Jackson v. Commissioner

1979 T.C. Memo. 336, 38 T.C.M. 1294, 1979 Tax Ct. Memo LEXIS 186

• Court: United States Tax Court
• Decided: August 27, 1979
• Docket: Docket No. 5108-78.
• Status: Unpublished

Opinion

ALWYN M. AND FAY D. JACKSON, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Jackson v. Commissioner

Docket No. 5108-78.

United States Tax Court

T.C. Memo 1979-336; 1979 Tax Ct. Memo LEXIS 186; 38 T.C.M. (CCH) 1294; T.C.M. (RIA) 79336;

August 27, 1979, Filed

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Held, 1975 amendment to section 241(d) increasing income limitation from $18,000 to $35,000 applicable to taxable years beginning after March 29, 1975 and hence $18,000 limitation applied to petitioners' 1975 calendar year.

Alwyn M. and Fay D. Jackson, pro se.

Thomas J. O'Rourke, for the respondent.

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STERRETT

MEMORANDUM FINDINGS OF FACT AND OPINION

STERRETT, Judge: On March 2, 1978, respondent issued a statutory notice to petitioners in which he determined a deficiency in income tax for their taxable year 1975 in the amount of $142. The only question before this Court is whether petitioners are entitled to deduct child care expenses under section 214, I.R.C. 1954.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found. The stipulation of facts, together with the exhibits attached thereto, are incorporated herein by this reference.

Petitioners, Alwyn M. and Fay D. Jackson, husband and wife, resided in Landover, Maryland at the time the petition herein was filed. Petitioners filed a joint income tax return for the calendar year 1975 with the district director's office in Baltimore, Maryland.

Petitioners' earned income in 1975 was in excess of $25,000. During the year in issue petitioners incurred total child care expenses in the amount of $570 for the care of one child.

OPINION

Section 214, I.R.C. 1954, provides for a deduction of employment related expenses inluding child care. Respondent's only basis for denying petitioners' deduction is subsection (d) of section 214 which places an income limitation on the availability of the deduction. Petitioners' position is that the limitation effective for calendar year 1975 was $35,000. Petitioners' basis for their position is the 1976 edition of the Teacher's Income Tax Guide. This publication provides, in pertinent part, as follows:

Child care expenses. Any teacher or married working couple who maintains a household (pays more than half of expenses) can deduct up to $400 a month for in-the-home expenses, if it is necessary to pay for the care of a (dependents) under 15 years of age while the (parents) works. A teacher can earn up to $35,000 a year and qualify for the full deduction. The monthly deduction is not limited just to at-home child care, but can include the cost of cleaning women and caretaker services.Out-of-home expenses, such as day care centers, boarding schools, recreational supervision, transportation to the care center, can be part of the $200 a month for one child, $300 for two, $400 a month for three or more. Special rules for divorced parents are found in IRS publication 503.

Respondent argues that the limitation in effect for calendar year 1975 is $18,000. Petitioners concede that, if the limitation is $18,000, then none of their child care expenses are deductible under section 214.

The Tax Reduction Act of 1975 raised the income limitation applicable to the child and dependent care deduction of section 214(d) from $18,000 to $35,000. Pub. L. 94-12, sec. 206, 94th Cong., 1st Sess. (1975). However, section 209 of the same Act provided that the amendments made to section 214 were to apply to taxable years beginning after March 29, 1975.

Petitioners used the calendar year as their tax year. Since January 1, 1975 was the beginning date of their taxable year, the $18,000 limitation was applicable. Therefore, we must hold that petitioners were not entitled to a deduction under section 214.

Decision will be entered for the Respondent.