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includes as a member one or more qualifying individuals. The
term “qualifying individual,” under section 21(b)(1), includes a
dependent of the taxpayer under age 13, with respect to whom the
taxpayer is entitled to a dependency deduction under section
151(c). The allowable credit, under section 21(b)(2), is based
upon employment-related expenses that are incurred to enable the
taxpayer to be gainfully employed, including expenses incurred
for the care of a qualifying individual. Respondent does not
dispute that petitioner’s daughter was a “qualifying individual”
under section 21(b)(1), or that petitioner’s payments to Kuddle
Korner, if actually paid, were employment related under section
21(b)(2). Respondent contends, however, that petitioner failed
to substantiate payments made during 1995 for the care of Clara
while petitioner and her husband were working.
Petitioner claimed the expenses paid to Kuddle Korner and
provided identifying information with respect to that service
provider on her 1995 return pursuant to section 21(e)(9).
Petitioner did not substantiate these child care expenses with
written records but testified credibly about the expense. See
sec. 1.44A-1(e), Income Tax Regs. (taxpayer must substantiate
credit by adequate records or other sufficient evidence). The
Court is satisfied from the record that petitioner did incur
child care expenses with respect to a qualifying individual, her
daughter, Clara. In the absence of adequate substantiation, this
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