Individual Who Supported Minor Denied Child Tax Credit and EITC

Christopher D. Bradley and John W. Sheffield III, for respondent.

In 2010 Lorenzo Cooper supported a minor child, T.P.² On his 2010 Federal income tax return, Mr. Cooper claimed a dependency exemption deduction for T.P.; he also elected head of household status and claimed both the child tax credit and the earned income tax credit. The Internal Revenue Service (IRS) determined that Mr. Cooper was not entitled to either tax credit, that he was not entitled to head of household status, and that he was not entitled to a dependency exemption deduction for T.P. The IRS issued a notice of deficiency on February 6, 2012, and on May 7, 2012, Mr. Cooper timely filed a petition with the Court under section 6213(a).

Respondent has conceded that Mr. Cooper was entitled to a dependency exemption deduction for T.P. and to head of household filing status. After those concessions, the issues remaining for decision are: (1) whether Mr. Cooper is entitled to the child tax credit for T.P. and (2) whether Mr. Cooper is entitled to the earned income tax credit for T.P. Because T.P. was not a "qualifying child" in 2010, the Court must decide each of these issues in favor of respondent.

Respondent examined Mr. Cooper's 2010 income tax return and disallowed the head of household filing status, the child tax credit, the earned income tax credit, and the dependency exemption deduction. On February 6, 2012, respondent issued a notice of deficiency determining a $4,684 increase in Mr. Cooper's tax liability as a result of the disallowance. On May 7, 2012, Mr. Cooper filed a petition challenging respondent's determinations. He resided in Georgia at the time he filed his petition.

At the time set for trial, Mr. Cooper appeared. At the call of the case, the parties presented a stipulation of facts, and Mr. Cooper summarized his anticipated testimony, which did not expand on the stipulated facts. Respondent orally stipulated to the dependency deduction and to head of household filing status. As a result, the Court accepted this case as fully stipulated.³

Section 152(c)(1) sets forth five requirements that must be met in order for an individual to be a qualifying child of a taxpayer.

First, the child in question must bear a specific relationship to that taxpayer.⁷ That is, the child must be (1) a child of the taxpayer, (2) a descendant of a child of the taxpayer, (3) a brother, sister, stepbrother, or stepsister of the taxpayer, or (4) a descendant of a brother, sister, stepbrother, or stepsister of the taxpayer.⁸

Second, the child must live with the taxpayer for more than one-half of the taxable year.⁹

Third, the child must meet certain age requirements.¹⁰ Specifically, the child must be younger than the taxpayer who is claiming the child as a qualifying child. Further, the child must be under age 19 or a student under age 24 at the end of the year.¹¹

Fourth, the child must not have provided over one-half of his or her own support for the taxable year at issue.¹²

Finally, the child must not have filed a joint tax return with a spouse for the taxable year at issue.¹³

The parties stipulated that during 2010 T.P. lived with Mr. Cooper, T.P. was a minor, and Mr. Cooper provided over one-half of T.P.'s support. Although the record is silent on this point, the Court will assume that T.P., as a minor, did not file a joint return with a spouse for 2010. However, the parties also stipulated that T.P. is not Mr. Cooper's biological child or descendant. If Mr. Cooper had adopted T.P., then T.P. would have been considered Mr. Cooper's child and the specified relationship would exist.¹⁴ However, there is no evidence that Mr. Cooper had adopted T.P. as of the close of 2010, nor is there any evidence that T.P. met any other part of the relationship test.

As a result, not all five of the requirements are fulfilled, and T.P. was not a qualifying child under section 152(c).

It is possible to qualify for the earned income tax credit without any qualifying children.²⁰ Among other requirements, to qualify for the earned income tax credit without any qualifying children for 2010, a taxpayer's adjusted gross income must have been less than $13,460 if not filing jointly. Mr. Cooper's taxable income for 2010 exceeded that amount. Thus, he is not entitled to the earned income tax credit for 2010.

To reflect the foregoing,

Decision will be entered under Rule 155.

² It is the policy of the Court to refer to a minor by his or her initials. See Rule 27(a)(3).

³See Rule 122.

⁴ Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).

⁵ Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992).

⁶ Under facts not present here, one may also be eligible for the earned income tax credit even without a qualifying child. See sec. 32(c)(1)(A)(ii).

⁷ Sec. 152(c)(1)(A).

⁸ Sec. 152(c)(2).

⁹ Sec. 152(c)(1)(B).

¹⁰ Sec. 152(c)(1)(C).

¹¹ Sec. 152(c)(3).

¹² Sec. 152(c)(1)(D).

¹³ Sec. 152(c)(1)(E).

¹⁴See sec. 152(f)(1)(B).

¹⁵ Sec. 24(a).

¹⁶ Sec. 24(d).

¹⁷ Sec. 24(c)(1).

¹⁸ Sec. 32(c)(1)(A)(i).

¹⁹ Sec. 32(c)(3)(A).

²⁰See sec. 32(c)(1)(A)(ii).

²¹Commissioner v. McCoy, 484 U.S. 3, 7 (1987); Hays Corp. v. Commissioner, 40 T.C. 436, 442-443 (1963), aff'd, 331 F.2d 422 (7th Cir. 1964).