                  T.C. Summary Opinion 2001-124



                     UNITED STATES TAX COURT



                FERNANDO D. RIVERA, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 3740-00S.                    Filed August 13, 2001.



     Fernando D. Rivera, pro se.

     Russell D. Pinkerton, for respondent.



     CARLUZZO, 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 1997, and Rule references are to the

Tax Court Rules of Practice and Procedure.   The decision to be

entered is not reviewable by any other court, and this opinion
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should not be cited as authority.

     Respondent determined a deficiency of $3,726 in petitioner's

1997 Federal income tax and a section 6651(a)(1) addition to tax

of $108.15.   The issues for decision are:   (1) Whether petitioner

is entitled to claim dependency exemption deductions for his

three nephews; (2) whether petitioner qualifies as a head of

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

credit; and (4) whether petitioner is liable for the section

6651(a)(1) addition to tax.

Background

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

At the time that the petition was filed, petitioner resided in

Kokomo, Indiana.

     During 1997, petitioner lived in a house owned by his

mother.   He did not pay any rent to live there, but he did pay,

or contribute to, the cost of certain utilities.   The house has

four bedrooms, one of which was used exclusively by petitioner’s

mother.   Another bedroom was used by petitioner and, from time to

time during 1997, petitioner’s brother.   The remaining two

bedrooms were shared by three of petitioner’s nephews

(petitioner’s nephews), all of whom lived in petitioner’s

mother’s house throughout 1997.

     In 1991, petitioner’s nephews were abandoned by their

parents (petitioner’s sister and former brother-in-law), and they
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have lived with petitioner’s mother in her house ever since.

Petitioner’s mother is listed as the guardian/custodian of

petitioner’s nephews on various school records applicable to the

year in issue.

     All of petitioner’s nephews were minors as of the close of

1997, but only one was a student for the entire year.    The other

two dropped out of school and worked that year; one earned $2,408

and the other earned $1,486.    Petitioner’s mother was not

employed during 1997.    She received Social Security benefits

totaling $5,556.   Petitioner’s brother, who from time to time

lived at petitioner’s mother’s house during 1997, had income of

$16,707 for that year.    Petitioner was employed as a laborer

during 1997.   His wages for that year were $14,655.

     Petitioner’s mother, petitioner’s brother, and petitioner

purchased food and clothing for petitioner’s nephews during 1997.

Petitioner’s nephews did not receive any support in any form from

their parents during that year.

     Petitioner’s 1997 Federal income tax return was filed on

June 25, 1998.   It was prepared at no cost to petitioner by a

friend of petitioner’s brother.    Petitioner did not request an

extension of time to file his 1997 return.    The income earned by

two of petitioner’s nephews, as mentioned above, was erroneously

included in the wage income reported on the return.    Petitioner

claimed a dependency exemption deduction for each of his nephews
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and the standard deduction applicable to a head of household.    He

claimed an earned income credit computed by treating two of his

nephews as qualifying children.

     In the notice of deficiency, respondent:    (1) Disallowed the

dependency exemption deductions for petitioner’s nephews; (2)

changed petitioner’s filing status from head of household to

single and adjusted the standard deduction accordingly; (3)

disallowed the earned income credit claimed on petitioner’s 1997

return; and (4) imposed an addition to tax under section

6651(a)(1).

Discussion

  1. Dependency Exemption Deductions

     Petitioner claimed dependency exemption deductions for his

three nephews on his 1997 return.   Generally, a taxpayer is

entitled to an exemption deduction for each dependent.    Sec.

151(c).   The term “dependent” includes a taxpayer’s nephews “over

half of whose support, for the calendar year * * * was received

from the taxpayer”.   Sec. 152(a)(6).   “The term ‘support’

includes food, shelter, clothing, medical and dental care,

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

Regs.

     During 1997, petitioner’s nephews did not receive any

food, shelter, clothing, etc. from their parents.    Instead,

substantially all of their support was received from petitioner,
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petitioner’s mother, and petitioner’s brother.   Taking into

account petitioner’s income, the amount of his brother’s income,

the amount of Social Security benefits received by petitioner’s

mother, and the fact that petitioner’s nephews lived in

petitioner’s mother’s house, it is unlikely that petitioner

contributed more towards the support of his nephews than the

combined contributions of his mother and brother.   Although

petitioner generously provided food, clothing, and other items of

support for his nephews during 1997, he failed to establish that

the total amount of the support that he provided exceeded the

support his nephews received from other sources; namely, his

brother, his mother and, with respect to two of them, themselves.

Consequently, petitioner is not entitled to dependency exemption

deductions for his nephews, and respondent’s determination in

this regard is sustained.

  2. Filing Status

     Petitioner filed his 1997 return as a head of household.

Under the circumstances, because petitioner is not entitled to a

dependency exemption deduction for at least one of his nephews,

he does not qualify as a head of household.   Sec. 2(b)(1)(A)(ii).

Respondent’s determination changing his filing status from head

of household to single is sustained.
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  3. Earned Income Credit

     Subject to various conditions and limitations, an eligible

individual is entitled to an earned income credit.    Sec. 32(a).

Petitioner was an eligible individual within the meaning of the

applicable statute.   Sec. 32(c)(1)(A)(i) and (ii).   Nevertheless,

because of the amount of his income, he is not entitled to an

earned income credit for 1997 unless at least one of his nephews

was a qualifying child with respect to him for that year.    Sec.

32(b).

     On his 1997 return, petitioner claimed an earned income

credit computed by treating two of his nephews as qualifying

children.   Among other requirements, to be treated as an eligible

child of a taxpayer, the child must be:   (1) A son or daughter

of the taxpayer; (2) a descendant of a son or daughter of the

taxpayer; (3) a stepson or stepdaughter of the taxpayer; or (4)

an eligible foster child of the taxpayer.    Sec. 32(c)(3)(B)(i).

Petitioner’s nephews obviously are not his children, descendants

of his children, or his stepchildren.   Furthermore, they were not

his eligible foster children because, although he generously

contributed towards their support, he did not care for them as

his own children.   Sec. 32(c)(3)(B)(iii).   According to school

records, petitioner’s mother, rather than petitioner, was the

guardian/custodian of petitioner’s nephews during the year in

issue.   It follows that respondent’s determination that
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petitioner is not entitled to an earned income credit for 1997

should be sustained, and we so hold.

  4. Section 6651(a)(1) Addition to Tax

     Petitioner did not request an extension to file his 1997

return.   Consequently, it was due on or before April 15, 1998,

sec. 6072(a), but it was not filed until June 25, 1998.

     Section 6651(a)(1) provides for an addition to tax of 5

percent of the amount of the tax required to have been shown on

the return if the failure to file is for not more than 1 month,

with an additional 5 percent for each month in which the failure

to file continues, to a maximum of 25 percent of the tax in the

aggregate.   If an income tax return is not filed within 60 days

of the prescribed date for filing (including extensions), the

addition to tax imposed is not less than the lesser of $100 or

100 percent of the amount required to be shown as tax on the

return.   Sec. 6651(a).   The addition to tax is applicable unless

it is shown that the failure to file is due to reasonable cause

and not due to willful neglect.    Id.

     Petitioner’s 1996 return was filed more than 60 days after

April 15, 1997.   Petitioner did not explain why his 1996 return

was filed late.   Because petitioner has not demonstrated that his

failure to file a timely 1996 Federal income tax return was due

to reasonable cause and not due to willful neglect, he is liable

for the addition to tax under section 6651(a)(1).
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     Reviewed and adopted as the report of the Small Tax Case

Division.

     Based on the foregoing, and to reflect the agreement between

the parties as to the correct amount of petitioner’s wage income

for 1997,


                                           Decision will be

                                      entered under Rule 155.
