                        T.C. Memo. 2005-58



                      UNITED STATES TAX COURT



               BRANDT N. CASTLETON, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 6109-03.             Filed March 28, 2005.


     Brandt N. Castleton, pro se.

     Catherine L. Campbell, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     MARVEL, Judge:   Respondent determined deficiencies with

respect to petitioner’s Federal income taxes of $7,206, $7,040,

and $1,095 for 1998, 1999, and 2000, respectively.1




     1
      All section references are to the Internal Revenue Code in
effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
                                - 2 -

     After concessions,2 the issues for decision are:

     (1)   Whether petitioner should be relieved of deemed

admissions resulting from his failure to respond to respondent’s

requests for admission;

     (2)   whether petitioner is entitled under section 170 to

deduct certain charitable contributions for 1998, 1999, and 2000;

     (3)   whether petitioner received unreported income from

Registe Religious Society (hereinafter RRS) during 1999;

     (4)   whether petitioner is entitled to claim the child tax

credit for 1998 and 1999; and




     2
      Petitioner did not contest the following adjustments in his
petition: (1) Disallowance of State and local tax deductions of
$119 and $413 for 1998 and 2000, respectively; and (2)
disallowance of interest deduction of $70 for 1998. Petitioner
did not present evidence to dispute these adjustments at trial or
arguments on these adjustments in his brief. These adjustments
are deemed conceded in accordance with Rule 34(b)(4). On May 12,
2004, the parties filed a stipulation of settled issues in which
respondent conceded that petitioner is entitled to dependency
exemptions for his daughters Shenara, Keturah, and Adara
Castleton for taxable years 1998 and 1999.

     Respondent determined that petitioner was entitled to a
child tax credit of $1,500 for 2000. In the notice of deficiency
respondent adjusted petitioner’s child tax credit by $64 but
identified the year of the adjustment as 2000 on Form 4549A,
Income Tax Examination Changes, and as 1999 on Form 886-A,
Explanation of Items. For purposes of this opinion we assume
that this adjustment is computational and will be dealt with in
the Rule 155 computation.
                                - 3 -

     (5)    whether petitioner may use head of household filing

status for 1998 and 1999.3

                          FINDINGS OF FACT

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

The stipulation of facts is incorporated herein by this

reference.    Petitioner resided in Puyallup, Washington, when his

petition in this case was filed.

Petitioner’s 1998, 1999, and 2000 Tax Returns

     Petitioner filed Form 1040, U.S. Individual Income Tax

Return, for 1998, 1999, and 2000.      Using head of household filing

status, petitioner reported the following:

                      Adjusted gross
     Year                 income                 Tax liability

     1998                 $46,829                     $664
                          1
     1999                   47,929                   1,628
     2000                  34,536                     -0-
     1
      Petitioner’s 1999 reported adjusted gross income consisted
of wages of $34,910, pension and annuity income of $1,539, and
unemployment compensation of $11,480.

Petitioner also claimed dependency exemptions for three of his

children, Shenara, Keturah, and Adara Castleton, on each return


     3
      Petitioner did not contest issues 3, 4, and 5 in his
petition. However, petitioner testified at trial that he did not
receive any unreported income, that he was entitled to child tax
credits of $1,200 and $1,500 for 1998 and 1999, and that he was
entitled to head of household filing status. Petitioner also
argued on brief that he did not receive any unreported income.
Respondent addressed these issues in his pretrial memorandum and
did not object to their review by the Court. We shall treat
these issues as tried by consent. See Rule 41(b); Shea v.
Commissioner, 112 T.C. 183, 190-191 & n.11 (1999).
                                 - 4 -

and child tax credits of $1,200, $1,500, and $1,436 for 1998,

1999, and 2000, respectively.

       On his 1998, 1999, and 2000 returns, petitioner also claimed

charitable contribution deductions as follows:

             Total       Contributions   Contributions   Carryover
           charitable      by cash or    other than by   from prior
Year       deductions        check       cash or check      year
           1
1998        $27,517         $24,317          $3,200           -0-
1999         15,320          15,320            -0-            -0-
2000         13,370           4,396            -0-          $8,974
       1
      The total amount of charitable deductions claimed was
limited to $23,415 by sec. 170(b)(1)(A).

Petitioner’s 1998 return included Form 8283, Noncash Charitable

Contributions, on which petitioner reported that his 1998 noncash

contributions consisted of “COMPUTER, SOFTWARE, PRINTER, DESK,

FILE AND CHAIRS” and that the items had been donated to the La

Whitmire School Fund.

Dependency Exemptions and Child Tax Credit

       Petitioner and Ellen May Castleton (Ellen), petitioner’s

former wife, have five children:      Shenara, born in 1987; Keturah,

born in 1990; Adara, born in 1992; Arthur, born in 1994; and

Aaron, born in 1997.    In 1997, petitioner and Ellen divorced, and

Ellen became the custodial parent of Shenara, Keturah, and Adara.

       On December 23, 1997, the Superior Court of Washington, King

County, issued an order of child support (Order) with respect to

petitioner’s children.    The Order obligated petitioner to pay

$992.34 per month in child support as well as other expenses of
                                - 5 -

the children.    Section 3.17 of the Order, provided that “Tax

exemptions for the children shall be allocated as follows:

BRANDT NOBLE CASTLETON is awarded tax exemptions unless the

mother becomes employed full time, then exemptions shall be

split.”   Petitioner and Ellen ultimately agreed that petitioner

would claim dependency exemptions on his tax returns for Shenara,

Keturah, and Adara, while Ellen would claim the exemptions for

Arthur and Aaron.

     On his 1998 and 1999 returns, petitioner claimed dependency

exemptions for Shenara, Keturah, and Adara and child tax credits.

In a supplemental stipulation, the parties agreed that petitioner

is entitled to the dependency exemptions claimed on his 1998 and

1999 returns but did not address the child tax credits.

Charitable Contributions

     Petitioner is a Microsoft-certified professional.      After his

divorce, petitioner decided to divest himself of the “garage

full” of equipment he had acquired through his studies of

computers, software, office equipment, and office equipment

repair.   Petitioner discussed this decision with his return

preparer, Willie Hughes.    Mr. Hughes, who was affiliated with

RRS, recommended that petitioner donate his equipment to the

organization.4   At some point during the years at issue,


     4
      While the parties dispute the true nature of RRS, they have
stipulated that RRS did not apply for or receive an exemption
                                                   (continued...)
                                 - 6 -

petitioner contributed equipment to RRS and provided the

organization with related services, such as repairing and setting

up the equipment.5

The Examination of Petitioner’s Tax Returns and the Present
Litigation

     In approximately 2001, the Internal Revenue Service began an

examination of petitioner’s 1998, 1999, and 2000 tax returns.

Petitioner’s case was assigned to Revenue Agent John Leahy.

Petitioner and Agent Leahy first met on September 19, 2001.   The

only documentation petitioner provided Agent Leahy at the

September 19 meeting was a receipt,6 purportedly from RRS, dated


     4
      (...continued)
from taxation as an organization described in sec. 501(c)(3) for
1998, 1999, or 2000 and that RRS has not filed any tax forms with
respondent for the periods ending Dec. 31, 1998, through Dec. 31,
2000.
     5
      Petitioner testified at trial that he donated equipment to
RRS in 1998 and 1999, that he provided services to RRS in 1999,
that his total donations for 2000 were made to the Church of
Jesus Christ of Latter Day Saints, and that he donated nothing to
RRS in that year. Respondent’s requests for admission include
statements that petitioner provided services to RRS in 1998,
1999, and 2000. In petitioner’s correspondence with respondent
during the examination of his returns, petitioner refers to
contributions he claims to have made to RRS, but he does not
mention any contributions to any other entity.
     6
      The receipt also states:

     [PETITIONER’S] * * * CONTRIBUTIONS WERE USE [sic] TO
     BUILD HOMES IN OUR BLS PROGRAM, TO PROVIDE AFFORDABLE
     HOUSING FOR THE POOR, AND FEED THE POOR ALL OVER THE
     WORLD WITH OUR INTERNATIONAL FEEDING PROGRAM.

     *       *       *       *           *   *       *
                                                   (continued...)
                               - 7 -

January 20, 2000, for $15,320 with respect to petitioner’s 1999

contributions and two pages of the Order.   Petitioner provided no

documentation to Mr. Leahy with respect to his 1998 and 2000

contributions.

     At the end of the meeting, Agent Leahy provided petitioner

with a Form 4564, Information Document Request.   The form

described the requested materials as follows:

     Contribution Documentation for 1999:
          If paid in cash - copies of checks
          If other than cash - Receipts listing fair market
     value of items and item descriptions. Also to whom
     given (name, address) and date.

Agent Leahy received none of the requested documentation from

petitioner.   Instead, he received a letter from petitioner, dated

October 22, 2001, in which petitioner stated that the RRS receipt

was “All that I have * * * in my records” and that he was

otherwise opposed to providing his “PRIVATE banking information”

to respondent to substantiate any of his contributions.




     6
      (...continued)
     Registe Religious Society was established under the
     Laws of Washington State (RCW 24.12) and all
     contributions are Tax Deductible under IRS reg.
     501c3(8) as a church or religious society. All
     contribution information and funds distribution are
     administer [sic] by R & R.
                              - 8 -

Petitioner also stated in the letter that

     most of the donations consisted of sound and video
     electronics, computers, and networking equipment.
     Another large portion of the donation was labor that
     was billed out by [RRS] for my services for repairing
     and setting up the computers I donated, and others that
     the Society got elsewhere. The donations were recorded
     as cash because that is what they were paid for my
     equipment and services. 90 percent of the actual money
     I gave the Society was by receipt for computer parts I
     purchased * * *.

In a letter dated April 25, 2002, petitioner represented that

“All payments for my services were paid to me, and I gave them

back to [RRS] as contributions.”

     On or about January 29, 2003, respondent mailed a notice of

deficiency to petitioner in which he disallowed petitioner’s

charitable contributions, determined that petitioner had

unreported income attributable to services he had rendered to RRS

during 1999, disallowed the dependency exemptions and child tax

credits for petitioner’s three daughters for 1998 and 1999, and

determined that petitioner owed additional income tax for each of

the years at issue.

     On April 22, 2003, we received and filed petitioner’s

petition contesting respondent’s adjustments.   On June 16, 2003,

we received and filed respondent’s answer to the petition.     On

September 24, 2003, we served notice on the parties that the case

was calendared for trial at the Court’s Seattle, Washington,

trial session beginning February 23, 2004.   Attached to the

notice was our Standing Pretrial Order, which required the
                                - 9 -

parties, among other things, to exchange documents and other data

that the parties intended to use at trial, to stipulate facts to

the maximum extent possible, and to prepare a pretrial memorandum

and submit it to the Court and the opposing party not less than

14 days before the first day of the trial session.   Petitioner

failed to comply with the Standing Pretrial Order.

     On December 5, 2003, respondent served requests for

admission on petitioner by certified mail.   See Rule 90.   The

return receipt indicated a new address for petitioner.

Petitioner had failed to notify respondent and the Court of the

new address.   After learning of the new address, respondent

promptly sent a copy of the requests for admission to that

address by certified mail.   Petitioner’s current wife, Julie Rae

Castleton, signed both the first and second certified mail

receipts, and petitioner admits that he received the requests for

admission.

     Petitioner never responded to the requests for admission,

and, consequently, the matters contained therein were deemed

admitted.    Rule 90(c); see Freedson v. Commissioner, 65 T.C. 333,

334 (1975), affd. 565 F.2d 954 (5th Cir. 1978).   Respondent

relied on the deemed admissions in preparing this case for trial.

At trial, petitioner made an oral motion to be relieved of the

deemed admissions.   We reserved ruling on petitioner’s motion.
                                - 10 -

                                OPINION

A.   Petitioner’s Motion for Relief From Deemed Admissions

     Generally, a fact that is deemed admitted is conclusively

established.   Rule 90(f); see also Sarchapone v. Commissioner,

T.C. Memo. 1983-446.    Rule 90(f) provides, however, that the

Court, on motion, may permit an admission to be withdrawn or

modified if (1) the withdrawal or modification would subserve the

presentation of the merits of the case, and (2) if the party

obtaining the admission (the respondent in this case) fails to

satisfy the Court that the withdrawal or modification will

prejudice him in prosecuting his case or defense on the merits.

As we are satisfied that the withdrawal of the deemed admissions

would not subserve the merits of the case and would prejudice

respondent, we shall deny petitioner's motion for relief from the

deemed admissions.7

     A party will be prejudiced by the withdrawal of admissions

if he has relied on them and if he will suffer delay and added

expense and will be required to expend additional effort because

of the withdrawal.     Morrison v. Commissioner, 81 T.C. 644, 649

(1983).   Respondent relied in good faith on the binding effect of



     7
      Several of the deemed admissions were incorporated into the
stipulation of facts. Moreover, certain of the deemed admissions
relating to the dependency exemption issue were effectively
withdrawn by the parties’ agreement to settle the dependency
exemption issue. The deemed admissions covered by petitioner’s
motion are those relating to the charitable contribution
deduction and unreported income issues.
                               - 11 -

the deemed admissions to prepare for trial.     Petitioner did not

move before trial for relief from the deemed admissions and

apparently did not notify respondent of his intention to seek

relief from the deemed admissions.      Most importantly, petitioner

did not supply respondent with any documents or information in

advance of trial that would have put respondent on notice that

any of the deemed admissions were in error.     When petitioner

finally made his oral motion at trial, he offered the Court no

compelling reason why he had failed to respond to the requests

for admission.

     Because we find that respondent reasonably relied on the

deemed admissions and that withdrawal of the deemed admissions

would not foster presentation of the merits and would unfairly

prejudice respondent, we shall deny petitioner's motion for

relief from the deemed admissions.      See Dahlstrom v.

Commissioner, 85 T.C. 812, 819 (1985); Morrison v. Commissioner,

supra at 649.

B.   Income Tax Deficiencies

     In general, the Commissioner’s determination of a deficiency

is presumed correct, and the taxpayer bears the burden of proving
                                 - 12 -

otherwise.8   In this case, petitioner bears the burden of proving

that respondent’s determination is in error.    Rule 142(a); Welch

v. Helvering, 290 U.S. 111, 115 (1933).

     1.   Charitable Contributions

     Subject to certain limitations,9 section 170(a) authorizes a

deduction for charitable contributions made to or for the use of

organizations described in section 170(c) within a taxable year.

However, a charitable contribution deduction is allowed only if

it is verified under regulations prescribed by the Secretary.

See sec. 170(a)(1).

     If a taxpayer makes a charitable contribution of property

other than money (a noncash contribution), the taxpayer generally

must retain a receipt for each contribution from the donee.    Sec.

1.170A-13(b)(1), Income Tax Regs.     The receipt must contain the

name of the donee, the date and location of the contribution, and

a description of the property in detail reasonably sufficient

under the circumstances.   Id.    If the taxpayer claims a deduction


     8
      Petitioner does not contend that sec. 7491 applies to this
case, and he has not produced evidence to show he meets the
requirements of sec. 7491(a).
     9
      Sec. 170(b)(1)(A) provides, in pertinent part, that in the
case of an individual, any charitable contribution to a church,
educational organization, or other enumerated organization,
meeting certain requirements “shall be allowed to the extent that
the aggregate of such contributions does not exceed 50 percent of
the taxpayer’s contribution base for the taxable year.” Sec.
170(b)(1)(F) defines contribution base to mean “adjusted gross
income (computed without regard to any net operating loss
carryback to the taxable year under section 172).”
                              - 13 -

in excess of $500 for a noncash contribution, the taxpayer must

maintain written records that also indicate how the property was

acquired, and the cost or adjusted basis of the property.   Sec.

1.170A-13(b)(3), Income Tax Regs.   The taxpayer must establish

the reliability of the written records.   Sec. 1.170A-13(a)(2)(i),

(b)(2)(i), Income Tax Regs.

     If the taxpayer claims a deduction in excess of $5,000 for

noncash contributions (other than certain publicly traded

securities), he must:   (1) Obtain a qualified appraisal for such

property;10 (2) attach a fully completed appraisal summary to the

tax return on which the deduction is first claimed; and (3)

maintain records containing the information required in section

1.170A-13(b)(2)(ii), Income Tax Regs.   Sec. 1.170A-13(c)(2),

Income Tax Regs.

     If the taxpayer makes a charitable contribution of money,

the taxpayer must maintain for each contribution either a


     10
      A qualified appraisal must be made within the proper time
in relation to the date of the contribution, must include the
information required by sec. 1.170A-13(c)(3)(ii), Income Tax
Regs., must not involve a prohibited appraisal fee, and must be
prepared, signed, and dated by a qualified appraiser. Sec.
1.170A-13(c)(3), Income Tax Regs. In general, a qualified
appraiser is an individual who either holds himself out to the
public as an appraiser or performs appraisals on a regular basis,
is qualified to make appraisals of the type of property being
valued, and is not a disqualified individual. Sec. 1.170A-
13(c)(5), Income Tax Regs. Disqualified individuals include the
donor or taxpayer claiming the deduction for the contributed
property, the donee of the property, and any person employed by
any of the foregoing persons. Sec. 1.170A-13(c)(5)(iv), Income
Tax Regs.
                                - 14 -

canceled check, a receipt, a letter, or other communication from

the donee charitable organization, or other reliable written

records showing the name of the donee, the date of the

contribution, and the amount of the contribution.      Sec. 1.170A-

13(a)(1), Income Tax Regs.    The taxpayer must establish the

reliability of the written records.      Sec. 1.170A-13(a)(2)(i),

Income Tax Regs.

     A taxpayer may not deduct any charitable contribution of

$250 or more unless the taxpayer substantiates the contribution

with a contemporaneous written acknowledgment from the charitable

organization.11    Sec. 170(f)(8)(A).    The written acknowledgment

must include:     (1) The amount of cash paid and a description (but

not value) of any property other than cash contributed; (2)

whether the organization provided any goods or services in

consideration for the cash or property; and (3) the estimated

value of any goods or services provided by the organization, or

if such goods and services consist solely of intangible religious

benefits, a statement to that effect.      Sec. 170(f)(8)(B).

     In order to satisfy his burden of proving that respondent’s

disallowance of his charitable contributions for the years at

issue was incorrect petitioner was required to substantiate his


     11
      An acknowledgment is contemporaneous if the taxpayer
obtains the acknowledgment on or before the earlier of the date
on which the taxpayer files a return for the taxable year in
which the contribution was made, or the due date (including
extensions) for filing such return. Sec. 170(f)(8)(C).
                               - 15 -

charitable contributions in accordance with section 170 and the

above-cited regulations.    See sec. 6001; Gomez v. Commissioner,

T.C. Memo. 1999-94; Brown v. Commissioner, T.C. Memo. 1996-43.

Petitioner did not do so.

     For taxable years 1998 and 2000, petitioner provided

conflicting testimony and documents regarding the identity of the

donee organizations and whether his contributions consisted of

cash or property or both.    Although the substantiation

requirements for cash and noncash contributions differ, it is not

necessary for us to parse the different requirements because

petitioner provided no written substantiation of any kind

regarding his 1998 and 2000 contributions.    Consequently, we

sustain respondent’s determination with regard to petitioner’s

claimed 1998 and 2000 charitable contribution deductions.

     For taxable year 1999, petitioner again offered conflicting

testimony and documents regarding the nature of his charitable

contributions.   Petitioner’s only documentation of his 1999

contributions is a receipt, allegedly from RRS, that indicates

petitioner made a $15,320 contribution to the organization during

1999.   The receipt is not sufficient substantiation of

petitioner’s 1999 charitable contributions for several reasons.

     First, petitioner did not prove that RRS was a qualifying

organization under section 170.    Section 170(c)(2) defines

charitable contribution, in pertinent part, to mean a

contribution or gift to or for the use of a corporation, trust,
                                 - 16 -

or community chest, fund or foundation that is organized and

operated exclusively for religious, charitable, scientific,

literary, or educational purposes.        The parties stipulated that

RRS had not applied for or received an exemption from taxation as

an organization described in section 501(c)(3) during or before

1998, 1999, and 2000.    Moreover, petitioner did not prove that

RRS was an organization of the type described in section

170(c)(2).

       Second, even if petitioner had proved that RRS was a

qualifying organization under section 170(c)(2), the RRS receipt

did not contain the necessary information to adequately

substantiate petitioner’s alleged 1999 contributions.       The

receipt purported to substantiate a contribution and did not

indicate that any noncash contribution had been made.       If

petitioner had made a noncash contribution as he testified, the

receipt should have described the location of the contributions

and the property contributed.     The receipt also should have

stated whether the donee provided goods or services as a quid pro

quo.    Sec. 170(f)(8)(B)(ii).   The receipt did not provide any of

the information necessary to substantiate the contribution that

petitioner testified he made.

       Third, because petitioner testified that he made noncash

contributions having a value in excess of $5,000, petitioner was

required to obtain a qualified appraisal.       Petitioner did not
                                - 17 -

produce the required appraisal.

     Because petitioner failed to substantiate his 1999

charitable contributions, we sustain respondent’s determination

disallowing petitioner’s 1999 charitable contribution deduction.

     2.    Unreported Income

     The Commissioner’s deficiency determination is normally

entitled to a presumption of correctness, Rapp v. Commissioner,

774 F.2d 932, 935 (9th Cir. 1985), and the burden of proving the

determination incorrect generally rests with the taxpayer, Rule

142(a).   However, when a case involves unreported income and that

case is appealable to the Court of Appeals for the Ninth Circuit,

barring a stipulation to the contrary, the Commissioner’s

determination of unreported income is entitled to the presumption

of correctness only if the determination is supported by some

evidence linking the taxpayer to an income-producing activity.

Palmer v. United States, 116 F.3d 1309, 1313 (9th Cir. 1997).

Once the Commissioner produces evidence linking the taxpayer to an

income-producing activity, the burden shifts to the taxpayer to

rebut the presumption by establishing that the Commissioner’s

determination is arbitrary or erroneous.   Rapp v. Commissioner,

supra at 935; Adamson v. Commissioner, 745 F.2d 541, 547 (9th Cir.

1984), affg. T.C. Memo. 1982-371; see also United States v. Janis,

428 U.S. 433, 441-442 (1976).

     This case is appealable, barring a stipulation to the
                               - 18 -

contrary, to the Court of Appeals for the Ninth Circuit.

Consequently, we are bound to apply the law of the circuit as

summarized above.   Golsen v. Commissioner, 54 T.C. 742 (1970),

affd. 445 F.2d 985 (10th Cir. 1971).

     The evidence on which respondent relies to satisfy his

initial burden of production regarding his determination that

petitioner had unreported compensation income from RRS is drawn

primarily from letters dated October 22, 2001, and April 25, 2002,

that petitioner sent to Agent Leahy during the examination of

petitioner’s 1998, 1999, and 2000 returns.   In those letters,

petitioner stated his donations to RRS consisted of equipment and

labor and that 90 percent of the “money” he gave RRS was his

expenditures to purchase the equipment.   Respondent asserted in

his pretrial memorandum that based on these statements by

petitioner, Agent Leahy determined:

     the 10 percent in excess of the value of the ‘donated’
     property was for services rendered. The portion of the
     income attributable to donations of services rendered to
     [RRS] * * * by petitioner in 1999 (ten percent of
     $15,320 plus the amount of contributions allegedly made
     in 1999 and carried over to 2000, i.e. $8,794) was
     determined to be $2,492.

Respondent also relies upon the following deemed admissions:

     1.   Petitioner provided personal services to RRS in 1999.

     2.   Petitioner received compensation for personal services

provided to RRS in 1999.

     3.   Petitioner did not include in gross income in 1999 the
                                 - 19 -

compensation for services received from RRS in 1999.

Although the evidence summarized above is sufficient to satisfy

respondent’s initial burden of production, we are not convinced

that respondent’s income adjustment should be sustained.

     The letters on which respondent relies to estimate the

compensation petitioner received are unclear at best and seem to

reflect that petitioner contributed equipment and services to RRS,

which RRS then transferred to unnamed third parties for a fee.     It

does not appear that petitioner kept any of the funds, even if he

received them.     Moreover, the amount of the 1999 income adjustment

is an estimate drawn from less than clear correspondence, and we

are not convinced that the estimate is reliable.     Finally,

although we acknowledge that petitioner is deemed to have admitted

he received compensation for personal services provided to RRS in

1999, the deemed admission does not establish the identity of the

payor or the amount of the compensation paid.

     Because the record causes us to doubt that respondent’s

estimate of petitioner’s compensation is reliable or correct, we

do not sustain respondent’s determination that petitioner had

unreported income attributable to services he rendered to RRS in

1999.

     3.      Child Tax Credit

        Section 24(a) provides for a credit against tax for each

qualifying child of the taxpayer.     Section 24(c)(1) defines a
                               - 20 -

qualifying child as any individual if:

          (A) the taxpayer is allowed a deduction under
     section 151 with respect to such individual for the
     taxable year,

          (B) such individual has not attained age 17 as of
     the close of the calendar year in which the taxable year
     of the taxpayer begins, and

          (C) such individual bears a relationship to the
     taxpayer described in section 32(c)(3)(B).[12]

     Respondent has conceded that petitioner is entitled to

deductions under section 151 for both 1998 and 1999 with respect

to each of petitioner’s daughters--Shenara, Keturah, and Adara

Castleton.   Additionally, none of the girls had attained age 17 by

the close of 1998 or 1999.   It follows, therefore, that petitioner

is entitled to the child tax credit for Shenara, Keturah, and

Adara under section 24(a) for 1998 and 1999, and we so hold.

     4.   Head of Household Filing Status

      Under section 2(b)(1), a taxpayer is allowed to file as head

of household if the taxpayer is not married at the close of his

taxable year, is not a surviving spouse, and maintains as his home

“a household which constitutes for more than one-half of such

taxable year the principal place of abode” for certain enumerated

individuals, including a son and daughter.   Petitioner provided no



     12
      An individual bears a relationship to the taxpayer
described in sec. 32(c)(3)(B) if such individual is the son or
daughter of the taxpayer, or a descendant of either, a stepson or
stepdaughter of the taxpayer, or an eligible foster child of the
taxpayer.
                                 - 21 -

evidence that Shenara, Keturah, Adara, Arthur, or Aaron lived with

him at any time during either 1998 or 1999.        Consequently, we

conclude that petitioner has failed to prove that he qualifies for

head of household filing status with respect to his 1998 and 1999

returns, and we sustain respondent’s determination regarding

petitioner’s filing status for those years.

     We have carefully considered all remaining arguments made by

the parties for results contrary to those expressed herein, and,

to the extent not discussed above, we reject those arguments as

irrelevant, moot, or without merit.

     To reflect the foregoing,


                                      Decision will be entered

                                 under Rule 155.
