Princess Stephan Obriot - Page 9




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          items such as clothing, education, and medical treatment.  Sec.             
          1.2-2(d), Income Tax. Regs.                                                 
               We found petitioner and Mr. Stephan to be credible and                 
          forthright witnesses.  Based on all the evidence, we conclude               
          that petitioner paid more than one-half of the expenses for her             
          household.  Accordingly, petitioner qualifies for the head-of-              
          household filing status for 1997 and 1998.                                  
               The next issue for decision is whether petitioner is                   
          entitled to child care credits for 1997 and 1998.  Under section            
          21(a)(1), a taxpayer who maintains a household may receive as a             
          credit a certain percentage of employment-related expenses for a            
          qualifying individual.  A qualifying individual includes a child            
          under the age of 13 who is a dependent of the taxpayer under                
          section 152 for the purpose of the section 151(c) dependency                
          exemption deduction.  Sec. 21(b)(1)(A).                                     
               Employment-related expenses are those incurred to care for a           
          qualifying individual, but only if they are incurred to enable              
          the taxpayer to be gainfully employed.  Sec. 21(b)(2)(A)(ii).               
          These expenses include child care services, such as nursery                 
          school.  Sec. 1.44A-1(c)(3)(i), Income Tax Regs.2                           
               As previously indicated, petitioner provided more than one-            
          half of the cost of maintaining the household.  Petitioner’s                


               2  Sec. 44A was redesignated as sec. 21 for tax years                  
          beginning after Dec. 31, 1983, pursuant to sec. 471(c)(1) of the            
          Deficit Reduction Act of 1984, Pub. L. 98-369, 98 Stat. 826.                





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