Thanks for the response!

The individuals that are placed in my client's home are all unrelated adults and meet the difficulty of care definition. All funds are received from a State organization.

My understanding is that if you house one of these individuals than none of the payments are taxable and you cannot deduct expenses. How I read section 131, is that you can exempt the income on up to five in qualified individuals.

From my research, a group home only applies to children but I could be wrong.