
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC131]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
               Subchapter B--Computation of Taxable Income
 
         PART III--ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME
 
Sec. 131. Certain foster care payments


(a) General rule

    Gross income shall not include amounts received by a foster care 
provider during the taxable year as qualified foster care payments.

(b) Qualified foster care payment defined

    For purposes of this section--

                           (1) In general

        The term ``qualified foster care payment'' means any amount--
            (A) which is paid by a State or political subdivision 
        thereof or by a placement agency which is described in section 
        501(c)(3) and exempt from tax under section 501(a), and
            (B) which is--
                (i) paid to the foster care provider for caring for a 
            qualified foster individual in the foster care provider's 
            home, or
                (ii) a difficulty of care payment.

                   (2) Qualified foster individual

        The term ``qualified foster individual'' means any individual 
    who is living in a foster family home in which such individual was 
    placed by--
            (A) an agency of a State or political subdivision thereof, 
        or
            (B) in the case of an individual who has not attained age 
        19, an organization which is licensed by a State (or political 
        subdivision thereof) as a placement agency and which is 
        described in section 501(c)(3) and exempt from tax under section 
        501(a).

     (3) Limitation based on number of individuals over the age 
                                    of 18

        In the case of any foster home in which there is a qualified 
    foster care individual who has attained age 19, foster care payments 
    (other than difficulty of care payments) for any period to which 
    such payments relate shall not be excludable from gross income under 
    subsection (a) to the extent such payments are made for more than 5 
    such qualified foster individuals.

(c) Difficulty of care payments

    For purposes of this section--

                   (1) Difficulty of care payments

        The term ``difficulty of care payments'' means payments to 
    individuals which are not described in subsection (b)(1)(B)(i), and 
    which--
            (A) are compensation for providing the additional care of a 
        qualified foster individual which is--
                (i) required by reason of a physical, mental, or 
            emotional handicap of such individual with respect to which 
            the State has determined that there is a need for additional 
            compensation, and
                (ii) provided in the home of the foster care provider, 
            and

            (B) are designated by the payor as compensation described in 
        subparagraph (A).

            (2) Limitation based on number of individuals

        In the case of any foster home, difficulty of care payments for 
    any period to which such payments relate shall not be excludable 
    from gross income under subsection (a) to the extent such payments 
    are made for more than--
            (A) 10 qualified foster individuals who have not attained 
        age 19, and
            (B) 5 qualified foster individuals not described in 
        subparagraph (A).

(Added Pub. L. 97-473, title I, Sec. 102(a), Jan. 14, 1983, 96 Stat. 
2606; amended Pub. L. 99-514, title XVII, Sec. 1707(a), Oct. 22, 1986, 
100 Stat. 2781.)


                            Prior Provisions

    A prior section 131 was renumbered section 139 of this title.


                               Amendments

    1986--Subsec. (a). Pub. L. 99-514 amended subsec. (a) generally. 
Prior to amendment, subsec. (a) read as follows: ``Gross income shall 
not include amounts received by a foster parent during the taxable year 
as qualified foster care payments.''
    Subsec. (b). Pub. L. 99-514 amended subsec. (b) generally. Prior to 
amendment, par. (1) ``In general'' read as follows: ``The term 
`qualified foster care payment' means any amount--
        ``(A) which is paid by a State or political subdivision thereof 
    or by a child-placing agency which is described in section 501(c)(3) 
    and exempt from tax under section 501(a), and
        ``(B) which is--
            ``(i) paid to reimburse the foster parent for the expenses 
        of caring for a qualified foster child in the foster parent's 
        home, or
            ``(ii) a difficulty of care payment.''
and par. (2) ``Qualified foster child'' read as follows: ``The term 
`qualified foster child' means any individual who--
        ``(A) has not attained age 19, and
        ``(B) is living in a foster family home in which such individual 
    was placed by--
            ``(i) an agency of a State or political subdivision thereof, 
        or
            ``(ii) an organization which is licensed by a State (or 
        political subdivision thereof) as a child-placing agency and 
        which is described in section 501(c)(3) and exempt from tax 
        under section 501(a).''
    Subsec. (c). Pub. L. 99-514, in amending subsec. (c) generally, in 
par. (1)(A), substituted references to ``qualified foster individual'', 
``such individual'', and ``foster care provider'' for references to 
``qualified foster child'', ``such child'', and ``foster parent'', 
respectively, and in par. (2) substituted ``more than (A) 10 qualified 
foster individuals who have not attained age 19, and (B) 5 qualified 
foster individuals not described in subparagraph (A)'' for ``more than 
10 qualified foster children''.


                    Effective Date of 1986 Amendment

    Section 1707(b) of Pub. L. 99-514 provided that: ``The amendment 
made by this section [amending this section] shall apply to taxable 
years beginning after December 31, 1985.''


                             Effective Date

    Section 102(c) of Pub. L. 97-473 provided that: ``The amendments 
made by this section [enacting this section] shall apply to taxable 
years beginning after December 31, 1978.''
