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Legislative History
Petitioners insist, however, that individuals placed by
ElderPlace were placed by an entity that had contracted with a
State agency responsible for such matters. Therefore, the
individuals placed by ElderPlace were placed by the State within
the meaning of section 131(b)(2), petitioners conclude. They
base their argument on the legislative history of section 131,
which, they claim, shows that the use of the phrase "placed by"
in section 131(b)(2) merely requires some indirect "State action"
of a government agency.
For taxable years beginning before January 1, 1986, section
131 provided an exclusion from gross income for certain payments
received by "foster parents" for caring for foster children. The
Tax Reform Act of 1986, Pub. L. 99-514, section 1707, 100 Stat.
2085, 2781-2782, amended section 131 to extend to certain adult
foster care payments the exclusion from gross income.
Petitioners point to the language of H. Conf. Rept. 99-841 (Vol.
II), at II-838 through II-839 (1986), 1986-3 C.B. (Vol. 4) 1,
838-839, which says:
The conferees intend that this extension of the
exclusion to adult foster care is limited to cases of
individuals who provide foster care within their own
homes to adults who have been placed in their care by
an agency of the State or political subdivision thereof
specifically designated as responsible for such
function. The exclusion does not apply to payments to
operators of boarding homes who provide room and board
to adults who have not been placed in their care
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