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representative as to whether one foster home would be better than
another for the particular enrollee, based upon that enrollee's
needs. Once a decision was made identifying the foster home in
which the enrollee wanted to live, ElderPlace negotiated the
enrollee's payment rate with the foster home operator of the
selected home.
During each of the years 1992, 1993, and 1994, petitioners
provided adult foster care to several persons in their home. All
of the residents had attained the age of 19. Petitioners
received adult foster care payments for the individuals from
various sources, from their residents or their representatives,
in some cases from the State of Oregon and in other cases from
ElderPlace.
On their Federal income tax returns for 1992 through 1994,
petitioners reported certain income and deductions from "ADULT
FOSTER CARE" on Schedule C. Petitioners did not report as income
amounts received from the State of Oregon or from ElderPlace. On
their return for 1994, petitioners reported exclusions of State
and ElderPlace payments from income and made a separate
adjustment for expenses attributable to nontaxable income.
Respondent examined petitioners' returns and determined that
petitioners improperly excluded self-employment income received
from ElderPlace in the amounts of $13,167, $22,750, and $32,366
for the years 1992, 1993, and 1994, respectively, and are
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