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A "qualified foster individual" is described in section
131(b)(2) as any individual living in a foster family home in
which the individual was "placed by":
(A) an agency of a State or political subdivision
thereof, or
(B) in the case of an individual who has not
attained age 19, an organization which is licensed by a
State (or political subdivision thereof) as a placement
agency and which is described in section 501(c)(3) and
exempt from tax under section 501(a).
Petitioners argue that the payments to them by ElderPlace
are excluded from income under section 131 because they are
qualified foster care payments. Even "though the check to the
petitioners is made by Providence ElderPlace", petitioners
contend that the payments, indirectly, are from the State of
Oregon. Petitioners argue further that the legislative history
of section 131 and the intent of Congress in enacting it was that
a payment by an "intermediary" such as ElderPlace, made out of
State funds "that a state has an obligation to provide", meets
the requirements of section 131(b)(1)(A).
Respondent contends that the ElderPlace payments to
petitioners are includable in gross income because the payments
are not qualified foster care payments. They are not qualified
foster care payments, maintains respondent, because the
ElderPlace payments were not paid to petitioners for caring for
"qualified foster [individuals]". Respondent points to the
definition of a qualified foster individual in section 131(b)(2)
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Last modified: May 25, 2011