                   T.C. Summary Opinion 2004-4



                     UNITED STATES TAX COURT



                 DIEGO FRANCISCO, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 12938-02S.              Filed January 21, 2004.


     Diego Francisco, pro se.

     Huong T. Duong, for respondent.



     WOLFE, 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, all section references are to the Internal Revenue

Code in effect at relevant times, 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.
                                 - 2 -

     Respondent determined a deficiency in petitioner’s 2001

Federal income tax of $4,880.30.    The issues for decision are

whether petitioner is entitled to head of household filing status

and whether petitioner is entitled to a claimed earned income

credit of $3,906.    Some of the facts have been stipulated and are

so found.    We incorporate by this reference the parties’

stipulation of facts and the accompanying exhibits.     Petitioner

was a resident of Los Angeles, California, at the time he filed

his petition.

     In 2001, petitioner resided with Yolanda Margarita Guzman

(Ms. Guzman) and their two children in a three-bedroom house

owned by Ms. Guzman’s parents.    Petitioner and Ms. Guzman were

not married.    Their children are named Cesar Mateo Diego, born on

April 10, 1992, and Juliana Maria Diego, born on May 3, 2000.

Ms. Guzman’s parents, her brother, her sister, and her sister’s

husband and three children all resided in the same house with

petitioner, Ms. Guzman, and their two children.

     On his 2001 Federal income tax return, petitioner reported

adjusted gross income (AGI) of $13,553, and computed his tax as a

head of household.    He also claimed the following:   Dependency

exemption deductions for Ms. Guzman and their two children, an

additional child tax credit of $355, and an earned income credit

of $3,906.    Respondent disallowed petitioner’s claim to the

dependency exemption deductions, the full amount of the
                                - 3 -

additional child tax credit, the head of household filing status,

and the full amount of the earned income credit.     Respondent has

since stipulated that petitioner is entitled to the three

dependency exemption deductions and the additional child tax

credit.

     Petitioner bears the burden of proving that respondent’s

determination is incorrect.1    Rule 142(a).   It is well

established that the Court is not bound to accept at face value

the self-serving testimony of a taxpayer or his or her close

relatives or intimates.   See, e.g., Tokarski v. Commissioner, 87

T.C. 74, 77 (1986).   Additionally, a taxpayer is required to

maintain permanent books of account or records sufficient to

establish the amount of his or her gross income, deductions,

credits, or other matters required to be shown on his or her tax

return.   Sec. 6001; sec. 1.6001-1(a), Income Tax Regs.

Petitioner has failed to substantiate the claims set forth in his

tax return, has failed to maintain books and records of his

relevant activities, and has failed to introduce credible

evidence to support his factual allegations.     Sec. 6001; sec.

1.6001-1(a), Income Tax Regs.

     The first issue for decision is whether petitioner is

entitled to head of household filing status.     Section 2(b)

     1
        Petitioner has not satisfied the requirements of sec.
7491(a); consequently, sec. 7491(a) does not shift the burden of
proof to respondent.
                               - 4 -

provides that a taxpayer may be considered a head of household if

the taxpayer is not married at the close of the taxable year and

maintains as his or her home a household that constitutes for

more than one-half of the taxable year the principal place or

abode, as a member of the household, of a son or a daughter or a

descendant of a son or a daughter or of certain other dependents

of the taxpayer, subject to exceptions inapplicable here.    See

sec. 2(b)(1)(A).   In addition, the taxpayer must furnish over

half the cost of maintaining the household for the taxable year.

See sec. 2(b)(1); see also, e.g., Estate of Fleming v.

Commissioner, T.C. Memo. 1974-137 (holding that the definition of

a “household” is determined by all of the facts and circumstances

of a particular case and is not determined solely by physical or

tangible boundaries).

     Respondent contends that petitioner has not established that

he maintained a household for purposes of section 2(b), but that

petitioner is part of a larger household established by Ms.

Guzman’s parents, and, therefore, that petitioner does not

qualify as a head of household and is subject to tax at rates

prescribed for single taxpayers.   Petitioner contends that the

space in Ms. Guzman’s parents’ house really was a separate one-

bedroom apartment that should itself be considered a household.
                               - 5 -

He also contends that he paid $500 in cash per month as rent to

Ms. Guzman’s father (Julio Guzman) and otherwise supported his

separate family.   We agree with respondent.

     Petitioner has failed to present persuasive evidence

supporting his contentions.   At trial, petitioner introduced a

handmade diagram of the house that purportedly showed that the

space occupied by petitioner, Ms. Guzman, and their two children

was physically separate from the rest of the house.2    Ms. Guzman

testified that, in addition to the bedroom, she and petitioner

and their children had their own kitchen area, bathroom, and

separate entrance.   This diagram and testimony are self-serving

and uncorroborated by any disinterested witnesses.     Respondent

argues that the diagram is inconsistent with municipal records

concerning the premises, particularly as to the number of

bathrooms.   Neither Julio Guzman nor any other member of his

family (except Ms. Guzman, who lived with petitioner) or neighbor

or friend appeared at trial to substantiate the self-serving

evidence Ms. Guzman provided for petitioner.

     Petitioner also presented a copy of an alleged lease

agreement between petitioner and Julio Guzman as well as rent


     2
        Ms. Guzman explained that her parents could come into her
area of the house at will, but that she and petitioner did not
have free access to the front of the house at all times. The
testimony indicates that the parents could lock the access to
their portion of the house but that petitioner and Ms. Guzman did
not have a lock for privacy.
                               - 6 -

receipts allegedly signed by Julio Guzman for the monthly rent

payments.   Once again, the alleged evidence produced by

petitioner is self-serving, uncorroborated, and unauthenticated.

All the rent receipts appear to have been prepared and signed at

the same time.   Neither Julio Guzman nor his wife appeared at

trial to verify that they received monthly rent payments from

petitioner.   The supposed receipts on their face are not

credible.   Petitioner has failed to present persuasive evidence

about Julio Guzman’s earnings or wealth.    Petitioner selected the

place of trial, and there is no apparent reason why he did not

arrange for Julio Guzman to appear and testify about the alleged

receipts, the layout of his home, and other matters concerning

the head of household issue.   The failure of a party to offer

available testimony gives rise to the inference that it would

have been unfavorable to his contentions.    Bresler v.

Commissioner, 65 T.C. 182, 188 (1975); Pollack v. Commissioner,

47 T.C. 92, 108 (1966), affd. 392 F.2d 409 (5th Cir. 1968);

Wichita Terminal Elevator Co. v. Commissioner, 6 T.C. 1158, 1165

(1946), affd. 162 F.2d 513 (10th Cir. 1947).    Under the

circumstances of this case, we hold that petitioner is not

entitled to head of household filing status.

     The second issue for decision is whether petitioner is

entitled to the claimed earned income credit.    Section 32(a)(1)

provides that an “eligible individual,” subject to certain
                                 - 7 -

limitations, may claim an earned income credit.    Section

32(c)(1)(A)(i) defines an “eligible individual” as including an

individual who has a “qualifying child” for the taxable year.     A

“qualifying child” includes a taxpayer’s children or

grandchildren, among others, who share the taxpayer’s principal

place of abode for more than one-half of the taxable year and who

meet certain age requirements.    Sec. 32(c)(3)(A) and (B)(i)(I).

If more than one individual otherwise would be treated as

eligible individuals with respect to the same qualifying child

for the same taxable year, only the individual with the highest

modified AGI for that taxable year shall be allowed the earned

income tax credit.    Sec. 32(c)(1)(C).

     We held above that petitioner cannot claim head of household

status because petitioner did not establish that he maintained a

separate household.    Instead, the record reflects that petitioner

shared the household with Ms. Guzman’s extended family;

therefore, either of Ms. Guzman’s parents or other members of the

household might be treated as eligible individuals for purposes

of the earned income credit.    See sec. 32(c)(1)(C).   The inquiry

then becomes whether petitioner had a higher AGI than Ms.

Guzman’s parents or other eligible individuals living in the

household.   Petitioner has failed to introduce any evidence to

demonstrate that he had a higher AGI than either of Ms. Guzman’s

parents.   Ms. Guzman testified not only that she did not know
                                - 8 -

what her father’s income was for 2001, but also that she even was

uncertain of what her father did for a living.   There is no

testimony relating to the AGI of Ms. Guzman’s parents, who owned

the house in which petitioner lived, or of anyone else in the

family living in the household.   Under the circumstances of this

case, we find that petitioner has not substantiated his

contention, and we therefore hold that he is not entitled to the

claimed earned income credit.   Again we note that we have no

reason to doubt that petitioner could have arranged for Ms.

Guzman’s parents to testify or otherwise present evidence as to

their AGI.   Petitioner failed to do so, and we must conclude that

this evidence would have been unfavorable to him.   See Bresler v.

Commissioner, supra; Pollack v. Commissioner, supra; Wichita

Terminal Elevator Co. v. Commissioner, supra.

     This matter was heard in Fresno, California.   This Court

considered whether this matter might properly be continued to a

date and time in Los Angeles, where petitioner and petitioner’s

family resided and this Court hears cases regularly.   We were

concerned that any potential witnesses, if present, would be

better able to substantiate petitioner’s contentions than only

petitioner and Ms. Guzman.   Petitioner, nevertheless, chose to

proceed in the absence of any witnesses other than Ms. Guzman.

Accordingly, petitioner’s contentions were unsupported, and his

evidence was unsubstantiated and unauthenticated.   He simply did
                                 - 9 -

not present credible evidence to support his position.

Respondent must be sustained on both issues presented for

decision.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect the foregoing,

                                               Decision will be entered

                                         under Rule 155.
