                   T.C. Summary Opinion 2004-6



                     UNITED STATES TAX COURT



             APRIL LENNETT WEBB-REED, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 15406-02S.              Filed January 22, 2004.


     April Lennett Webb-Reed, pro se.

     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 that 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.

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 1999 a deficiency in petitioner’s

Federal income tax of $2,987.

     The issues for decision are:    (1) Whether petitioner is

entitled to dependency exemption deductions; (2) whether

petitioner is entitled to earned income credits; (3) whether

petitioner is entitled to head of household filing status; (4)

whether petitioner is entitled to child tax credits; and, (5)

whether petitioner is entitled to child care credits.

                             Background

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

The stipulations of facts and exhibits received into evidence are

incorporated herein by reference.    At the time the petition was

filed, petitioner resided in Austin, Texas.

     Ms. Yolanda Hardeman is the mother of Eric Walker, Jr.

(Eric), and Cassandra Hardeman (Cassandra).      Petitioner is Ms.

Hardeman’s godmother and neighbor.      There is no other

relationship by birth or marriage between petitioner and Ms.

Hardeman and her children.

     Petitioner timely filed her electronic 1999 Federal income

tax return as head of household and reported income of $26,358.

Petitioner claimed dependency exemption deductions for Eric and

Cassandra as well as several credits relating to the children.

The return states that the children are petitioner’s foster

children.
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     Ms. Hardeman provided respondent with a written statement

that petitioner was the guardian of the children.      In that same

statement, Ms. Hardeman admitted that the children’s school

records indicate that Ms. Hardeman is their mother and show her

address as the children’s address.       Petitioner does not have any

legal documents showing that she had legal guardianship of the

children.

     Petitioner, who resided in the home of her former husband’s

grandmother, did not provide any testimony or evidence regarding

sums she may have spent to care for Eric and Cassandra.

Additionally, petitioner was not employed from October 1999

through the end of the year because she had been injured.

     Respondent issued a notice of deficiency determining that

petitioner is not entitled to claim head of household filing

status, the dependency exemption deductions, or any of the

credits applicable to the children for 1999 because she failed to

substantiate her claims.

                            Discussion

     Deductions are a matter of legislative grace, and taxpayers

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.   Taxpayers generally bear the burden of proving that

the Commissioner’s determinations are incorrect.      Rule 142(a);
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Welch v. Helvering, 290 U.S. 111 (1933).    The Court decides this

case without regard to the burden of proof.    Accordingly, the

Court need not decide whether section 7491(a)(1) is applicable in

this case.    See Higbee v. Commissioner, 116 T.C. 438 (2001).

1.   Dependency Exemption Deductions

      Section 151(c) allows a taxpayer to deduct an exemption

amount for each “dependent” as defined in section 152.    Section

152(a) defines a dependent to include an individual, other than a

spouse, whose principal place of abode is the home of the

taxpayer and who is a member of the taxpayer’s household “over

half of whose support, for the calendar year in which the taxable

year of the taxpayer begins, was received from the taxpayer (or

is treated under subsection (c) or (e) as received from the

taxpayer)”.

      For the purposes of section 152(a)(9), it is not necessary

that the dependent be related to the taxpayer, but it is

necessary that the taxpayer both maintain and occupy the

household.    Sec. 1.152-1(b), Income Tax Regs.

      To qualify for a dependency exemption deduction, a taxpayer

must establish the total support cost expended on behalf of a

claimed dependent from all sources for the year and demonstrate

that she provided over half of this amount.    See Archer v.

Commissioner, 73 T.C. 963, 967 (1980); Blanco v. Commissioner, 56

T.C. 512, 514-515 (1971); sec. 1.152-1(a)(2)(i), Income Tax Regs.
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     The term “support” includes food, shelter, clothing, medical

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

Income Tax Regs.   The total amount of support for each claimed

dependent furnished by all sources during the year in issue must

be established by competent evidence.    Blanco v. Commissioner,

supra at 514; sec. 1.152-1(a)(1), Income Tax Regs.    The amount of

support that the claimed dependent received from the taxpayer is

compared to the total amount of support the claimed dependent

received from all sources.    Sec. 1.152-1(a)(2)(i), Income Tax

Regs.

     Petitioner claims that Eric lived with her for the entire

year and Cassandra lived with her for 8 months during 1999.

Petitioner also claims that she provided for their every need,

including food, clothing, and shelter.    She also stated that she

paid a babysitter to care for Eric all day and to provide after-

school care for Cassandra.    Petitioner said she paid the

babysitter in cash and did not receive any receipts documenting

the payments.   Petitioner has provided no evidence at all

regarding any amounts she may have expended to care for Eric or

Cassandra.

     The Court sustains respondent’s determination that

petitioner is not entitled to dependency exemption deductions for

Eric and Cassandra in 1999.
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2.   Earned Income Credit

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

income credit against the individual’s income tax liability.       The

credit 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.

      Petitioner claimed an earned income credit based on Eric and

Cassandra as qualifying foster children.     As relevant herein,

section 32(c)(3)(B)(iii) defines an “eligible foster child” as an

individual who is placed with the taxpayer by an authorized

placement agency; whom the taxpayer cares for as the taxpayer’s

own child; and, who has the same principal place of abode as the

taxpayer for the taxpayer’s entire taxable year.

      Neither Eric nor Cassandra was placed with petitioner by an

authorized placement agency.     Additionally, the record indicates

that Cassandra did not have the same principal place of abode as

petitioner for petitioner’s entire taxable year.     Petitioner is

therefore not entitled to claim earned income credits for the

children.

3.   Head of Household Filing Status

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

filing as head of household.     As relevant herein, section 2(b)
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defines a “head of household” as an unmarried individual who

maintains as her home a household that for more than one-half of

the taxable year constitutes the principal place of abode of a

person who is a dependent of the taxpayer, if the taxpayer is

entitled to a deduction for the taxable year for that dependent

under section 151.

      Respondent determined that petitioner is not entitled to

section 151 dependency exemption deductions for Eric and

Cassandra in 1999.      The Court has sustained respondent’s

determination regarding the section 151 deductions.      That holding

is dispositive of this issue, and, as a result, the Court

sustains respondent’s determination that petitioner is not

entitled to claim head of household filing status for 1999.

4.   Child Tax Credit

      For the taxable year 1999, taxpayers are allowed to claim a

tax credit of $500 for each qualifying child.      Sec. 24(a).   The

plain language of section 24 establishes a three-pronged test to

determine whether a taxpayer has a qualifying child.      If one of

the qualifications is not met, the claimed child tax credit must

be disallowed.   The first element of the three-pronged test

requires that a taxpayer must have been allowed a deduction for

that child under section 151.      Sec. 24(c)(1)(A).

      As stated supra, the Court has sustained respondent’s

determination that petitioner is not entitled to dependency

exemption deductions for the children.      Thus, petitioner fails
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the first prong of the test of section 24.      The Court sustains

respondent’s determination regarding the section 24 child tax

credits.

5.   Child Care Credit

      Section 21(a) generally provides for what is sometimes

referred to as the child care credit.      The allowable credit

generally is based upon employment-related expenses that are

incurred to enable the taxpayer to be gainfully employed,

including expenses incurred for the care of a qualifying

individual.   Sec. 21(b)(2).   A “qualifying individual” must be

someone for whom the taxpayer is entitled to a dependency

deduction under section 151(c).    Sec. 21(b)(1).    Petitioner is

not entitled to dependency exemptions for Eric and Cassandra,

and, thus, she is not entitled to the child care credit.

Respondent’s determination on this issue is sustained.

      Reviewed and adopted as the report of the Small Tax Case

Division.

                                        Decision will be entered

                                for respondent.
