Yung-Shing Hsu v. Commissioner

MEMORANDUM FINDINGS OF FACT AND OPINION

DRENNEN, Judge: This case was assigned to and heard by Special Trial Judge Marvin F. Peterson pursuant to the provisions of section 7456(c) of the Internal Revenue Code*698 ¹ and Rules 180 and 181, Tax Court Rules of Practice and Procedure.² The Court agrees with and adopts his opinion which is set forth below.

OPINION OF THE SPECIAL TRIAL JUDGE

PETERSON, Special Trial Judge: Respondent determined a deficiency in petitioners' 1978 Federal income tax in the amount of $ 720. The only issue is whether petitioners are entitled to claim dependency exemptions for petitioner Yung-Shing's son and petitioner Debbie Hsu's father and uncle.

Petitioners and respondent executed a stipulation of facts which is incorporated herein. The relevant facts are not in dispute. At the time petitioners filed their petition herein they were residents of Lewiston, Idaho. Their 1978 Federal income tax return was filed with the Internal Revenue Service Center at Ogden, Utah.

Petitioners are, and were at all times*699 relevant hereto, naturalized citizens of the United States. The parties are in agreement that petitioners totally supported the three dependents in question. Further, there is no dispute that the three dependents resided in and were residents of Taiwan during the year 1978. Respondent agrees that petitioners met all the statutory provisions relating to the allowance of the dependency exemptions except for the requirement that the dependents be citizens or residents of the United States or of a country contiguous to the United States pursuant to section 152(b)(3). ³ Petitioners are cognizant of this statutory provision but maintain that the statute is unconstitutional since it discriminates against United States citizens who support nonresident aliens in countries not contiguous to the United States. Petitioners contend that the only reasonable criteria for claiming a dependency exemption should be limited to the support test. As such, petitioners argue, to this extent the statute is unconstitutional since it violates the due process clause of the Fifth Amendment of the Constitution. ⁴

*700 Petitioners argue that the statute is unconstitutional since it unjustly discriminates against them in depriving them of a deduction for three dependents that would otherwise be allowed but for the place of residence or citizenship of the dependents involved. In Barr v. Commissioner,51 T.C. 693, 695 (1969) we held that such a claim concerning this very issue was meritless. In reaching this conclusion we held that the power of Congress in levying taxes is very wide, and where a reasonable classification is made concerning taxpayers, which is not arbitrary and capricious, the Fifth Amendment does not apply, citing Barclay & Co. v. Edwards,267 U.S. 442, 450 (1924). Normally, a legislative classification will not be set aside if any state of facts rationally justifying it is demonstrated to or perceived by the courts. United States v. Maryland Savings-Share Ins. Corp.,400 U.S. 4, 6 (1970) revg. per curiam 308 F. Supp. 761 (D.Md. 1970); Habeeb v. Commissioner, 559 F.2d 435 (5th Cir. 1977), affg. T.C. Memo. 1976-259; Wexler v. Commissioner, 507 F.2d 843 (6th Cir. 1974),*701 affg. T.C. Memo. 1974-113. Imposing the citizenship and residency requirements under section 152(b)(3) was not unreasonable and arbitrary since the limitations were imposed by practical reasons to facilitate the administration of the income tax law. Barr v. Commissionr,supra at 695; Gitter v. Commissioner,13 T.C. 520, 526-527 (1949). Also, we do not find that the statute involves a suspect classification since it applies to all taxpayers. Accordingly, there are no grounds on which to hold section 152(b)(3) unconstitutional.

Decision will be entered for the respondent.