Cato v. Commissioner
United States Tax Court
P, a foster parent, provided a home for disabled foster children and received payments for providing foster care. The funds were received from a placement agency described in sec. 501(c)(3), I.R.C., and exempt from tax under sec. 501(a). A portion of the funds for such payments was provided by the Federal Government. Held, for 1986, 1987, and 1988, sec. 131 excludes from P's gross income the foster care receipts.
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P, a foster parent, provided a home for disabled foster children and received payments for providing foster care. The funds were received from a placement agency described in sec. 501(c)(3), I.R.C., and exempt from tax under sec. 501(a). A portion of the funds for such payments was provided by the Federal Government. Held, for 1986, 1987, and 1988, sec. 131 excludes from P's gross income the foster care receipts. Held, further, for 1985, secs. 1401 and 1402 tax the excess of foster care receipts over foster care expenses as self-employment income because P's activity was a trade or business.
1Opinion of the Court
OPINION
Cohen, Judge:
Respondent determined the following deficiencies in, and additions to, petitioners’ Federal income taxes:
Additions to tax
Year Deficiency Sec. 6653(a)(1) Sec. 6653(a)(2) Sec. 6653(a)(1)(A) Sec. 6653(a)(1)(B) Sec. 6651 Sec. 6661
1985 $34,252 $1,713 1 $8,563
1986 20,852 $1,043 2 5,213
1987 16,019 801 3 $801 4,005
1988 16,229 4,057
Unless otherwise indicated, 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.
The deficiencies in tax for 1985, 1986, 1987, and 1988 are…
2Cases cited12 opinions
- United States v. American Trucking AssociationsSupreme Court of the United States · 1940
- Commissioner v. GroetzingerSupreme Court of the United States · 1987
- Takao Ozawa v. United StatesSupreme Court of the United States · 1922
- National Labor Relations Board v. Lion Oil Co.Supreme Court of the United States · 1957
- Commissioner v. EngleSupreme Court of the United States · 1984
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3Cited by11 opinions
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- Cato v. CommissionerUnited States Tax Court · 1992
- Dobra v. CommissionerUnited States Tax Court · 1998
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