Hi all,

My client has 6 qualified difficulty of care individuals that live with him and his wife 24/7. He created a single member LLC and pays an employee to help out.

The IRS states that one can exclude difficulty of care payments to the extent of 5 qualified foster individuals. The wording in this leads me to believe that they can exclude the income from the first 5 but would have to report the income for any individuals over 5. For example, if they get $600,000 a year for all 6, then $500,000 can be excluded.

The other caveat that throws a wrench in things, is that my clients own an assisted living facitilty separate from where they live. I came accross something that sounded like they would have a problem deducting these payments if this were the case. The only difference in the case I read about is that the foster care and business was under the same roof. In my client's situation, it is two separate locations.