                  T.C. Summary Opinion 2002-109



                     UNITED STATES TAX COURT



                  HELEN HUBBARD, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 10128-01S.             Filed August 26, 2002.


     Helen Hubbard, pro se.

     Anita A. Gill, 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 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.
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The decision to be entered is not reviewable by any other court,

and this opinion should not be cited as authority.

     Respondent determined a deficiency of $4,436 in petitioner’s

Federal income tax for 1999.

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

entitled to deductions for dependency exemptions; (2) whether

petitioner is entitled to head of household filing status;1 and

(3) whether petitioner is entitled to an earned income credit.

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

The stipulation of facts and the attached exhibits are

incorporated herein by reference.   At the time the petition was

filed petitioner resided in East Cleveland, Ohio.

     In 1999, petitioner lived alone at her home in East

Cleveland.   Petitioner’s grandmother, Rebecca Willis, lived in a

nursing home from 1998 until she died in August 1999.    While Ms.

Willis lived in the nursing home she received Social Security

benefits.    Petitioner’s daughter, Vidah A. Saeed, lived with her

five children, petitioner's grandchildren, in her own home and

paid her own bills.   Ms. Saeed received Social Security benefits

and child-support payments from her children’s father.

     Petitioner claimed dependency exemption deductions for her

grandmother, daughter, and two of her grandchildren, Akilah and


     1
       Our resolution of the issue of petitioner's filing status
will determine the correct computation of her standard deduction
for the year at issue.
                                - 3 -

Zakihhah Saeed.   Respondent issued a notice of deficiency

determining that petitioner was not entitled to deductions for

dependency exemptions, head of household filing status, and

earned income credit because she failed to provide substantiation

for her claims.

     The first issue we address is whether petitioner is entitled

to deductions for dependency exemptions.    Deductions are strictly

a matter of legislative grace, and taxpayers must satisfy the

specific requirements for any deduction claimed.    See INDOPCO,

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

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

required to maintain records sufficient to substantiate their

claimed deductions.   See sec. 6001; sec. 1.6001-1(a), Income Tax

Regs.

     Taxpayers generally bear the burden of proving that the

Commissioner’s determination is incorrect.    Rule 142(a); Welch v.

Helvering, 290 U.S. 111 (1933).    Under section 7491(a)(1),

however, the burden of proof shifts to the Commissioner if, among

other requirements, the taxpayer introduces “credible evidence

with respect to any factual issue relevant to ascertaining” his

tax liability.    We find that the burden of proof does not shift

to respondent because petitioner has failed to comply with the

requirements of section 7491(a)(1).
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       Section 151(c)(1) allows a taxpayer to claim an exemption

deduction for each qualifying dependent as defined in section

152.    As relevant here, section 152(a)(1) defines a “dependent”

to mean a taxpayer's daughter, grandchildren, or grandparent who

received or is treated under section 152(e) as having received

over half of his or her support from the taxpayer.    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.

       Petitioner argues that her grandmother and daughter meet the

relationship, gross income, and support tests provided in the

Internal Revenue Code and in the “RULES AS SET FORTH IN 1999 CAT.

NO. 12086Y and Chapter 3 of Personal Exemptions and Dependents”.

Her position is that her relatives do not need to live with her

to qualify for the deduction.

       Petitioner testified that her grandmother’s only outside

source of income was Social Security.    Specifically, petitioner

argues that her grandmother qualifies as a dependent because she

“lived” with petitioner under the temporary absence explanation

provided in “Chapter 3 page 23".    We need not evaluate the merits

of petitioner’s argument because she failed to show the total
                               - 5 -

support cost expended for her grandmother in 1999 and failed to

establish that she provided over half of that amount.

     Petitioner also claims that she gave her daughter money

while her daughter was ill.   Petitioner, however, concedes that

her daughter received Social Security benefits and child-support

payments.   Petitioner failed to substantiate the total amount

expended on behalf of her daughter for support during 1999 and

that she provided over half of that amount.

     Respondent argues that petitioner failed to substantiate her

claims with records, receipts, or any other evidence of

expenditures.   Petitioner has offered no evidence of the total

support furnished for her grandmother or daughter and has

provided no evidence of her own contributions of support.   The

Court cannot conclude that petitioner provided more than one-half

of either of their support.   The Court thus holds that petitioner

is not entitled to the dependency exemption deductions for her

grandmother and daughter.

     Section 152(e), support test in case of divorced parents,

etc., provides a special rule for children of separated parents.

Section 152(e)(1) provides that, if the child receives over half

of his support from his parents and he is in the custody of one

or both of his parents for more than half of the year, then the

child is treated as receiving over half of his support from the

custodial parent.   Because Ms. Saeed and her children’s father
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lived apart at all times during the last 6 months of the calendar

year, and she had custody of the children, she is the custodial

parent.   Sec. 152(e)(1).

     Petitioner has not shown that her grandchildren did not

receive over half of their support from their parents.    In the

present case, because Ms. Saeed is the custodial parent, she is

treated as providing over half the support of her children for

purposes of section 152(a).    Accordingly, petitioner is not

entitled to deductions for dependency exemptions for her

grandchildren for 1999.     Sec. 152(e)(1).

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

filing as “heads of households”.    “Head of household” is defined

to include an unmarried individual whose household is maintained

as the principal place of abode for specific family members.    If

petitioner provided over half the cost of maintaining as her home

a household that for more than one-half of the year was the

principal place of abode for her daughter or a grandchild, or for

any other person who qualifies as her dependent under section

151, she meets the head of household definition in section

2(b)(1)(A).

     Petitioner has not demonstrated that she maintained such a

household.    Because petitioner is not entitled to a deduction for

her grandmother under section 151, her grandmother does not serve
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to qualify her for head of household filing status.   See sec.

2(b)(1)(A)(ii); sec. 1.2-2(b)(3)(ii), Income Tax Regs.

     In addition, we find that petitioner did not provide over

half the cost of maintaining a principal place of abode for more

than one-half of 1999 for her daughter or grandchildren.    See

sec. 2(b)(1)(A)(i); sec. 1.2-2(b), (c), and (d), Income Tax Regs.

The Court thus holds that petitioner is not entitled to head of

household filing status.

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

income credit against the individual’s income tax liability.

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.    To be

eligible to claim an earned income credit with respect to a

qualifying child, a taxpayer must establish:   (1) The child bears

the relationship to the taxpayer prescribed by section

32(c)(3)(B); (2) the child meets the age requirements of section

32(c)(3)(C); and (3) the child shares the same principal place of

abode as the taxpayer for more than one-half of the taxable year

as prescribed by section 32(c)(3)(A)(ii).   Because petitioner has

not established that any of her grandchildren shared her

principal place of abode for more than one-half of the year at

issue, she has no qualifying children for purposes of the earned

income credit.
                                 - 8 -

     Petitioner also is not eligible for the earned income credit

as an individual with no qualifying children under section

32(c)(1)(A)(ii) because her adjusted gross income in 1999 was in

excess of the complete phaseout amount prescribed by section

32(a)(2).   The earned income credit is completely phased out for

individuals with no qualifying children and adjusted gross income

in excess of $10,199 for 1999.    See sec. 32(a) and (b); see also

Rev. Proc. 98-61, 1998-2 C.B. 814.       Petitioner had adjusted gross

income of $22,448.70 in 1999.    The Court holds, therefore, that

petitioner is not entitled to an earned income credit.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect the foregoing,

                                                  Decision will be

                                             entered for respondent.
