                               T.C. Memo. 2018-112



                         UNITED STATES TAX COURT



     MIGUEL A. JUSINO AND ELIZABETH H. EZCURRA, Petitioners v.
        COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 20101-17.                           Filed July 19, 2018.



      Miguel A. Jusino and Elizabeth H. Ezcurra, pro se.

      John R. Gordon, for respondent.



            MEMORANDUM FINDINGS OF FACT AND OPINION


      COHEN, Judge: Respondent determined an $8,250 deficiency and a $1,650

accuracy-related penalty under section 6662(a) with respect to petitioners’ Federal

income tax liability for 2015. Respondent has conceded that petitioners are not

liable for the penalty. The issue for decision is whether petitioners are entitled to

claim two children (children) as dependents, the child tax credits, and an earned
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[*2] income credit for 2015. All section references are to the Internal Revenue

Code in effect for 2015, and Rule references are to the Tax Court Rules of Practice

and Procedure.

                                FINDINGS OF FACT

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

incorporated in our findings by this reference. Petitioners resided in Arizona at

the time they filed their petition. They were the biological parents of both

children, who were nine years old and four years old, respectively, at the end of

2015.

        The parental rights of petitioners with respect to the children were

terminated by an order filed January 15, 2015, in the Superior Court of the State of

Arizona in and for the County of Maricopa (superior court). That decision was

affirmed on appeal. On September 23, 2015, by order of the superior court, the

children were adopted by their maternal aunt, with whom they had resided since

2014. The children resided with their aunt during all of 2015, although they

visited with petitioners some weekends and during the summer. Although

petitioners bought gifts for the children and took them to restaurants during the

visits, their aunt provided primary financial support for them.
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[*3] On their 2015 Form 1040A, U.S. Individual Income Tax Return, petitioners

claimed the children as dependents and claimed a $5,360 earned income credit, a

$103 child tax credit, and a $1,897 additional child tax credit related to the

children. In claiming the earned income credit, they falsely reported that the

children lived with them 12 months during 2015. They reported $24,532 in wages

earned by petitioner Miguel A. Jusino during 2015.

                                      OPINION

      The Internal Revenue Code allows as a deduction an exemption for each

dependent of a taxpayer in computing taxable income. Sec. 151(c). Section

152(a) defines a dependent as a qualifying child or a qualifying relative of the

taxpayer. In addition to other requirements, a qualifying child must have the same

principal place of abode as the taxpayer for more than one-half of the tax year.

Sec. 152(c).

      The taxpayer has the burden of proving entitlement to the deduction

claimed. See Rule 142(a); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440

(1934); Rockwell v. Commissioner, 512 F.2d 882, 886 (9th Cir. 1975), aff’g T.C.

Memo. 1972-133.

      The facts of this case are somewhat unusual because the biological parents

have lost their parental rights and the children have been adopted by another. We
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[*4] need not determine, however, whether they could be qualifying children or

qualifying relatives under section 152(a) by parsing the complicated definitions in

section 152. Petitioners conceded in their pretrial memorandum that the children

“were placed with * * * [their aunt] in 2014 and have lived with her since.” They

did not dispute the aunt’s testimony that the children visited them only when not

in school. The arrangements to have the children visit petitioners appear

commendable, but the aunt’s candid testimony was credible. Because the children

did not share a principal place of abode with petitioners, petitioners are not

entitled to claim the children as dependents for 2015.

      Subject to limitations, section 24(a) allows a child tax credit with respect to

a qualifying child of the taxpayer as described in section 152(c). A portion of this

credit, the additional child tax credit, can be refundable if certain conditions are

met. Sec. 24(d). Because the children did not qualify as dependents under section

152, petitioners are not entitled to the child tax credit or the related additional

child tax credit for 2015.

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

against the individual’s income tax liability. Section 32(b) prescribes different

percentages and amounts used to calculate the credit. The limitation amount is

based on the taxpayer’s earned income, the taxpayer’s adjusted gross income, and
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[*5] whether the taxpayer has any qualifying children. Sec. 32(b), (f). To be

eligible to claim a higher earned income credit with respect to a child, the taxpayer

must establish that the child meets the definition of a qualifying child under

section 152(c) as modified by section 32(c)(3)(A). Because the children were not

qualifying under these parameters, petitioners would be eligible for the earned

income credit only on the basis of their earned income. See sec. 32(a),

(c)(1)(A)(ii). Because the reported wages on their joint return, $24,532, exceeded

the limitation for 2015, $20,330, they were not entitled to the earned income

credit. Sec. 32(b)(2), (j)(1); Rev. Proc. 2014-61, sec. 3.06, 2014-47 I.R.B. 860,

863.

       We have considered the other arguments of the parties, and they are not

necessary to address or are without merit. To reflect the foregoing,


                                                    Decision will be entered for

                                          respondent.
