Ann Powers, F/K/A Melanie Ann Studinger - Page 6




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              however, * * * the most significant objective of the                    
              provision should be to assist in encouraging people to                  
              obtain employment, reducing the unemployment rate and                   
              reducing the welfare rolls.                                             
         S. Rept. 94-36 (1975), 1975-1 C.B. (Part II) 590, 603 to                     
         accompany the Tax Reduction Act of 1975, Pub. L. 94-12, 89 Stat.             
         26, sec. 204.                                                                
              At trial, petitioner testified that she was physically                  
         disabled and should therefore be deemed to have earned income                
         pursuant to a special rule that “assumes an earned income of $200            
         per month for one qualifying person, and an earned income of $400            
         per month for two or more qualifying persons.”  This special                 
         rule, however, serves to ameliorate the earned income limitation             
         on the amount of a taxpayer’s “employment-related expenses” for              
         purposes of the child care credit under section 21; this special             
         rule does not apply in determining the amount of a taxpayer’s                
         earned income for purposes of the earned income credit under                 
         section 32.  See sec. 21(d)(2).                                              
              Petitioner also testified at trial that she is an inventor,             
         implying that her power or ability to invent is a trade or                   
         business.  However, petitioner did not allege, much less prove,              
         that she had net earnings from any such trade or business.                   
              Finally, petitioner testified at trial that she received                
         “under $400 miscellaneous income” from “my sister and a friend of            
         mine”, apparently for doing “legal correspondence and a lot of               






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