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Discussion
Section 131(a) provides the general rule that “Gross income
shall not include amounts received by a foster care provider
* * * as qualified foster care payments.” Section 131(b) defines
the “qualified foster care payments” (QFCP) referred to by
section 131(a). Under section 131(b)(1)(B), a payment may be a
QFCP only if it is either a “difficulty of care payment”, as
defined in section 131(c), or is “paid to the foster care
provider for caring for a qualified foster individual in the
foster care provider's home” (emphasis added).3
Finally, section 131(b)(2) defines a “qualified foster
individual” as “any individual who is living in a foster family
home” (emphasis added).4
The parties have stipulated that none of the payments at
issue were “difficulty of care payments”. Accordingly, the
3 Sec. 131(b) additionally requires that a "qualified foster
care payment" (QFCP) be paid by a State or tax-exempt placement
agency. The payments at issue were made by the State of Oregon;
and respondent has not argued in this case that the State payment
requirement has not been met. Cf. Cato v. Commissioner, 99 T.C.
633 (1992), in which the Commissioner argued that the payment
requirement of sec. 131 was not satisfied because the tax-exempt
placement agency was serving as a mere conduit for the payment of
funds from another source.
4 With respect to payments made for the foster care of adult
individuals, the definition of a "qualified foster individual" in
sec. 131(b)(2) also requires that the individuals were placed in
the foster home by a State agency. The parties have stipulated
that neither the notice of deficiency nor the pleadings raises an
issue as to whether this requirement was met. Cf. Micorescu v.
Commissioner, T.C. Memo. 1998-398.
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