Miguel A. Jusino & Elizabeth H. Ezcurra v. Commissioner , 2018 T.C. Memo. 112 ( 2018 )

T.C. Memo. 2018-112
UNITED STATES TAX COURT
MIGUEL A. JUSINO AND ELIZABETH H. EZCURRA, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 20101-17. Filed July 19, 2018.
Miguel A. Jusino and Elizabeth H. Ezcurra, pro se.
John R. Gordon, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
COHEN, Judge: Respondent determined an $8,250 deficiency and a $1,650
accuracy-related penalty under section 6662(a) with respect to petitioners’ Federal
income tax liability for 2015. Respondent has conceded that petitioners are not
liable for the penalty. The issue for decision is whether petitioners are entitled to
claim two children (children) as dependents, the child tax credits, and an earned
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[*2] income credit for 2015. All section references are to the Internal Revenue
Code in effect for 2015, and Rule references are to the Tax Court Rules of Practice
and Procedure.
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulated facts are
incorporated in our findings by this reference. Petitioners resided in Arizona at
the time they filed their petition. They were the biological parents of both
children, who were nine years old and four years old, respectively, at the end of
2015.
The parental rights of petitioners with respect to the children were
terminated by an order filed January 15, 2015, in the Superior Court of the State of
Arizona in and for the County of Maricopa (superior court). That decision was
affirmed on appeal. On September 23, 2015, by order of the superior court, the
children were adopted by their maternal aunt, with whom they had resided since
2014. The children resided with their aunt during all of 2015, although they
visited with petitioners some weekends and during the summer. Although
petitioners bought gifts for the children and took them to restaurants during the
visits, their aunt provided primary financial support for them.
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[*3] On their 2015 Form 1040A, U.S. Individual Income Tax Return, petitioners
claimed the children as dependents and claimed a $5,360 earned income credit, a
$103 child tax credit, and a $1,897 additional child tax credit related to the
children. In claiming the earned income credit, they falsely reported that the
children lived with them 12 months during 2015. They reported $24,532 in wages
earned by petitioner Miguel A. Jusino during 2015.
OPINION
The Internal Revenue Code allows as a deduction an exemption for each
dependent of a taxpayer in computing taxable income. Sec. 151(c). Section
152(a) defines a dependent as a qualifying child or a qualifying relative of the
taxpayer. In addition to other requirements, a qualifying child must have the same
principal place of abode as the taxpayer for more than one-half of the tax year.
Sec. 152(c).
The taxpayer has the burden of proving entitlement to the deduction
claimed. See Rule 142(a); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440
(1934); Rockwell v. Commissioner, 512 F.2d 882, 886 (9th Cir. 1975), aff’g T.C.
Memo. 1972-133.
The facts of this case are somewhat unusual because the biological parents
have lost their parental rights and the children have been adopted by another. We
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[*4] need not determine, however, whether they could be qualifying children or
qualifying relatives under section 152(a) by parsing the complicated definitions in
section 152. Petitioners conceded in their pretrial memorandum that the children
“were placed with * * * [their aunt] in 2014 and have lived with her since.” They
did not dispute the aunt’s testimony that the children visited them only when not
in school. The arrangements to have the children visit petitioners appear
commendable, but the aunt’s candid testimony was credible. Because the children
did not share a principal place of abode with petitioners, petitioners are not
entitled to claim the children as dependents for 2015.
Subject to limitations, section 24(a) allows a child tax credit with respect to
a qualifying child of the taxpayer as described in section 152(c). A portion of this
credit, the additional child tax credit, can be refundable if certain conditions are
met. Sec. 24(d). Because the children did not qualify as dependents under section
152, petitioners are not entitled to the child tax credit or the related additional
child tax credit for 2015.
Section 32(a)(1) allows an eligible individual an earned income credit
against the individual’s income tax liability. Section 32(b) prescribes different
percentages and amounts used to calculate the credit. The limitation amount is
based on the taxpayer’s earned income, the taxpayer’s adjusted gross income, and
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[*5] whether the taxpayer has any qualifying children. Sec. 32(b), (f). To be
eligible to claim a higher earned income credit with respect to a child, the taxpayer
must establish that the child meets the definition of a qualifying child under
section 152(c) as modified by section 32(c)(3)(A). Because the children were not
qualifying under these parameters, petitioners would be eligible for the earned
income credit only on the basis of their earned income. See sec. 32(a),
(c)(1)(A)(ii). Because the reported wages on their joint return, $24,532, exceeded
the limitation for 2015, $20,330, they were not entitled to the earned income
credit. Sec. 32(b)(2), (j)(1); Rev. Proc. 2014-61, sec. 3.06, 2014-47 I.R.B. 860,
863.
We have considered the other arguments of the parties, and they are not
necessary to address or are without merit. To reflect the foregoing,
Decision will be entered for
respondent.