                  T.C. Summary Opinion 2005-167



                     UNITED STATES TAX COURT



                   ELROY SMITH, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 16623-04S.            Filed November 14, 2005.


     Elroy Smith, pro se.

     James R. Rich, for respondent.



     GOLDBERG, 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.   The decision to be

entered is not reviewable by any other court, and this opinion

should not be cited as authority.   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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     Respondent determined a deficiency in petitioner’s Federal

income tax of $3,290 for the taxable year 2003.

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

entitled to claim a dependency exemption deduction for DS;1 (2)

whether petitioner is entitled to head-of-household filing

status; (3) whether petitioner is entitled to an earned income

credit; and (4) whether petitioner is entitled to a child tax

credit for taxable year 2003.

                            Background

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

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.     Petitioner resided in

Jackson, South Carolina, on the date the petition was filed in

this case.

     During taxable year 2003, petitioner resided in a dwelling

next to that of his sister, Yvonne Smith (Yvonne), who was

single.   Yvonne has a son DS, who turned 17 years old during

taxable year 2003, and who lived with Yvonne.

     Also, during taxable year 2003, petitioner was employed as a

long-distance truck driver by J.B. Hunt Transport, Inc.

Additionally, petitioner was self-employed by his own truck

company, E. Smith Trucking Company.     J.B. Hunt Transport, Inc.

issued to petitioner a Form W-2, Wage and Tax Statement, which


     1
      The Court uses only the minor child’s initials.
                                - 3 -

reflected wages earned in the amount of $4,400.63.    Petitioner

reported business income in the amount of $9,094 from E. Smith

Trucking Company, on his 2003 Form 1040, U.S. Individual Income

Tax Return.   Petitioner’s normal job schedule during taxable year

2003 was to be on the road 3 consecutive weeks, then return to

his residence for 3 days, and then go back on the road.

     On or about March 27, 2004, petitioner timely filed his Form

1040 for taxable year 2003.    Petitioner filed his 2003 Federal

income tax return as a head-of-household and claimed a dependency

exemption deduction for DS.    Petitioner also claimed an earned

income credit with DS as the qualifying child and a child tax

credit with DS as the qualifying child.

     On October 12, 2004, respondent issued a notice of

deficiency denying petitioner (1) the claimed dependency

exemption deduction, (2) head-of-household filing status, (3) the

claimed earned income credit, and (4) the claimed child tax

credit for taxable year 2003.

                              Discussion

     In general, the Commissioner’s determination set forth in a

notice of deficiency is presumed correct.    Welch v. Helvering,

290 U.S. 111, 115 (1933).   In pertinent part, Rule 142(a)(1)

provides the general rule that “The burden of proof shall be upon

the petitioner”.   In certain circumstances, however, if the

taxpayer introduces credible evidence with respect to any factual
                                - 4 -

issue relevant to ascertaining the proper tax liability, section

7491 places the burden of proof on the Commissioner.     Sec.

7491(a)(1); Rule 142(a)(2).    Credible evidence is “‘the quality

of evidence which, after critical analysis, * * * [a] court would

find sufficient * * * to base a decision on the issue if no

contrary evidence were submitted’”.2    Baker v. Commissioner, 122

T.C. 143, 168 (2004) (quoting Higbee v. Commissioner, 116 T.C.

438, 442 (2001)).    Section 7491(a)(1) applies only if the

taxpayer complies with substantiation requirements, maintains all

required records, and cooperates with the Commissioner for

witnesses, information, documents, meetings, and interviews.

Sec. 7491(a)(2).    Although neither party alleges the

applicability of section 7491(a), we conclude that the burden of

proof has not shifted to respondent with respect to any of the

issues in the case at bar.

     Moreover, deductions are a matter of legislative grace and

are allowed only as specifically provided by statute.     INDOPCO,

Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice

Co. v. Helvering, 292 U.S. 435, 440 (1934).




     2
      We interpret the quoted language as requiring the
taxpayer’s evidence pertaining to any factual issue to be
evidence the Court would find sufficient upon which to base a
decision on the issue in favor of the taxpayer. See Bernardo v.
Commissioner, T.C. Memo. 2004-199.
                                - 5 -

1.   Deduction for Dependency Exemption

      As previously stated, petitioner claimed a dependency

exemption deduction for DS on his 2003 Federal income tax return.

Respondent disallowed the deduction in the notice of deficiency.

      Section 151 allows deductions for exemptions for dependents

of the taxpayer.   See sec. 151(c).     Section 152(a) defines the

term “dependent”, in pertinent part, to include a son or daughter

of a brother or sister of the taxpayer over half of whose

support, for the calendar year was received from the taxpayer.

“Support” includes “food, shelter, clothing, medical and dental

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

Tax Regs.

      In determining whether an individual received more than one-

half of his or her support from the taxpayer, there shall be

taken into account the amount of support received from the

taxpayer as compared to the entire amount of support which the

individual received from all sources.      Id.   In other words, the

support test requires the taxpayer to establish the total support

costs for the claimed individual and that the taxpayer provided

at least half of that amount.     Archer v. Commissioner, 73 T.C.

963, 967 (1980); see Cotton v. Commissioner, T.C. Memo. 2000-333;

Gulvin v. Commissioner, T.C. Memo. 1980-111, affd. 644 F.2d 2

(5th Cir. 1981); Toponce v. Commissioner, T.C. Memo. 1968-101.         A

taxpayer who cannot establish the total amount of support costs
                               - 6 -

for the claimed individual generally may not claim that

individual as a dependent.   Blanco v. Commissioner, 56 T.C. 512,

514-515 (1971); Cotton v. Commissioner, supra.

      Petitioner testified that DS resided with his mother,

Yvonne, during taxable year 2003.   However, petitioner claims

that DS resided at petitioner’s house when petitioner was home

and that he provided DS with food and shelter.    As previously

stated, petitioner’s house was located on a plot of land adjacent

to Yvonne’s residence.   Petitioner, a long-distance truck driver,

was on the road 3 consecutive weeks at a time, then returned to

his residence for 3 days, and then went back on the road.

Petitioner testified that when he was at his residence he spent

50 percent of his time with his nephew, DS.    Giving petitioner

the benefit of the doubt and taking petitioner upon his word, we

conclude that DS could have only resided with petitioner for

about 50 days during taxable year 2003.

      Petitioner further testified that he supported his nephew,

DS.   Petitioner stated that he would send checks to his mother,

Lydia Smith.   She then would cash the checks and give the money

to Yvonne to pay for DS’s expenses.    Petitioner claims that he

paid for DS’s car, automobile insurance, shoes, clothing, and

other necessities during taxable year 2003.

      Petitioner has offered into evidence copies of checks which

he claims were support payments for DS.    However, the checks are
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not all made out to Lydia Smith, as would be expected by the

support arrangement described by petitioner.    Additionally, the

checks are all dated during the taxable years 2004 and 2005.

      We are convinced that, during 2003, petitioner paid various

expenses for DS and was a caring uncle to DS.   However,

petitioner has failed to provide the Court with any significant

corroborative evidence showing that he provided over half of DS’s

support during the 2003 taxable year.

      Upon the basis of the record before us, we cannot find that

petitioner has established the total support costs for DS during

taxable year 2003, nor has he established that he provided at

least half of that amount.   Respondent’s determination on this

issue is sustained.

2.   Head of Household

      As previously stated, petitioner claimed head-of-household

filing status on his 2003 Federal income tax return, and

respondent changed the filing status to single in the notice of

deficiency.

      Section 1(b) imposes a special income tax rate on an

individual filing as head of household.   Section 2(b) provides

the requirements for head-of-household filing status.   As

relevant here, to qualify as a head of a household a taxpayer

must (a) be unmarried at the end of the taxable year, (b) not be

a surviving spouse, and (c) maintain as the taxpayer’s home a
                                - 8 -

household that constitutes the principal place of abode of a

dependent for whom the taxpayer is entitled to claim a deduction

under section 151.    Sec. 2(b)(1)(A)(ii).

      We have already held that petitioner is not entitled to the

dependency exemption deduction pursuant to section 151 with

respect to DS.    It follows, therefore, that petitioner is not

entitled to claim head-of-household filing status.      We sustain

respondent’s determination with respect to this issue.

3.   Earned Income Credit

      As previously stated, petitioner claimed an earned income

credit for taxable year 2003 with DS as the qualifying child.        In

the notice of deficiency, respondent disallowed the earned income

credit.

      Subject to certain limitations, an eligible individual is

allowed a credit which is calculated as a percentage of the

individual’s earned income.    Sec. 32(a)(1).    Earned income

includes wages.    Sec. 32(c)(2)(A).    Section 32(c)(1)(A)(i), in

pertinent part, defines an “eligible individual” as “any

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

“qualifying child” is one who satisfies a relationship test, a

residency test, and an age test.    Sec. 32(c)(3).    The pertinent

parts of section 32(c)(3) provide:
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      (3) Qualifying Child.--

           (A) In general.--The term “qualifying child” means,
      with respect to any taxpayer for any taxable year, an
      individual--

                (i) who bears a relationship to the taxpayer
           described in subparagraph (B),

                (ii) who has the same principal place of abode as
           the taxpayer for more than one-half of such taxable
           year, and

                (iii) who meets the age requirements of
           subparagraph (C).

      As relevant herein, a descendant of a brother or sister, who

the taxpayer cares for as the taxpayer’s own child, satisfies the

relationship test.      We are willing to assume DS satisfies the

relationship test.

      However, as previously stated, petitioner has not

established that his residence was the principal place of abode

for DS for more than one-half of the taxable year 2003.      We find

that DS fails the residency test of section 32(c)(3)(ii).

Accordingly, respondent’s determination on this issue is

sustained.

4.   Child Tax Credit

      As previously stated, petitioner claimed a child tax credit

for taxable year 2003 with DS as the qualifying child.      In the

notice of deficiency, respondent disallowed the child tax credit.

      Section 24(a) authorizes a child tax credit with respect to

each “qualifying child” of the taxpayer.      The term “qualifying
                               - 10 -

child” is defined in section 24(c).     As relevant here, a

“qualifying child” means an individual with respect to whom the

taxpayer is allowed a deduction under section 151.     Sec.

24(c)(1)(A).

     We have already held that petitioner is not entitled to the

dependency exemption deduction under section 151 for DS.

Accordingly, DS is not considered a “qualifying child” within the

meaning of section 24(c).   It follows, therefore, that petitioner

is not entitled to a child tax credit under section 24(a) with

respect to DS.

     In view of the foregoing, we sustain respondent’s

determination on this issue.

     Furthermore, we have considered all of the other arguments

made by petitioner, and, to the extent that we have not

specifically addressed them, we conclude they are without merit.

     Reviewed and adopted as the report of the Small Tax Case

Division.


                                      Decision will be entered

                               for respondent.
