- 22 -
of such interest is received or accrued) wholly
exempt from the taxes imposed by this subtitle.
Respondent determined that some of the adult foster home care
expenses claimed by petitioners are expenses that are allocable
to petitioner's tax-exempt income and are therefore
nondeductible. Petitioner's position is that respondent's method
of allocation is wrong.
Having determined that petitioners must include in income
the payments received from ElderPlace, respondent argues that
petitioners may deduct foster home care expenses only in the same
ratio as the ratio of taxable income to total income.
Petitioners, rather than a pro rata allocation based on
taxable and nontaxable income, would allocate expenses to three
income categories: (a) To adult foster care "service" income,
some of which is tax exempt; (b) to "room and board" income,
almost all of which is taxable;7 and (c) to income related to
both "service" and "room and board". Petitioners characterize
mortgage interest, real estate taxes and insurance, repairs,
maintenance, depreciation, and food expense as "room and board"
expenses. Petitioners want the Court to allocate most "room and
board" expenses to "room and board" income and almost none of it
to "service" income.
7The parties agree that petitioners had a resident,
Mr. Authur (sic) Armstrong, whose room and board was paid by the
Oregon Department of Veterans' Affairs in 1993 and 1994 and is
tax exempt.
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011