§32 — Earned income

Finally, and most importantly, are we really prepared to interpret a ruling that, it seems by stealth, overrules a - 38 - regulation without asking for the Commissioner’s position and without deciding for ourselves whether the regulation is valid?

As a result, petitioners maintain: "Feldman is distinguishable as a matter oflaw and has no application here." An additional reason offered by petitioners in support oftheir position that the Indiana Supreme Court would use the equitable collapsing doctrine is that that court would want to avoid the conflict that petitioners claim would be created if respondent's equitable doctrines were used between (1) Ind. Code Ann. sec. 32-18-2-20, which incorporates equitable principles into the Indiana UFT

As a result, petitioners maintain: "Feldman is distinguishable as a matter oflaw and has no application here." An additional reason offered by petitioners in support oftheir position that the Indiana Supreme Court would use the equitable collapsing doctrine is that that court would want to avoid the conflict that petitioners claim would be created if respondent's equitable doctrines were used between (1) Ind. Code Ann. sec. 32-18-2-20, which incorporates equitable principles into the Indiana UFT

As a result, petitioners maintain: "Feldman is distinguishable as a matter oflaw and has no application here." An additional reason offered by petitioners in support oftheir position that the Indiana Supreme Court would use the equitable collapsing doctrine is that that court would want to avoid the conflict that petitioners claim would be created if respondent's equitable doctrines were used between (1) Ind. Code Ann. sec. 32-18-2-20, which incorporates equitable principles into the Indiana UFT

[Emphasis supplied.] In arguing that section 32(i) does not apply, petitioner focused his argument on whether his real estate rental property activity constituted a trade or business.

We need not decide whether petitioner’s lack of knowledge of his 7Individuals without qualifying children may be eligible for the EIC if their earned income is no greater than the phaseout amount the Code permits.

Therefore, we need not decide whether it was so untimely as to be invalid .

He had previously worked as a seamster for 15 years; however, it is unclear whether petitioner was employed or only collecting disability benefits during the year at issue.

We disagree with petitioner’s characterization.

Ide]4: P was an inmate during the time he was confined to the State hospital.

Furthermore, the Court has already decided above for the year in issue that petitioner is not eligible to claim the EITC pursuant to section 32(a)(1).

Therefore, to the extent respondent seeks to use Notice 2014-7, supra, to deprive petitioners ofa benefit bestowed by Congress, we hold he may not do so.

h respect to any return or claim for refund who fails to comply with due diligence requirements imposed by the Secretaryby regulations with respect to determining eligibility for, - 10 - or the amount of, the credit allowable by * * * section 32 shall pay a penalty of $500 for each such failure."3 Section 32 provides for the earned income credit.4 Section 1.6695-2(b), Income Tax Regs., prescribes due diligence requirements that a tax return preparer must satisfy to avoid a penalty under section

We hold that he is not.

Earned Income Credit Section 32 provides a refundable earned income credit to certain low- income individuals.

Accordingly, we hold that petitioners received $4,117 in taxable income resulting from stock transactions in their TD Ameritrade account.

In view ofthe foregoing, we hold that petitioner is not entitled to an earned income credit.

For purposes ofthe earned income credit, section 32 requires that the taxpayer have a qualifying child or children for the taxable year.

We hold that the amounts received by petitioners, as substantiated by the record and discussed infra, constitute earned income within the meaning ofsection 32.

ccordingly, we hold that petitioner is entitled to dependency exemption deductions for her 'granddaughter and great- granddaughter for 2007.

We hold that she does not.

Therefore, we hold that Mr .

We hold that she is not .

or his minor child pursuant to sectio n SERVED May 13 2009 151(c)' ;,(2) whether petitioner is entitled to a child tax credi t pursuant to-section 24(a) ; (3) whether petitioner is entitled to head-6.f-household filing status ; and (4) whether petitioner i s entitled to an earned income tax credit pursuant to section 32 .

We hold that he is not .

Thus , petitioner is not entitled to claim an EIC for having qualifying children pursuant to section 32(c) .

Consequently, pursuant to section 2(b)(3)(B), we hold that petitioner is not entitled to head-of-household filing status .

Earned Income Credit Section 32 provides that certain individuals may be entitled to an earned income credit if they satisfy certain requirements .

Accordingly, we hold that petitioner is not entitled to the claimed $5,301 deduction for taxable year 2002 .

whether petitioner is entitled to an earned income credit for taxable year 2003 pursuant to section 32; and 4.

- 6 - Finally, section 32 requires that a married individual must file a joint return with the individual's spouse for the year for which the credit is claimed.

Upon the basis of the record, we hold that Christopher does not satisfy the requirements for a qualifying child with respect 1This amount was obtained from the 2002 earned income credit tables prescribed pursuant to sec.

Section 32 provides, in pertinent part, as follows: 5 However, this expression of congressional intent supports respondent’s statutory interpretation only by circular reasoning, or “begging the question”.

According to the tables prescribed by the Secretary pursuant to section 32(f), the lowest income amount at which the earned income credit is no longer available in this situation is $10,380 for taxable year 2000.

Pursuant to section 32(c)(3)(A)(ii), the qualifying child must have the same principal place of abode as the taxpayer for more than one-half of the taxable year.

However, based upon the total expenses for the household in 1997 and 1998, it is clear that petitioner did not provide more than half of the cost of maintaining the household.4 Therefore, on the basis of the record, we hold that petitioner is not entitled to file her 1997 and 1998 Federal income tax returns as head of household.

Therefore, we hold that petitioner is - 5 - not entitled to a section 151 dependency exemption deduction for the 1996 tax year.

We hold that petitioner does not qualify as a head of household for 1998.

Therefore, on the basis of the record, we hold that petitioner is entitled to file her 1995 and 1996 Federal income tax returns as head of household.

Section 32 provides that an eligible individual is allowed a credit calculated as a percentage of the individual’s earned income.

Earned Income Credit Section 32 provides for an earned income credit.

Earned Income Credit Section 32 provides for an earned income credit.

We hold that petitioner is entitled to the earned income credit for 1996.

The phrase “same principal place of abode” is not defined in section 32 or the regulations under that section.

filed with the Tax Court during that period, the restriction upon such a levy continues until the Court’s decision becomes final. A levy must be distinguished from an offset of an overpayment or refundable credit, such as the earned income credit of section 32. See, e.g., Belloff v. Commissioner, 996 F.2d 607, 615-616 (2d Cir. 1993) (comparing discussion of “levy” in United States v. Natl. Bank of Commerce, 472 U.S. 713, 720 (1985), with “setoff” in United States v. Munsey Trust Co., 332 U.S. 23

ied the relationship, residency, and age tests (discussed supra), as well as the section 32(c)(3)(A)(iv) “identification test”. See Omnibus Budget Reconciliation Act of 1990 (OBRA), Pub. L. 101-508, sec. 11111(a), 104 Stat. 1388, 1388-408 (amending sec. 32). The identification test required a taxpayer to include on his or her income tax return the name, age, and taxpayer identification number of each qualifying child with respect to whom he or she claimed the earned income credit. See sec. 32(c)

Section 32 provides for an earned income credit. In order to be entitled to an earned income credit, the taxpayer must satisfy a number of requirements. One of the requirements is that the taxpayer have earned income. See sec. 32(a)(1). Without earned income, there is no earned income credit.5 3 All section references are to the Internal Revenue Co

Respondent on brief admits that section 32 consists of four elements.

over the tax imposed by subtitle A (determined without regard to such credits).” Section 24(d) provides for the ACTC, and section 32 provides for the Earned Income Credit.

The term "qualifying child", for purposes ofsection 32, means a qualifying child 3This remains true even without regard to sec.

The.term "qualifying child", for.purposes of section 32, means a qualifying child as defined in section 152(c) without a regard to section 152(c) (1) (D) and (e).

Therefore , petitioner is not entitled to claim these children as qualifying children for purposes of the earned income credit under section 32 ( a) (1) .

s were consolidated for trial, briefing and opinion . After concessions, the issue for decision is whether petitioner's nephew and niece were his qualifying children for purposes of the earned income tax credit (EITC) provided by SERVED SEP 15 2009 section 32 . Except as otherwise stated, all section references are to the Internal Revenue Code in effect for the years'in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure . 4 FINDINGS OF FACT f }''" "'"''Some of th

Section 32 indexes the ceilings such that for 2006, the upper limitation ("completed phaseout amount") of earned income 2In future years petitioner might avoid the issue of whether T .A.N . was his qualifying child by attaching to his Federal income tax return a properly completed Form 8332 which Ms . Angwafo has signed . - 13 - for individuals wi

However, in the case of a married individual, section 32(d) provides that section 32 applies only if the individual filed a joint return.

whether petitioner is entitled to a section 32 earned income credit for taxable year 2003 .

There is no provision in section 32 that excludes - 4 - gambling income from modified adjusted gross income or allows the deduction of gambling losses in arriving at modified adjusted gross income.

Section 32 generally provides that an eligible individual may qualify for an earned income credit. A taxpayer who has a “qualifying child” may be an eligible individual for the earned income credit. Sec. 32(c)(1)(A)(i). - 3 - A “qualifying child” is an individual who satisfies a relationship test, a residency test, an age test, and for whom the ta

Under section 32, an eligible taxpayer is allowed a credit which is calculated as a percentage of the taxpayer’s earned income, subject to certain limitations. Sec. 32(a)(1). Taxpayers who have qualifying children are allowed a larger credit and are entitled to a credit at higher income levels than are individuals without qualifying children. Sec. 32(a),

The relevant parts of section 32 provide that an individual is eligible for the earned income credit if the individual has a qualified child or qualified children who satisfy the relationship and residency tests.

r. 1949). Factual determinations are required in order to decide whether a taxpayer is entitled to: (1) Head-of-household filing status, see sec. 2(b); (2) a dependency exemption deduction, see secs. 151 and 152; or (3) an earned income credit, see sec. 32. We have held that whenever the resolution of adjustments requires factual determinations, the Commissioner is not obliged to concede those adjustments until the Commissioner has received, and has had a reasonable period of time to verify, ade

In his petition, petitioner alleged "my ex-wife filed for the year of 1995 and I do not remember signing a 1040 for that tax season, so I cannot attest to its correctness, nor should I be held accountable if it is incorrect as to her income." At trial, petitioner filed a trial memorandum in which he stated that his former spouse, Carol L. Fuhr Hamblin (Mrs. Hamblin), falsely reported on their joint return income from a trade or business activity conducted by her in the amount of $5,670, and the

Earned Income Credit The relevant parts of section 32 provide that an individual is eligible for the earned income credit if the individual has a - 8 - “qualifying child”.

Respondent reasoned that, because petitioner had no earned income within the meaning of section 32 during 1999, petitioner failed to state a claim for relief.

dingly, petitioner is not considered as unmarried pursuant to section 7703(b), and his filing status is necessarily married filing separately. Respondent’s determination on this issue is sustained. - 7 - Issue 2. Earned Income Credit We turn now to section 32. That section provides for an earned income credit. However, in order to be entitled to an earned income credit, the taxpayer must satisfy a number of requirements. One of the requirements is that the taxpayer, if married, must file a joint

Petitioner's entitlement to section 32 earned income credit for 1995 and 1996, however, is not conditioned on petitioner's entitlement to dependency exemption deductions under section 151.

Section 32(d) provides that an individual who is married must file a joint return with her spouse for the taxable year in order for section 32 to apply.

d the earned income amount. See sec. 32(a). Earned income includes wages, salaries, tips, and other employee compensation. See sec. 32(c)(2)(A)(i). The money petitioner received from begging does not meet the definition of earned income provided by section 32. Rather, the money petitioner received from his family and friends was received as a gift. A gift is a transfer that proceeds from a "’detached and disinterested generosity,’ * * * out of affection, respect, admiration, charity or like impu

ed the earned income amount. See sec. 32(a). Earned income includes wages, salaries, tips, and other employee compensation. See sec. 32(c)(2)(A)(i). The money petitioner received from begging does not meet the definition of earned income provided by section 32. Rather, the money petitioner received from his family and friends was - 3 - received as a gift. A gift is a transfer that proceeds from a "’detached and disinterested generosity,’ * * * out of affection, respect, admiration, charity or li

ed the earned income amount. See sec. 32(a). Earned income includes wages, salaries, tips, and other employee compensation. See sec. 32(c)(2)(A)(i). The money petitioner received from begging does not meet the definition of earned income provided by section 32. Rather, the money petitioner received from his family and friends was received as a gift. A gift is a transfer that proceeds from a "’detached and disinterested generosity,’ * * * out of affection, respect, admiration, charity or like imp

trial memorandum that his adjustment for "recapture of the earned income credit [is] computational" based on the Court's holdings on the other issues in this case. Respondent misstates the law applicable to this case. Petitioner's entitlement to the sec. 32 earned income credit for 1995 is not conditioned on petitioner's entitlement to dependency exemption deductions under sec. 151 or head of household filing status under sec. 2(b). The statutory language which previously linked those issues was

Section 32(d) provides that an individual who is married, within the meaning of section 7703, must file a joint return with his spouse for the taxable year in order for section 32 to apply.

ed the earned income amount. See sec. 32(a). Earned income includes wages, salaries, tips, and other employee compensation. See sec. 32(c)(2)(A)(i). The money petitioner received from begging does not meet the definition of earned income provided by section 32. Rather, the money petitioner received from his family and friends was - 3 - received as a gift. A gift is a transfer that proceeds from a "’detached and disinterested generosity,’ * * * out of affection, respect, admiration, charity or li

Section 32 provides for an earned income credit for an "eligible individual". Section 32(d) provides, however, that a married individual (within the meaning of section 7703) is only eligible for an earned income credit if a joint return is filed for the taxable year. Section 7703 provides, in pertinent part: SEC. 7703. DETERMINATION OF MARITAL STAT

)(A). Thus, petitioner has not established that he maintained a household for a qualified individual. Respondent is sustained on this issue. The final issue in this case is whether petitioner is entitled to the earned income credit as provided under section 32. Section 32(a) permits an "eligible individual" to claim an earned income credit against the individual's income tax liability. An eligible individual is defined in section 32(c)(1)(A) as either (1) an individual who has a qualifying child

Earned Income Credit Section 32 provides an earned income credit for certain "eligible individuals".

Section 32 provides for an earned income credit for certain "eligible individuals". Section 32(d) provides, however, that a married individual (within the meaning of section 7703) is only eligible for the earned income credit if a joint return is filed for the taxable year. Petitioner, a married individual within the meaning of section 7703, did no

Pursuant to section 32, certain low-income individuals with a child residing in the taxpayer's household may qualify for the earned income credit.

EITC Credit For tax year 2016 the maximum allowed adjusted gross income (AGI) to claim any amount of the EITC under section 32 for a taxpayer filing as head of household with three or more qualifying children was $47,955.

Respondent does not argue that petitioners are liable for section 6662(a) penalties under section 32 [*32] 6662(b)(3).

The Joint Committee staff can speak with some authority in 2016 on the reasons Congress repealed section 32 [*32] 704(e)(1) the previous year.16 It has little or no authority to explain why Congress first enacted that statutory rule 65 years earlier.17 Moreover, the Joint Committee staff recognized that, before 2016,18 an argument could have been made that section 704(e)(1) “provides an alternative test as to whether the holder of a capital i

At all times relevant to this case, section 32 imposed the following identification number requirement with respect to individuals otherwise eligible to claim the EITC: Sec.

The definition of “qualifying child” for purposes of section 32 is the same requirement as provided in section 152(c).

Again, a qualifying child for purposes ofsection 32 is generally defined as an individual who is the taxpayer's "qualifying child" as defined in section 152(c).

Again, a qualifying child for purposes ofsection 32 is generally defined as an individual who is the taxpayer's "qualifying child" as defined in section 152(c).

The definition of "qualifying child" for the purposes ofsection 32 is the same requirement as provided in section 152(c).

t would be quite intolerable to pyramid the existing complexities oftax law by a rule that the tax shall be that resulting from - 22 - the form oftransaction taxpayers have chosen or from any other form they might have chosen, whichever is less."), § 32 T.C. 1297 (1959). Nothing in the record suggests that Waterfront's form did not respect its substance. To the contrary, the record shows that in May 2012 Waterfront was purposefully organized as a nonprofit corporation, upon an attorney's advice,

curacy-Related Penalties Respondent determined that for each tax year at issue petitioners are liable for a 20% accuracy-related penalty pursuant to section 6662(a). Under section 7491(c), respondent bears the burden ofproduction with respect to the section 32Mr. MacCuish testified vaguely that the concept behind his methodology is illustrated by the example of"people that are flipping houses to make a profit", who might insist on a discount in buying damaged property in order to make a profit.

Again, a qualifying child for purposes ofsection 32 is generally defined as an individual who is the taxpayer's "qualifying child" as defined in section 152(c).

ments to petitioner in 2010 and again in 2011. Standard filed with respondent and issued to petitioner a Form W-2, Wage and Tax Statement, for 2011 reporting the $43,868 in LTD payments it made to petitioner during that year as wages. See generally sec. 32.1, Temporary Employment Tax Regs., 47 Fed. Reg. 29225 (July 6, 1982) (as amended by T.D. 7867, 48 Fed. Reg. 793 (Jan. 7, 1983), and T.D. 9233, 70 Fed. Reg. 74199 (Dec. 15, 2015)). Petitioner disagreed with Standard's position that her disabili

lected on the time logs petitioner attached to his opposition to respondent's motion to dismiss is significantly less than $2,500, and surmise that petitioner's refund claims relate not to tax withheld on this income but to a refundable credit under sec. 32, commonly known as the earned income tax credit. Under sec. 32(c)(2)(B)(iv), however, income earned while a taxpayer is incarcerated is not taken into account for purposes ofthis credit, which likely constituted the basis ofthe Commissioner's

6 Section 32 borrows the definition of"qualifying child" from section 152(c), but changes it in ways that aren't relevant to this opinion. See sec. 32(c)(3). - 13 - [*13] Ifa taxpayer is entitled to a dependency exemption for a "qualifying child" who is not yet 17 years old, then she also gets a child tax credit for that child. See sec. 24(a), (c).

The earned income credit, as provided in section 32, permits a larger percentage credit for a taxpayerwith one or more "qualifying" children.

e view that the caption transforms a narrow closing agreement to a broad, sweeping one. - 33 - broaden the scope ofthe closing agreement beyond what the parties intended.28 S_e_e 17A C.J.S., Contracts, sec. 399 (2011); c£ 11 Williston on Contracts, sec. 32:10 (4th ed. 1999) ("Even absent a true conflict, specific words will limit the meaning ofgeneral words ifit appears from the whole agreement that the parties' purpose was directed solely toward the matter to which the specific words or clause

mined an addition to tax rather than an accuracy-relatedpenalty, and that was respondent's position at trial. 3Respondent also made computational adjustments to petitioner's self- employment tax for each year, sec. 36A credits for 2009 and 2010, and sec. 32 credits for 2010 and 2011. - 3 - [*3] FINDINGS OF FACT Some ofthe facts have been stipulated and are so found. The stipulation of facts and the accompanying exhibits are incorporated herein by this reference. At the time the petition was file

As pertinent here, section 24(c)(1) provides that, for purposes ofsection 24, "qualifying child" means an individual under age 17 who is a qualifying child ofthe taxpayer as defined in section 152(c).

Saenz and DS as qualifying children for purposes ofthe section 32 earned income tax credit and claim DS as a qualifying child forpurposes ofthe section 24 additional child tax credit depends on whetherMrs.

at 556-557, also included a provision exempting charitable organizations from tax, but the income tax system provided for in the Act was declared unconstitutional. Pollock v. Farmers' Loan & Tr. Co., 158 U.S. 601 (1895). 3°During the years at issue (and currently), sec. 170(a) allowed a deduction, subject to certain limitations an

604 (1959); sec. 1.166-5(b)(2), Income Tax Regs. 3°Litwin v. United States, 983 F.2d 997, 999 (10th Cir. 1993). 3¹Secs. 166(d)(1)(B), 1211(b), 1212(b); sec. 1.166-5(a)(2), Income Tax Regs. 32Sec. 166(a). 33Sec. 1211(b). - 23 - [*23] As an initial matter, Mr. Espaillat and Ms. Lizardo do not argue and the record does not support that they

at 556-557, also included a provision exempting charitable organizations from tax, but the income tax system provided for in the Act was declared unconstitutional. Pollock v. Farmers' Loan & Tr. Co., 158 U.S. 601 (1895). 3°During the years at issue (and currently), sec. 170(a) allowed a deduction, subject to certain limitations an

ld tax credit, commonly referred to as the additional child tax credit, is refundable and is computed (as relevant here) under paragraph (1)(B)(i) as the amount equal to "15 percent ofso much ofthe -6- taxpayer's earned income (within the meaning ofsection 32) which is taken into account in computing taxable income for the taxable year as exceeds $10,000".4 A taxpayer claiming an EIC must establish that he or she had earned income and the amount ofthat income.

The Advance Earned Income Credit Before it was repealed, effective for tax years beginning after December 31, 2010, section 3507 permitted employees to convert the earned income credit provided by section 32 into increased wages by filing a Form W-5, Earned Income Credit Advance Payment Certificate, with their employers.

32-2101(49) (2012) (West). Thus, according to respondent, in Arizona, Colorado, and California the subject ofa real estate contract is the real estate being transferred. But in California, the legislature has also defined real property to include "[t]hat which is incidental or appurtenant to land". Cal. Civ. Code sec. 658(3) (West 2007). The C

Earned Income Credit Taxpayers are afforded a refundable creditunder section 32 against income tax whentheir earned income is below a statutorylevel; however, section 32(d) denies this credit to married individuals who file separate returns.

32-2101(49) (2012) (West). Thus, according to respondent, in Arizona, Colorado, and California the subject ofa real estate contract is the real estate being transferred. But in California, the legislature has also defined real property to include "[t]hat which is incidental or appurtenant to land". Cal. Civ. Code sec. 658(3) (West 2007). The C

32-2101(49) (2012) (West). Thus, according to respondent, in Arizona, Colorado, and California the subject ofa real estate contract is the real estate being transferred. But in California, the legislature has also defined real property to include "[t]hat which is incidental or appurtenant to land". Cal. Civ. Code sec. 658(3) (West 2007). The C

32-2101(49) (2012) (West). Thus, according to respondent, in Arizona, Colorado, and California the subject of a real estate contract is the real estate being transferred. But in California, the legislature has also defined real property to include “[t]hat which is incidental or appurtenant to land”. Cal. Civ. Code sec. 658(3) (West 2007). The

Child Tax Credit A taxpayer may claim a child tax credit for each "qualifying child" ofthe taxpayer (as defined in section 152) who has not yet reached age 17.

151(c). - 24 - [*24] that declaration is attached to the noncustodial parent's return.39 A "'custodial parent' means the parent having custody for the greater portion ofthe calendar year."4° This declaration is commonly made on a Form 8332. Mr. Thunstedt testified that because his ex-wife was the custodial spouse under the marital

32(c)(2)(A) The term "qualifying child", for purposes<ofsection 32,,means a qualifying child as defined in section 152(c) withoutregard to section 152(c)(1)(D) arid (E) Sec.

ons by the principal that the agent will act on behalfofthe principal, (2) the - 15 - agent's acceptance ofsuch undertaking,,and (3) an understanding by both parties that the principal is to be in control ofsuch undertaking. See 2A C.J.S., Agency, sec. 32 (2003). The TIA does not establish an agency relationship, or support he existence ofsuch a relationship between the United States and the Virgin Isladds or their respective tax departrñents (i.e., the IRS and the .BIR). To the contra ; the TIA

Davila claimed an earned income tax credit under section 32 on the basis of his having two qualifying children.

actions by the principal that the agent will act on behalf of the principal, (2) the agent’s acceptance of such undertaking, and (3) an understanding by both parties that the principal is to be in control of such undertaking. See 2A C.J.S., Agency, sec. 32 (2003). The TIA does not establish an agency relationship, or support the existence of such a relationship, between the United States and the Virgin Islands or their respective tax departments (i.e., the IRS and the BIR). To the contrary, the

However, section 32(d) provides that a married individual is entitled to the credit only if a joint return is filed.

Earned Income Credit In the case of an "eligible individual", section 32 (a) allows an EIC against the individual's income tax liability.

and J.Lë are not petitioner's qualifying children for purposes of the EITC under section 32 (a))(1) .

additional portion referred to as the "additional child tax credit" is refundable and is computed as relevant here under section 24 (d) (1) (:B) (i), as the amount equal to "15 percent of so much of the taxpayer'.s earned income (within the meaning of section 32) which is taken into account in computing taxable income for the taxable year as exceeds $10,000.·"3 See, e.g., H.' Conf.

or self-employment tax. As a result, petitioner is deemed to have conceded this issue. See Rules 142(a), 149(b); Burris v. Commissioner, T.C. Memo. 2001-49. Respondent's determinations with respect to petitioners' claimed earned income credits under sec. 32 and personal exemption deductions under sec. 151 are automatic adjustments that will be resolved by our decision of the primary issue (i.e. whether petitioners had unreported income), and computations shall be made under Rule 155. - 3 - Petit

f Chicago, the Democratic Organization of Cook County, and others, which alleged 2The notice of deficie cy also made adjustments to Ms. Ruffin's child tax credit and additi nal child tax credit under section 24 and her earned income tax credit under section 32. The IRS's motiön for summary judgme'nt shows that these are computational adj stments that follow necessarily from the inclusion of the settlesent proceeds in income, and Ms. Ruffin does not dispute this showing. - 3 that the defendants h

32 (after a public hearing). Id. n.6. It states with respect to condemnation: “Thus if a conservation easement restricts the development of real property that is needed for a school, hospital, or publicly aided housing, eminent domain may be exercised.” Id. sec. 34A.07[2]. It notes that the method of valuation of the interest represented by th

24(d) (referring to section 32 for the definition of earned income) .

Child-Tax Credit A taxpayer may claim a child tax credit for each qualifying child of the taxpayer as defined in section 152(c)6 Sec .

Under section 32(c) (3) (A), a qualifying child is defined the same as "a qualifying child of the taxpayer (as defined in section 152(c) * * * )." Petitioner's daughter is not treated as his qualifying child for 2006 pursuant to section 152(c) (4).

Section 32 (a)(1) allows an eligible individual an earned income credit against the individual's income tax liability . Section 32 (a)(2) limits the credit allowed through a phaseout, and section 32(b) prescribes different percentages and amounts used to calculate the credit . The limitation amount is based on the taxpayer' s earned income and whe

Amounts of Employment Taxes i 1, 1 In .the petition, petitioner argues that the amount(cid:127)o f 11 employment taxes due and owing on the $14,845,019 of unreported j cash wages should be offset by the earned income credits to which !temporary laborers paid in cash wouldl~have been entitled unde r EI' - 27 - section 32 had they claimed those credi s .

Amounts of Employment Taxes In the petition, petitioner argues that the amount of employment taxes due and owing on the $14,845,019 of unreported cash wages should be offset by the earned income credits to which temporary laborers paid in cash would have been entitled under section 32 had they claimed those credits.

A qualifying child for purposes of the child tax credit is a child : (a) For whom the taxpayer is entitled to a deduction for a dependency exemption under section 151 ; (b) who is under the age of 17 ; and (c) who bears a relationship to the taxpayer as set forth in section 32 ( c)(3)(B) .

Section 32.(c)°(1) (A) provides that,: for purposes of qualifying for the earned income credit, an "eligible individual" is an = individual who has a qualifying: child for the taxable year .' A "qualifying child" is defined as an individual's child, stepchild, sibling-, step-sibling., a des.cendant,of-any of these,- or an eligible fos

Section 32 allows an eligible individual to claim an earned income credit against his or her income for the taxable year, and . the amount of the credit is calculated as a percentage of the - 4 - taxpayer's earned income .; The issue is whether petitioner is entitled. to the credit based-upon .having qualifying children as defined in section 32(c)

Section 32 (a)(1) allows an eligible individual an earned income credit against the individual ' s income tax liability. Section 32(a)(2) limits the credit allowed through a phaseout, and section 32(b) prescribes different percentages and amounts

Earned Income Credit Section 32 allows an earned income credit .

year, and who bears a relationship to the taxpayer as prescribed by section 32 (c) (3) (B) .

the taxpayer . Petitioner satisfies that requisite ; consequently, he qualifies for head-of-household filing status for the year at issue . See sec . 2(b)(1)(A)(i) . The third issue is petitioner's claim to the earned income credit of $2,815 under section 32 . Section 32(a)(1) allows an eligible individual an earned income credit against the individual's income tax liability . Section 32(a)(2) limits the credit allowed, and section 32(b) prescribes different percentages and amounts used to calc

Section 32 (a)(1) allows an eligible individual an earned income credit against the individual ' s income tax liability . - 8 - Section 32(a)(2) limits the credit allowed . Section 32(b) prescribes different credit and "phaseout" percentages used to calculate the credit based on whether the eligible individual has no qualifying children, one quali

n 74301 and Rule 231.2 Respondent determined a deficiency in individual income tax against petitioner in the amount of $2,890 for 2002. The determined deficiency arose from petitioner’s claim of a refundable earned income credit in that amount under section 32. 1 Unless indicated otherwise, all references to secs. 7430 and 7453 are to those sections of the Internal Revenue Code of 1986 as in effect for proceedings commenced at the time the petition in the instant case was filed; all other sectio

90 (1966).] As to the addition of section 882(d), the Senate committee report stated: As a general rule, the bill provides that income of a nonresident alien or foreign corporation will be subject to the flat 30-percent (or lower treaty) rate if it is not effectively connected with the conduct of a trade or business within the United States.

During this period Great Plains would be entitled to the possession, rents, use, and benefit of the plant. N.D. Cent. Code § 28-24-11 (1974). * * * [United States v. Great Plains Gasification Associates, supra at 195.] The Court of Appeals did not question ANR’s standing to pursue the litigation as a partner of the partnership. P

produce the unintended result of allowing Peter Wuol to obtain earned income credits in an amount in excess of the maximum amount allowed for those individuals filing joint returns. A joint return must be filed by a married individual in order for sec. 32 to apply. Sec. 32(d). Thus, Peter Wuol and Jekow Wuol should have filed joint income tax returns rather than returns filed under head of household filing status for their 2000, 2001, and 2002 taxable years, as well as for Peter Wuol’s 2003 tax

This rule has also been extended to apply to credits against tax, such as the foreign tax credit, other than the credit provided by section 32 for tax withheld at the source or the credit provided by section 39 for certain users of gasoline and lubricating oil.

Since petitioner failed to satisfy the residency requirement of section 32, neither of petitioner’s children is considered a qualifying child.

tate of California, Department of Social Services, In-Home Supportive Services program (IHSS), to care for petitioners’ disabled son constitute gross income under section 61, and (2) whether petitioners are entitled to the earned income credit under section 32. Some of the facts were stipulated. Those facts, with the exhibits annexed thereto, are so found and made part hereof. Petitioners’ legal residence at the time the petition was filed was Fresno, California. Petitioners have a mentally disa

The decedent acquired the right to exclusive possession of the condominium by contract, the parties’ Agreement regarding use and payment of expenses * * * (hereinafter “the Agreement”). Generally, all co- tenants are obligated to contribute to the expenses and upkeep of the property and a tenant who pays more than his pro-rata shar

The relevant parts of section 32 provide that an individual is eligible for the earned income tax credit if the individual has a qualifying child.

were shared by members of the household. We conclude, based on the entire record, that petitioner cared for his nieces as his own children, and thus, the children are qualifying children for purposes of computation of the earned income credit under section 32. We find for petitioner on this issue. 4. Child Tax Credits We next consider the child tax credits. A taxpayer may be entitled to a credit against tax with respect to each “qualifying child”. Sec. 24(a). The plain language of section 24 es

Because petitioner has failed to meet the relationship test under section 32, it is not necessary to analyze the remaining factors of section 32.

As relevant here, section 6401(b) provides that if the amount “allowable” as refundable credits, such as the wage withholding credit under section 31 and the EIC under section 32, exceeds the “tax imposed”, the excess “shall be considered an overpayment.” It is undisputed that for the year at issue, petitioners have an allowable section 31 wage withholding credit of $225 3 Pursuant to sec.

Under section 32, an eligible individual is allowed a credit which is calculated as a percentage of the individual’s earned income, subject to certain limitations. Sec. 32(a)(1). Any individual with a qualifying child is an eligible individual. Sec. 32(c)(1)(A)(i). An individual with qualifying children is entitled to a larger credit than is an individua

Under section 32, an eligible individual is allowed a credit which is calculated as a percentage of the individual's earned income. Sec. 32(a)(1). 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. Initially, petitioner argues th

Accordingly, the Court holds that petitioner is entitled to the earned income credit under section 32 as an eligible individual with no qualifying children.

r concessions,1 the issues for decision are: (1) Whether petitioner qualifies for head-of-household filing status and (2) whether petitioner’s daughter is a “qualifying child” with respect to petitioner for purposes of the earned income credit under section 32. Background Some of the facts have been stipulated, and they are so found. The stipulation of facts and the attached exhibits are incorporated herein by this reference. At the time of filing his petition, petitioner resided in Morgantown,

d Cir. 1949). Factual determinations are required in order to decide whether a taxpayer is entitled to: (1) Head of household filing status, see sec. 2(b); (2) a dependency exemption deduction, see secs. 151 and 152; (3) an earned income credit, see sec. 32; or (4) a child tax credit, see sec. 24. We have held that whenever the resolution of adjustments requires factual determinations, - 13 - the Commissioner is not obliged to concede those adjustments until the Commissioner has received, and ha

Under section 32(d), in the case of an individual who is married (within the meaning of section 7703), the individual may be entitled to an EIC under section 32 only if a joint return is filed for the taxable year under section 6013.

Section 32 (a) provides for an earned income credit in the case of an eligible individual. Section 32(c) (1) (A), in pertinent part, defines an "eligible individual" as an individual who has a qualifying child for the taxable year. Sec. 32 (c) (1) (A) (i) . A qualifying child is one who satisfies a relationship test, a residency test, an age test,

Under section 32, an eligible individual is allowed a credit which is calculated as a percentage of the individual’s earned income, subject to certain limitations. Sec. 32(a)(1). Any individual with a qualifying child is an eligible individual. Sec. 32(c)(1). As is relevant here, the definition of a qualifying child for purposes of section 32 includes a

A refund of $3,656 attributable entirely to a section 32 earned income credit is claimed on the return.

Nevertheless, both section 2(b) and section 32 require that petitioner's household be Maddison's principal place of abode for more than one-half of the taxable year.

Awadallah to claim the earned income tax credit under section 32, resulting in a refund of $761 for 1996.

Earned Income Credit The relevant parts of section 32 provide that an individual is eligible for the earned income credit if the individual has a qualifying child.

Under section 32, an eligible individual is allowed a credit which is calculated as a percentage of the individual’s earned income, subject to certain limitations. Sec. 32(a)(1). Any individual with a qualifying child is an eligible individual. Sec. 32(c)(1). An individual with qualifying children is entitled to a larger credit than is an individual with

The earned income credit under section 32 will automatically be adjusted for any changes.

Under section 32,1 an eligible individual is allowed a credit which is calculated as a percentage of the individual’s earned income. Sec. 32(a)(1). Any taxpayer with a qualifying child is an eligible individual. Sec. 32(c)(1). Taxpayers with two or more qualifying children are entitled to a larger credit 1We apply sec. 32 as it was in effect in the years

32.7 (2000); 14 Op. Atty. Gen. 608 (1873); 9 Op. Atty. Gen. 364 (1859); The U.S. Constitution and Insular Areas, supra at 39-40, 50-51; U.S. 5We rely on judicial notice and stipulations of the parties for statements describing Johnston Island and Johnston Atoll. 6Johnston Atoll, furthermore, is a national wildlife refuge under the jurisdiction

status for 1994 and 1995. B. The Earned Income Credit The next issue is whether petitioner is entitled to the earned income credit for 1995. A taxpayer who is married must file a joint return with his or her spouse for the taxable year in order for section 32 to apply. See sec. 32(d). Petitioner was married in 1995, but he and Mrs. Chappell did not file a joint return. Thus, petitioner is not entitled to an earned income credit for 1995. C. Unreported Income Respondent contends that petitioner u

32.7 (2000); 14 Op. Atty. Gen. 608 (1873); 9 Op. Atty. Gen. 364 (1859); The U.S. Constitution and Insular Areas, supra at 39-40, 50-51; U.S. 5We rely on judicial notice and stipulations of the parties for statements describing Johnston Island and Johnston Atoll. 6Johnston Atoll, furthermore, is a national wildlife refuge under the jurisdiction

Cotton is entitled to the earned income credit under section 32; (3) whether Mrs.

Cotton is entitled to the earned income credit under section 32; (3) whether Mrs.

The issues for decision are: (1) Whether there are deficiencies at issue in these cases within the meaning of section 6211; and (2) whether petitioner had earned income during the years in issue, entitling him to a section 32 earned income credit for each year.

494, 530. DEFRA section 32 is virtually identical to current section 7701(h), which was enacted during 1986 as part of the Tax Reform Act of 1986 (TRA 1986), Pub. L. 99-514, sec. 201(c), 100 Stat. 2085, 2138. The legislative history of DEFRA section 32 specifically refers to: (1) Our decision in Swift Dodge, (2) the decision of th

ed the earned income amount. See sec. 32(a). Earned income includes wages, salaries, tips, and other employee compensation. See sec. 32(c)(2)(A)(i). The money petitioner received from begging does not meet the definition of earned income provided by section 32. Rather, the money petitioner received from his family and friends was - 3 - received as a gift. A gift is a transfer that proceeds from a "’detached and disinterested generosity,’ * * * out of affection, respect, admiration, charity or li

By those references, we know that, when DEFRA section 32 was enacted, Congress was aware of our holding and the Court of Appeals’ holding in Swift Dodge, as well as the proposed regulations.

iduals at his modest income level. OPINION Section 1401 imposes Social Security and medicare taxes (self-employment tax) on income derived by an individual from a 2 Respondent concedes that petitioner is entitled to earned income credits pursuant to sec. 32 for the taxable years 1992 and 1993 in the amounts of $1,184 and $1,429, respectively. - 3 - trade or business (self-employment income) in excess of $400 to pay for old-age, survivors and disability insurance, and hospital insurance. Secs. 14

ar at trial and did not sign the stipulation of facts in this case. Respondent orally moved to dismiss her for failure to properly prosecute her case. Respondent's motion will be granted. 2Petitioners' entitlement to the "Earned Income" credit under sec. 32 as well as their liability for the tax on self- employment income under secs. 1401-1403 and their entitlement to the deduction under sec. 164(f) of one-half the amount, if any, of any self-employment tax imposed, is dependent upon our resolut

32-3-101 (1984)). In Tennessee, technical words used in a will drafted by an attorney are to be given their technical meaning, in the absence of a finding of a contrary intent on the part of the testator. Fariss v. Bry-Block Co., 346 S.W.2d 705, 707 (Tenn. 1961). In Daugherty v. Daugherty, supra at 653, the Supreme Court of Tennessee explained