in an amount that

is the lesser of the full child tax credit or the taxpayer’s

Federal income tax liability for the taxable year.         See sec.

26(a).   If the child tax credit exceeds the taxpayer’s Federal

income tax liability for the taxable year, a portion of the child

tax credit may be refundable as an “additional child tax credit”

under section 24(d)(1).   The refundable and nonrefundable

portions of the child tax credit cannot exceed the total

allowable amount of the credit.

     Petitioner is not entitled to claim an additional child tax

credit because he did not qualify for a child tax credit.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect the foregoing,

                                              Decision will be entered

                                         for respondent.
