## Facts

- Daniel Aaron Baker and Deanna Wus had two children, a daughter “A” (age four in 2003) and a son “C.”
- Baker and Wus stopped living together in 2002 and, during 2003, were unmarried, lived in separate residences, and had no custody agreement.
- In 2003 Wus received Delaware public benefits for A, and state records treated Wus as A’s custodial parent; A’s health coverage was through Medicaid rather than through Baker.
- Baker did not apply for public assistance for A.
- Baker lived in a double-wide trailer until about mid-February 2003, then moved to a duplex on Barney Jenkins Road, and later moved (between late September/October and mid-November 2003) into a house on Fox Road owned by his mother, paying rent while she was away.
- Rosemary Srase, a long-time family friend, babysat A and C about two to three times per week. She babysat at her own home until Baker moved into his mother’s Fox Road house, after which she babysat at that house.
- Baker did not pay Srase cash; he compensated her by doing work around her home. Srase provided most of the food the children ate while in her care.
- The Dover Educational & Community Daycare Center cared for the children at least from January 2 through March 31, 2003. Daycare records showed Wus usually dropped the children off and Baker usually picked them up, with variations where either parent handled both drop-off and pick-up.
- On his 2003 federal income tax return, Baker claimed A for: a dependency exemption, head-of-household status, the earned income tax credit (EITC), the child tax credit, and the additional child tax credit.
- The IRS issued a notice of deficiency determining a $3,556 deficiency for 2003 after disallowing those items, and Baker petitioned the Tax Court.
- At trial, Baker, his mother, and Srase testified that A lived with Baker from January 2003 until November 2003, when A allegedly began living with Wus.

## Issues

1. Whether Baker was entitled to a dependency exemption deduction for A under I.R.C. § 151 for 2003.
2. Whether Baker qualified for head-of-household filing status under I.R.C. § 2(b) for 2003.
3. Whether Baker was entitled to the earned income tax credit under I.R.C. § 32 for 2003 based on A as a qualifying child.
4. Whether Baker was entitled to the child tax credit under I.R.C. § 24 for 2003 based on A.
5. Whether Baker was entitled to the additional child tax credit under I.R.C. § 24 for 2003 based on A.

## Decision

- The Tax Court sustained the deficiency determination.
- Baker was not entitled to a dependency exemption for A because he failed to prove A resided with him for more than half of 2003.
- Because A was not shown to be Baker’s qualifying child for 2003, Baker was not entitled to head-of-household status.
- Baker was not entitled to the EITC because he failed to establish A as his qualifying child under § 32’s residency requirement.
- Baker was not entitled to the child tax credit or additional child tax credit because he failed to establish A as a qualifying child for those credits.

## Legal Principles

- The taxpayer bears the burden of proving entitlement to deductions, credits, and filing status benefits, and must substantiate the facts supporting the claim.
- The court will not shift the burden of proof to the Commissioner under I.R.C. § 7491 when the taxpayer does not meet the statutory conditions (including substantiation and cooperation).
- For the dependency exemption and the related benefits at issue, the child generally must be the taxpayer’s “qualifying child,” which includes a residency requirement: the child’s principal place of abode must be the same as the taxpayer’s for more than half of the taxable year.
- Head-of-household status requires that the taxpayer maintain a household that is the principal place of abode of a qualifying child for more than half of the year; failure to prove the child’s residency defeats the status.
- The EITC’s “qualifying child” test includes a similar residency requirement; failure to prove residence for the required period defeats the credit.
- Eligibility for the child tax credit and additional child tax credit depends on establishing the child as a qualifying child; if the dependency-based requirements are not met, the credits are denied.
- When testimony conflicts with contemporaneous records and other objective evidence (such as public-assistance listings, medical coverage information, and daycare records), the court may give greater weight to the records than to uncorroborated testimony.

## Conclusion

Because Baker did not carry his burden to prove that A’s principal place of abode was with him for more than half of 2003, the Tax Court held that A was not shown to be his qualifying child and therefore denied the dependency exemption, head-of-household status, the EITC, and the child tax credit and additional child tax credit, sustaining the Commissioner’s $3,556 deficiency determination.


Baker v. Commissioner, 91 T.C.M. 949 (2006)