                          T.C. Memo. 2003-254



                        UNITED STATES TAX COURT



                  NIMFA C. MOLINA, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8989-02.               Filed August 25, 2003.



     Nimfa C. Molina, pro se.

     Angelique M. Neal, for respondent.



              MEMORANDUM FINDINGS OF FACT AND OPINION


     LARO, Judge:     Petitioner petitioned the Court to redetermine

respondent’s determination of a $20,177 deficiency in her 1997

Federal income tax.    We decide the following issues as to 1997:

     1.   Whether petitioner may deduct three dependency

exemptions in addition to one for herself.      We hold she may.
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     2.    Whether petitioner may file as “Head of Household”.     We

hold she may.

     3.    Whether petitioner may deduct certain disputed itemized

amounts.     We hold she may to the extent stated herein.

                           FINDINGS OF FACT

     Some facts were stipulated.     The stipulated facts and the

accompanying exhibits are incorporated herein by this reference.

We find the stipulated facts accordingly.      Petitioner resided in

Downey, California, when her petition was filed.      During 1997,

she received wages of $84,515 working as a nurse.

     During 1997, petitioner lived in a house (house).      She and

her former boyfriend, Danilo P. Lodevico (Lodevico), had bought

the house before 1994 and had titled it in both of their names.

Petitioner always made all of the mortgage and tax payments on

the house, and Lodevico never gave any money to her for household

or support expenses.     In 1994, Lodevico moved out of the house

and conveyed his interest in the house to petitioner by quitclaim

deed.     Petitioner did not record that deed because she believed

that it was too expensive to do so.

     Petitioner filed with respondent a 1997 Federal income tax

return using the filing status of “Head of Household”.      That

return was prepared by a paid preparer.       Petitioner reported on

the return that her dependents were Abigail Lodevico (Abigail),

Escolastica Cauilan (Escolastica), and Erica Molina (Erica).
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Abigail, the daughter of petitioner and Lodevico, was born on

June 14, 1982, and lived with petitioner during all of 1997.

Abigail depended on petitioner during 1997 for the payment of all

of her expenses.   Escolastica, who died in 1998, was petitioner’s

elderly grandmother.   Escolastica lived with petitioner during

all of 1997 and depended on petitioner for the payment of all of

her expenses.   Erica was petitioner’s young niece.    Erica’s

parents (petitioner’s brother and his wife) resided in New

Jersey, and petitioner took care of Erica during all of 1997.

During 1997, Erica depended on petitioner for the payment of

substantially all of her expenses.      Erica’s parents during that

year were experiencing problems with another child of theirs who

is autistic.    Erica was reunited with her parents in 1998 after

having lived with petitioner for approximately 18 months.

     Petitioner also reported on her 1997 return that she was

entitled to deduct certain itemized amounts.     These deductions

were for medical expenses of $10,243, State and local income

taxes of $3,798, real estate taxes of $4,900, personal property

taxes of $1,356, mortgage interest of $37,919, charitable

contributions of $11,490, unreimbursed employee business expenses

of $15,589, and tax return preparation fees of $150.     Petitioner

reported that the specific unreimbursed business expenses were

union and professional dues of $885, professional subscriptions

of $450, uniforms and protective clothing of $3,782,
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“CE/BOOKS/TUITION/EQUIPMENT/BEEPER/CELLULAR” of $3,452, and

“TRAVEL/LODGING” of $7,020.

     In the notice of deficiency, respondent disallowed

petitioner’s deductions of each of the claimed itemized amounts,

disallowed her claimed dependency exemptions for Abigail,

Escolastica, and Erica, and changed petitioner’s filing status to

“Single”.   The notice of deficiency states as to these

disallowances and change:

     We have disallowed the amount(s) shown on your return
     because you did not contact us or keep your scheduled
     appointment. If you will contact our office, we will
     arrange a time convenient for you to come in so we can
     reconsider the proposed adjustment.

Respondent conceded at trial that petitioner may deduct State and

local income taxes of $3,798.

     During 1997, petitioner paid medical expenses of $10,000.

This amount included dental services to repair the bridge of

petitioner’s mouth and to remove one or more of Abigail’s wisdom

teeth.   This amount also included medical services connected with

a stroke suffered by Escolastica.

     During 1997, petitioner paid $150 to her tax return preparer

for tax preparation services.   During 1998, Associated Home

Equity Services, Inc., issued to petitioner a 1997 Form 1098,

Mortgage Interest Statement, reporting that she alone had paid

$20,919 of mortgage interest to it during 1997.
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                               OPINION

1.   Burden of Proof

      Taxpayers generally must prove the Commissioner’s

determinations wrong in order to prevail.    Rule 142(a)(1);1 Welch

v. Helvering, 290 U.S. 111, 115 (1933).     As one exception to this

rule, section 7491(a) places upon the Commissioner the burden of

proof with respect to any factual issue if the taxpayer

maintained adequate records, satisfied applicable substantiation

requirements, cooperated with the Commissioner, and introduced

during the court proceeding credible evidence on the factual

issue.    The legislative history of section 7491(a) clarifies that

taxpayers must prove that they have satisfied the adequate

records, substantiation, and cooperation requirements before that

section places the burden of proof upon the Commissioner.    H.

Conf. Rept. 105-599, at 239 (1998), 1998-3 C.B. 747, 994 (“The

taxpayer has the burden of proving that it meets each of these

conditions, because they are necessary prerequisites to

establishing that the burden of proof is on the Secretary.”); see

also Prince v. Commissioner, T.C. Memo. 2003-247.

     We do not find that petitioner maintained adequate records,

satisfied applicable substantiation requirements, or cooperated



      1
       Rule references are to the Tax Court Rules of Practice and
Procedure. Section references are to the applicable versions of
the Internal Revenue Code.
                                - 6 -

with respondent.    Accordingly, we hold that section 7491(a) does

not apply here to place the burden of proof upon respondent.

2.   Dependency Exemptions/Filing Status

      Section 152(a) allows a taxpayer to treat certain

individuals (e.g., daughter, grandmother, niece) as dependents if

the taxpayer provided during the taxable year over half of their

support.   See also sec. 151(a), (c) (taxpayer may deduct an

exemption amount for each dependent).     Support generally includes

amounts used for a dependent’s food, shelter, clothing, medical

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

Income Tax Regs.

      Respondent argues that petitioner is not entitled to deduct

dependency exemptions for Abigail, Escolastica, and Erica

because, respondent asserts, petitioner has not presented

credible evidence that these individuals lived with her or that

she provided more than half of their support.     We disagree with

this argument and these assertions.     Petitioner testified

credibly and without contradiction as to both of these points,

and respondent did not challenge this testimony either on cross-

examination or through the presentation of other evidence.     In

fact, as to the claimed dependents, the full extent of

respondent’s cross-examination was as follows:

           Q   Ms. Molina, what was your niece’s name?

           A   Erica Molina.
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          Q   Erica?

          A   Uh-huh.

          Q   And she lived with you here in California?

          A   Yes.

          Q And your sister-in-law and your brother, where
     do they live?

          A   They live in New Jersey.

          Q   New Jersey. * * *

     Respondent argues on brief that the Court generally does not

rely upon an individual taxpayer’s testimony to meet his or her

burden of proof.     However, petitioner’s testimony is credible,

uncontroverted, and not improbable.       See Diaz v. Commissioner,

58 T.C. 560 (1972) (taxpayer’s testimony sufficient to meet

burden of proof); Am. Underwriters, Inc. v. Commissioner, T.C.

Memo. 1996-548 (same).     Contrary to respondent’s argument, the

Court will not disregard petitioner’s uncontroverted testimony

simply because she is an interested witness.

     We also conclude from the record that petitioner may file as

head of household.     Under section 2(b)(1)(A)(i), an individual

such as petitioner will qualify for head of household filing

status if she maintains as her home a household that is the

principal place of abode of certain family members (e.g., a

daughter) for more than one-half of the taxable year.      The record

establishes that petitioner resided with all three of her
                               - 8 -

dependents during all of 1997 and that she furnished all of the

household’s support during that year.

3.   Itemized Amounts

      Petitioner has met her burden only as to some of the claimed

itemized amounts.   The record establishes that petitioner is

entitled to deduct, in addition to the $3,798 of State and local

income taxes conceded by respondent, $20,919 of mortgage

interest, $10,000 of medical expenses, $150 for tax preparation,

and $4,900 for real estate taxes.   As to the latter amount, we do

not understand respondent to challenge that $4,900 of real estate

taxes was paid in 1997 as to the house, but only that petitioner

(as opposed to Lodevico) paid these taxes.   We find as a fact

that Lodevico did not pay those taxes and that petitioner did.

      All arguments made by the parties and not discussed herein

have been rejected as meritless.

                                              Decision will be

                                         entered under Rule 155.
