Manuel R. Chavez - Page 4




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               Petitioner worked for the Department of Defense and received           
          wages totaling $14,010 in 2003.  On his 2003 Form 1040A, U.S.               
          Individual Income Tax Return, which was prepared by H&R Block,              
          petitioner listed RJM and CGM, his nieces, as dependents.                   
          Petitioner filed his Federal tax return as head of household and            
          claimed a standard deduction in the amount of $7,000.3                      
          Petitioner claimed three exemptions, one for himself and                    
          dependency exemptions for RJM and CGM, totaling $9,150.                     
          Petitioner also claimed an earned income credit in the amount of            
          $4,142, and a child tax credit in the amount of $351.  According            
          to petitioner and H&R Block’s calculations, petitioner was                  
          entitled to a $4,790 refund.                                                
               The notice of deficiency was sent to petitioner on August              
          30, 2004.  In the notice of deficiency, respondent:                         
          (1) Disallowed the dependency exemptions for petitioner’s nieces;           
          (2) changed petitioner’s filing status from head of household to            
          single and adjusted the standard deduction accordingly;                     
          (3) disallowed the child tax credit; and (4) disallowed the                 
          earned income credit.  As a result, respondent determined a                 
          deficiency of $5,116.  Petitioner timely petitioned this Court,             
          and a trial was held on February 6, 2006, in El Paso, Texas.                




               3The standard deduction for single or married filing                   
          separately for the taxable year 2003 was $4,750.                            






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