Expenses for Household and Dependent Care Services Necessary for Gainful Employment, 45338-45346 [E7-15753]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 72, Number 156 (Tuesday, August 14, 2007)]
[Rules and Regulations]
[Pages 45338-45346]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-15753]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 602

[TD 9354]
RIN 1545-BB86


Expenses for Household and Dependent Care Services Necessary for 
Gainful Employment

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations regarding the credit 
for expenses for household and dependent care services necessary for 
gainful employment. The regulations reflect statutory amendments under 
the Deficit Reduction Act of 1984, the Tax Reform Act of 1986, the 
Omnibus Budget Reconciliation Act of 1987, the Family Support Act of 
1988, the Small Business Job Protection Act of 1996, the Economic 
Growth and Tax Relief Reconciliation Act of 2001, the Job Creation and 
Worker Assistance Act of 2002, the Working Families Tax Relief Act of 
2004, and the Gulf Opportunity Zone Act of 2005. The regulations affect 
taxpayers who claim the credit for expenses for household and dependent 
care services, and dependent care providers.

DATES: Effective Date: These regulations are effective August 14, 2007.
    Applicability Date: For date of applicability, see Sec.  1.21-1(l).

FOR FURTHER INFORMATION CONTACT: Amy Pfalzgraf, (202) 622-4960 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    This document contains final amendments to the Income Tax 
Regulations, 26 CFR part 1, relating to the credit for expenses for 
household and dependent care services necessary for gainful employment 
(the credit) under section 21 of the Internal Revenue Code (Code).
    On May 24, 2006, a notice of proposed rulemaking (REG-139059-02) 
regarding the credit was published in the Federal Register (71 FR 
29847). Written and electronic comments responding to the notice of 
proposed rulemaking were received. No public hearing was requested or 
held. After consideration of all the comments, the proposed regulations 
are adopted as amended by this Treasury decision. The comments and 
revisions are discussed in the preamble.

Explanation of Provisions and Summary of Comments

1. Time of Payment and Performance of Services

    Section 21(b)(2) provides, in part, that employment-related 
expenses are amounts paid to enable a taxpayer to be gainfully employed 
for a period for which there are one or more qualifying individuals 
with respect to a taxpayer. The proposed regulations provide that a 
taxpayer may take expenses into account under section 21 only in the 
later of the taxable year the services are performed or the taxable 
year the expenses are paid. The proposed regulations also provide that 
the status of an individual as a qualifying individual is determined on 
a daily basis, that a taxpayer may take into account only expenses that 
qualify before a disqualifying event, such as a child turning 13, and 
that the requirements of section 21 and the regulations are applied at 
the time the services are performed, regardless of when the expenses 
are paid.
    A verbal comment inquired whether, to be creditable, expenses must 
be paid and services must be performed before a disqualifying event.
    The determination of whether expenses qualify as employment-related 
expenses, including whether an individual is a qualifying individual, 
can be made only at the time services are performed. Only expenses for 
the care of a qualifying individual that are for the purpose of 
enabling the taxpayer to be gainfully employed qualify for the credit. 
Therefore, services must be performed prior to a disqualifying event 
and at a time when the purpose is to enable the taxpayer to be 
gainfully employed. For purposes of determining whether expenses are 
employment-related expenses, the time of payment is irrelevant, 
although payment must be made before the credit is claimed. The final 
regulations provide examples to illustrate these rules.

2. Care of Qualifying Individual and Household Services

    Under section 21(b)(2)(A), expenses are employment-related only if 
the expenses are primarily for household services or for the care of a 
qualifying

[[Page 45339]]

individual. The proposed regulations provide that the primary purpose 
of expenses for the care of a qualifying individual must be to assure 
that individual's well-being and protection.
a. Costs for Education
    The proposed regulations provide that expenses for a child in 
nursery school, pre-school, or similar programs for children below the 
kindergarten level are for the care of a qualifying individual and may 
be employment-related expenses. Expenses for a child in kindergarten or 
a higher grade are not for care and therefore, are not employment-
related expenses. However, expenses for before-or after-school care of 
a child in kindergarten or a higher grade may be for care.
    Commentators noted that some public school systems offer only half-
day kindergarten, and that some parents send their children to private 
kindergarten because it offers a full-day program. Under the proposed 
regulations, a parent whose child attends a half-day kindergarten may 
claim the credit for the cost of an afternoon after-school program. 
However, a parent whose child attends a full-day private kindergarten 
may not claim the credit for the cost of services performed in the 
afternoon, because the services are part of the kindergarten program 
and not after-school care. Commentators suggested that taxpayers who 
send their children to full-day private kindergarten should be allowed 
some apportionment of expenses for the afternoon portion of the 
kindergarten.
    The final regulations do not adopt this comment. Kindergarten 
programs are primarily educational. See, for example, section 62(d)(1) 
(definitions of eligible educator and school) and section 530(b)(3)(B) 
(definition of school). Although nursery school and other programs 
below the level of kindergarten also may include significant 
educational elements, for administrative convenience the proposed 
regulations treat these programs as for care. The final regulations 
retain these rules for greater ease of administration.
    A commentator suggested that amounts paid for sending a child to a 
private school by a taxpayer living overseas should be an employment-
related expense if public education is not available. The final 
regulations do not adopt this comment. Employment-related expenses must 
be for the care of a qualifying individual and may not be for other 
services such as education.
b. Specialty Day Camps
    The proposed regulations provide that the full amount paid for a 
day camp or similar program may be for the care of a qualifying 
individual although the camp specializes in a particular activity, such 
as soccer or computers. For administrative convenience, no allocation 
is required in this situation between the cost of care and amounts paid 
for learning a specialized skill.
    A verbal comment requested that the regulations clarify that summer 
school is not day camp and that the cost of summer school is not 
creditable. Another commentator commended the proposed regulations for 
allowing the credit for the cost of ``education day camps'' that focus 
on reading, math, writing, and study skills.
    The final regulations retain the rule that no allocation is 
required for the cost of a specialty day camp, but clarify that 
expenses for summer school and tutoring programs are not creditable. 
Summer school and tutoring programs are indistinguishable from school 
and are education, not care. The final regulations provide examples to 
illustrate these rules.
    Section 21(b)(2)(C) provides, in part, that the cost of services 
performed by a dependent care center are employment-related expenses 
only if the dependent care center complies with the applicable laws of 
the state and local government. A commentator requested that the 
regulations clarify whether a day camp is a dependent care center and 
must comply with this requirement. The final regulations clarify that 
the requirements of section 21(b)(2)(C) apply to day camps that meet 
the definition of dependent care center in section 21(b)(2)(D).
c. Sick Child Centers
    A commentator asserted that sick child centers that provide care 
for children with illnesses who cannot be cared for by the primary care 
provider primarily provide dependent care and that any medical care 
provided is incidental. The commentator suggested that these costs may 
be employment-related expenses.
    The final regulations do not adopt this comment. A taxpayer may 
take an amount into account as either an employment-related expense 
under section 21 or an expense for medical care under section 213 (but 
not both). See section 213(e). Whether the care provided at a sick 
child center assures a child's well-being and protection or constitutes 
medical care is a factual matter that must be determined on a case-by-
case basis.
d. Boarding School
    The proposed regulations provide that an allocation must be made 
between expenses for the care of a qualifying individual and expenses 
for other goods or services, unless the other goods or services are 
incidental to and inseparably a part of the care. Specifically, amounts 
paid for food, lodging, clothing, or education are not for the care of 
a qualifying individual. The proposed regulations provide an example 
requiring a taxpayer to allocate the costs of a boarding school between 
care and education, meals, and housing.
    A commentator stated that the example does not provide clear 
guidance for determining which expenses are for care and whether 
lodging and meals could be considered incidental and therefore, part of 
care. The commentator suggested that meals and lodging at a boarding 
school are incidental to and inseparably a part of the care provided.
    The final regulations do not adopt this comment. The example and 
the regulations clearly distinguish care from food, lodging, and 
education provided by a boarding school, which are not for the care of 
a qualifying individual, or incidental to or inseparably a part of the 
care provided.
e. Expenses for Room and Board of a Caregiver
    The proposed regulations provide that the additional cost of 
providing room and board for a caregiver over usual household expenses 
may be an employment-related expense. This rule is based on Rev. Rul. 
76-288 (1976-2 CB 83), which holds that under the predecessor to 
section 21, a taxpayer furnishing meals and lodging to a housekeeper 
who provides care may deduct the allocable expenses attributable to the 
housekeeper that are in addition to normal household expenses. The 
ruling provides an example allowing a taxpayer to take into account the 
additional cost of rent for an apartment with an additional bedroom to 
accommodate the housekeeper and additional utilities attributable to 
the housekeeper.
    The proposed regulations provide that the general substantiation 
rules of section 6001 and the implementing regulations apply to 
taxpayers claiming the credit. A commentator stated that the 
regulations should clarify whether an increase in utilities (such as 
electric, water, and gas) may be employment-related expenses and what 
constitutes acceptable proof of costs.
    The final regulations adopt the first of these comments and include 
an

[[Page 45340]]

example similar to the example in Rev. Rul. 76-288. However, the final 
regulations do not provide special substantiation rules for these 
costs. These rules encompass substantiation of allocations by taxpayers 
claiming the credit with respect to the additional cost of providing 
room and board for a caregiver.
f. Cost of Overnight Camp
    A commentator suggested that the credit should be allowed for a 
portion of the cost of overnight camp allocable to time when parents 
work. The final regulations do not adopt this comment. Under section 
21(b)(2), the cost of overnight camp is not an employment-related 
expense.

3. Expenses Enabling a Taxpayer To Be Gainfully Employed

    Under section 21(b)(2)(A), expenses are employment-related only if 
the taxpayer's purpose in obtaining the services is to enable the 
taxpayer to be gainfully employed. The expenses must be for periods 
during which the taxpayer is gainfully employed or is in active search 
of gainful employment.
a. Short, Temporary Absence Exception
    The proposed regulations provide that a taxpayer must allocate the 
cost of care on a daily basis if expenses are paid for a period during 
only part of which the taxpayer is employed or in active search of 
gainful employment. The proposed regulations provide an exception to 
the allocation requirement for a short, temporary absence from work for 
a taxpayer paying for dependent care on a weekly, monthly, or annual 
basis. Whether an absence is a short, temporary absence is determined 
based on all the facts and circumstances. The proposed regulations 
requested comments on an appropriate period to constitute a temporary 
absence safe harbor.
    A commentator suggested that the exception for short, temporary 
absences should not be limited to taxpayers who pay employment-related 
expenses on a weekly, monthly, or annual basis. The commentator stated 
that regardless of payment schedule, taxpayers who take their children 
out of care due to a short illness or vacation typically must pay for 
that care when absent or risk losing it.
    The final regulations adopt this comment and delete the provision 
that the temporary absence exception applies only to taxpayers who must 
pay for care on a weekly, monthly, or annual basis. The final 
regulations clarify, however, that only those costs that the taxpayer 
is required to pay during the absence qualify for the exception. The 
final regulations provide examples to illustrate these rules.
    A commentator suggested that a length of absence that is less than 
a taxpayer's pay period should be deemed to be a short, temporary 
absence for that taxpayer, up to a maximum of 2 weeks. For example, the 
maximum short, temporary absence period of a taxpayer with a 1-week pay 
period would be 4 days. The final regulations do not adopt this 
comment, which would result in disparate treatment of taxpayers based 
on length of pay period.
    A commentator suggested that the final regulations should adopt 12 
weeks as a temporary absence safe harbor. The commentator based this 
suggestion on the Family Medical Leave Act (FMLA), which guarantees 
workers a maximum of 12 weeks of unpaid leave for the birth or adoption 
of a child and other purposes. The final regulations do not adopt this 
comment. Different policies underlie the FMLA and the dependent care 
credit. An absence of 12 weeks is not a short, temporary absence for 
purposes of claiming the credit.
    The final regulations include a safe harbor that treats an absence 
of no more than 2 consecutive calendar weeks as a short, temporary 
absence, and modify the examples to illustrate this rule.
 b. Other Costs
    A commentator suggested that the final regulations should clarify 
that expenses may be paid to enable a taxpayer to be gainfully employed 
and may be employment-related expenses if one parent works during the 
day and the other parent works at night, and the expenses are for care 
while one parent is working and the other is sleeping. Another 
commentator suggested that the cost of overnight care (not overnight 
camp) should be an employment-related expense for a taxpayer who works 
at night. The final regulations include examples illustrating that 
expenses may be employment-related expenses in these situations.
    Commentators suggested that the cost of care should be treated as 
an employment-related expense for any period that a taxpayer is on 
short-or long-term disability, leave under the FMLA, paid medical 
leave, or paid maternity leave. The final regulations do not adopt 
these comments as these rules would be inconsistent with the statutory 
requirement that expenses are employment-related expenses only if paid 
to enable the taxpayer to be gainfully employed.

4. Limitations on Amount Creditable

a. Dollar Limit
    Commentators suggested that the dollar limit on employment-related 
expenses should be increased from $3,000 for one qualifying child and 
$6,000 for two or more qualifying children, to $5,000 for each 
qualifying child. The final regulations do not adopt these comments as 
they are inconsistent with the statutory limitations.
b. Student at an Educational Organization
    For purposes of the deemed earned income of a spouse who is a full-
time student, section 21(e)(7) and (8) defines student as an individual 
who, during each of 5 calendar months during the taxable year, is a 
full-time student at an educational organization described in section 
170(b)(1)(A)(ii). Section 170(b)(1)(A)(ii) provides that an educational 
organization normally maintains a regular faculty and curriculum and 
normally has a regularly enrolled body of pupils or students in 
attendance at the place where its educational activities are regularly 
carried on.
    A commentator suggested that a full-time student in an on-line 
degree program is a full-time student at an educational organization. 
The final regulations do not adopt this comment. A degree program 
offered by an organization that provides instruction exclusively over 
the internet (as opposed to an organization that provides courses on-
line as well as traditional classroom instruction) does not have 
students in attendance at the place where its educational activities 
are regularly carried on and is not an educational organization within 
the meaning of section 170(b)(1)(A)(ii). Accordingly, an individual 
enrolled in a program provided by an organization that offers only on-
line instruction is not a student for purposes of the deemed earned 
income rule. However, an individual who takes on-line courses at an 
organization that has traditional classroom instruction as well as on-
line courses, and that otherwise meets the definition of educational 
organization under section 170(b)(1)(A)(ii), may be a student for 
purposes of the deemed earned income rule.
    The final regulations delete the cross-reference in the proposed 
regulations to the definition of student in section 152(f)(2) (for 
taxable years beginning after December 31, 2004) or section 151(c)(4) 
(for taxable years beginning before January 1, 2005), and the 
regulations thereunder, as that term is

[[Page 45341]]

defined in section 21(e)(7) and (8) and these regulations.

5. Substantiation

    The proposed regulations provide that taxpayers claiming a credit 
for employment-related expenses must maintain adequate records or other 
sufficient evidence to substantiate the expenses in accordance with 
section 6001 and the regulations thereunder.
    A commentator suggested that dependent care assistance program 
administrators should be able to rely on the representations of plan 
participants, without additional documentation, to establish that 
indirect expenses are required and are subject to forfeiture, the 
proper expense allocation for part-time employees, and whether expenses 
are paid on a weekly or monthly basis. The final regulations do not 
adopt this comment as these situations do not present unusual 
substantiation issues.

6. Conforming Changes

    The final regulations incorporate several changes to conform to 
amendments to the statute. The final regulations reflect that the 
special dependency rule of section 21(e)(5) applies to children of 
parents who live apart at all times during the last 6 months of the 
calendar year as well as to the children of separated or divorced 
parents. The final regulations reflect the changes made to the 
definitions of qualifying individual and custodial parent by the Gulf 
Opportunity Zone Act of 2005 (Pub. L. 109-135, 119 Stat. 2577). 
Finally, the final regulations clarify that, for taxable years 
beginning after December 31, 2004, costs for care outside the 
taxpayer's household of a qualifying individual who is a dependent or 
spouse incapable of self-care who regularly spends at least 8 hours 
each day in the taxpayer's household may continue to qualify for the 
credit.

7. Effective Date

    The final regulations apply to taxable years ending after August 
14, 2007.

Effect on Other Documents

    Rev. Rul. 76-278 (1976-2 CB 84) and Rev. Rul. 76-288 (1976-2 CB 83) 
are obsoleted as of August 14, 2007.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in Executive Order 12866. 
Therefore, a regulatory assessment is not required. Section 553(b) of 
the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to 
these regulations. Because the regulations do not impose a collection 
of information on small entities, the Regulatory Flexibility Act (5 
U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the 
Code, the notice of proposed rulemaking that preceded these final 
regulations was submitted to the Chief Counsel for Advocacy of the 
Small Business Administration for comment on its impact on small 
business.

Drafting Information

    The principal author of these regulations is Amy Pfalzgraf of the 
Office of Associate Chief Counsel (Income Tax and Accounting). However, 
other personnel from the IRS and Department of the Treasury 
participated in their development.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 602

    Reporting and recordkeeping requirements.

Amendments to the Regulations

0
Accordingly, 26 CFR parts 1 and 602 are amended as follows:

PART I--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

    Authority: 26 U.S.C. 7805 * * *
Section 1.21-1 also issued under 26 U.S.C. 21(f).
Section 1.21-2 also issued under 26 U.S.C. 21(f).
Section 1.21-3 also issued under 26 U.S.C. 21(f).
Section 1.21-4 also issued under 26 U.S.C. 21(f) * * *


Sec.  1.21-1  [Redesignated as Sec.  1.15-1].

0
Par. 2. Section 1.21-1 is redesignated Sec.  1.15-1.
0
Par. 3. New Sec. Sec.  1.21-1, 1.21-2, 1.21-3, and 1.21-4 are added to 
read as follows:


Sec.  1.21-1  Expenses for household and dependent care services 
necessary for gainful employment.

    (a) In general. (1) Section 21 allows a credit to a taxpayer 
against the tax imposed by chapter 1 for employment-related expenses 
for household services and care (as defined in paragraph (d) of this 
section) of a qualifying individual (as defined in paragraph (b) of 
this section). The purpose of the expenses must be to enable the 
taxpayer to be gainfully employed (as defined in paragraph (c) of this 
section). For taxable years beginning after December 31, 2004, a 
qualifying individual must have the same principal place of abode (as 
defined in paragraph (g) of this section) as the taxpayer for more than 
one-half of the taxable year. For taxable years beginning before 
January 1, 2005, the taxpayer must maintain a household (as defined in 
paragraph (h) of this section) that includes one or more qualifying 
individuals.
    (2) The amount of the credit is equal to the applicable percentage 
of the employment-related expenses that may be taken into account by 
the taxpayer during the taxable year (but subject to the limits 
prescribed in Sec.  1.21-2). Applicable percentage means 35 percent 
reduced by 1 percentage point for each $2,000 (or fraction thereof) by 
which the taxpayer's adjusted gross income for the taxable year exceeds 
$15,000, but not less than 20 percent. For example, if a taxpayer's 
adjusted gross income is $31,850, the applicable percentage is 26 
percent.
    (3) Expenses may be taken as a credit under section 21, regardless 
of the taxpayer's method of accounting, only in the taxable year the 
services are performed or the taxable year the expenses are paid, 
whichever is later.
    (4) The requirements of section 21 and Sec. Sec.  1.21-1 through 
1.21-4 are applied at the time the services are performed, regardless 
of when the expenses are paid.
    (5) Examples. The provisions of this paragraph (a) are illustrated 
by the following examples.

    Example 1. In December 2007, B pays for the care of her child 
for January 2008. Under paragraph (a)(3) of this section, B may 
claim the credit in 2008, the later of the years in which the 
expenses are paid and the services are performed.
    Example 2. The facts are the same as in Example 1, except that 
B's child turns 13 on February 1, 2008, and B pays for the care 
provided in January 2008 on February 3, 2008. Under paragraph (a)(4) 
of this section, the determination of whether the expenses are 
employment-related expenses is made when the services are performed. 
Assuming other requirements are met, the amount B pays will be an 
employment-related expense under section 21, because B's child is a 
qualifying individual when the services are performed, even though 
the child is not a qualifying individual when B pays the expenses.

    (b) Qualifying individual--(1) In general. For taxable years 
beginning after December 31, 2004, a qualifying individual is--
    (i) The taxpayer's dependent (who is a qualifying child within the 
meaning of section 152) who has not attained age 13;

[[Page 45342]]

    (ii) The taxpayer's dependent (as defined in section 152, 
determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B)) 
who is physically or mentally incapable of self-care and who has the 
same principal place of abode as the taxpayer for more than one-half of 
the taxable year; or
    (iii) The taxpayer's spouse who is physically or mentally incapable 
of self-care and who has the same principal place of abode as the 
taxpayer for more than one-half of the taxable year.
    (2) Taxable years beginning before January 1, 2005. For taxable 
years beginning before January 1, 2005, a qualifying individual is--
    (i) The taxpayer's dependent for whom the taxpayer is entitled to a 
deduction for a personal exemption under section 151(c) and who is 
under age 13;
    (ii) The taxpayer's dependent who is physically or mentally 
incapable of self-care; or
    (iii) The taxpayer's spouse who is physically or mentally incapable 
of self-care.
    (3) Qualification on a daily basis. The status of an individual as 
a qualifying individual is determined on a daily basis. An individual 
is not a qualifying individual on the day the status terminates.
    (4) Physical or mental incapacity. An individual is physically or 
mentally incapable of self-care if, as a result of a physical or mental 
defect, the individual is incapable of caring for the individual's 
hygiene or nutritional needs, or requires full-time attention of 
another person for the individual's own safety or the safety of others. 
The inability of an individual to engage in any substantial gainful 
activity or to perform the normal household functions of a homemaker or 
care for minor children by reason of a physical or mental condition 
does not of itself establish that the individual is physically or 
mentally incapable of self-care.
    (5) Special test for divorced or separated parents or parents 
living apart--(i) Scope. This paragraph (b)(5) applies to a child (as 
defined in section 152(f)(1) for taxable years beginning after December 
31, 2004, and in section 151(c)(3) for taxable years beginning before 
January 1, 2005) who--
    (A) Is under age 13 or is physically or mentally incapable of self-
care;
    (B) Receives over one-half of his or her support during the 
calendar year from one or both parents who are divorced or legally 
separated under a decree of divorce or separate maintenance, are 
separated under a written separation agreement, or live apart at all 
times during the last 6 months of the calendar year; and
    (C) Is in the custody of one or both parents for more than one-half 
of the calendar year.
    (ii) Custodial parent allowed the credit. A child to whom this 
paragraph (b)(5) applies is the qualifying individual of only one 
parent in any taxable year and is the qualifying child of the custodial 
parent even if the noncustodial parent may claim the dependency 
exemption for that child for that taxable year. See section 21(e)(5). 
The custodial parent is the parent having custody for the greater 
portion of the calendar year. See section 152(e)(4)(A).
    (6) Example. The provisions of this paragraph (b) are illustrated 
by the following examples.

    Example. C pays $420 for the care of her child, a qualifying 
individual, to be provided from January 2 through January 31, 2008 
(21 days of care). On January 20, 2008, C's child turns 13 years 
old. Under paragraph (b)(3) of this section, C's child is a 
qualifying individual from January 2 through January 19, 2008 (13 
days of care). C may take into account $260, the pro rata amount C 
pays for the care of her child for 13 days, under section 21. See 
Sec.  1.21-2(a)(4).

    (c) Gainful employment--(1) In general. Expenses are employment-
related expenses only if they are for the purpose of enabling the 
taxpayer to be gainfully employed. The expenses must be for the care of 
a qualifying individual or household services performed during periods 
in which the taxpayer is gainfully employed or is in active search of 
gainful employment. Employment may consist of service within or outside 
the taxpayer's home and includes self-employment. An expense is not 
employment-related merely because it is paid or incurred while the 
taxpayer is gainfully employed. The purpose of the expense must be to 
enable the taxpayer to be gainfully employed. Whether the purpose of an 
expense is to enable the taxpayer to be gainfully employed depends on 
the facts and circumstances of the particular case. Work as a volunteer 
or for a nominal consideration is not gainful employment.
    (2) Determination of period of employment on a daily basis--(i) In 
general. Expenses paid for a period during only part of which the 
taxpayer is gainfully employed or in active search of gainful 
employment must be allocated on a daily basis.
    (ii) Exception for short, temporary absences. A taxpayer who is 
gainfully employed is not required to allocate expenses during a short, 
temporary absence from work, such as for vacation or minor illness, 
provided that the care-giving arrangement requires the taxpayer to pay 
for care during the absence. An absence of 2 consecutive calendar weeks 
is a short, temporary absence. Whether an absence longer than 2 
consecutive calendar weeks is a short, temporary absence is determined 
based on all the facts and circumstances.
    (iii) Part-time employment. A taxpayer who is employed part-time 
generally must allocate expenses for dependent care between days worked 
and days not worked. However, if a taxpayer employed part-time is 
required to pay for dependent care on a periodic basis (such as weekly 
or monthly) that includes both days worked and days not worked, the 
taxpayer is not required to allocate the expenses. A day on which the 
taxpayer works at least 1 hour is a day of work.
    (3) Examples. The provisions of this paragraph (c) are illustrated 
by the following examples:

    Example 1. D works during the day and her husband, E, works at 
night and sleeps during the day. D and E pay for care for a 
qualifying individual during the hours when D is working and E is 
sleeping. Under paragraph (c)(1) of this section, the amount paid by 
D and E for care may be for the purpose of allowing D and E to be 
gainfully employed and may be an employment-related expense under 
section 21.
    Example 2. F works at night and pays for care for a qualifying 
individual during the hours when F is working. Under paragraph 
(c)(1) of this section, the amount paid by F for care may be for the 
purpose of allowing F to be gainfully employed and may be an 
employment-related expense under section 21.
    Example 3. G, the custodial parent of two children who are 
qualifying individuals, hires a housekeeper for a monthly salary to 
care for the children while G is gainfully employed. G becomes ill 
and as a result is absent from work for 4 months. G continues to pay 
the housekeeper to care for the children while G is absent from 
work. During this 4-month period, G performs no employment services, 
but receives payments under her employer's wage continuation plan. 
Although G may be considered to be gainfully employed during her 
absence from work, the absence is not a short, temporary absence 
within the meaning of paragraph (c)(2)(ii) of this section, and her 
payments for household and dependent care services during the period 
of illness are not for the purpose of enabling her to be gainfully 
employed. G's expenses are not employment-related expenses, and she 
may not take the expenses into account under section 21.
    Example 4. To be gainfully employed, H sends his child to a 
dependent care center that complies with all state and local 
requirements. The dependent care center requires payment for days 
when a child is absent from the center. H takes 8 days off from work 
as vacation days. Because the absence is less than 2 consecutive 
calendar

[[Page 45343]]

weeks, under paragraph (c)(2)(ii) of this section, H's absence is a 
short, temporary absence. H is not required to allocate expenses 
between days worked and days not worked. The entire fee for the 
period that includes the 8 vacation days may be an employment-
related expense under section 21.
    Example 5. J works 3 days per week and her child attends a 
dependent care center (that complies with all state and local 
requirements) to enable her to be gainfully employed. The dependent 
care center allows payment for any 3 days per week for $150 or 5 
days per week for $250. J enrolls her child for 5 days per week, and 
her child attends the care center for 5 days per week. Under 
paragraph (c)(2)(iii) of this section, J must allocate her expenses 
for dependent care between days worked and days not worked. Three-
fifths of the $250, or $150 per week, may be an employment-related 
expense under section 21.
    Example 6. The facts are the same as in Example 5, except that 
the dependent care center does not offer a 3-day option. The entire 
$250 weekly fee may be an employment-related expense under section 
21.

    (d) Care of qualifying individual and household services--(1) In 
general. To qualify for the dependent care credit, expenses must be for 
the care of a qualifying individual. Expenses are for the care of a 
qualifying individual if the primary function is to assure the 
individual's well-being and protection. Not all expenses relating to a 
qualifying individual are for the individual's care. Amounts paid for 
food, lodging, clothing, or education are not for the care of a 
qualifying individual. If, however, the care is provided in such a 
manner that the expenses cover other goods or services that are 
incidental to and inseparably a part of the care, the full amount is 
for care.
    (2) Allocation of expenses. If an expense is partly for household 
services or for the care of a qualifying individual and partly for 
other goods or services, a reasonable allocation must be made. Only so 
much of the expense that is allocable to the household services or care 
of a qualifying individual is an employment-related expense. An 
allocation must be made if a housekeeper or other domestic employee 
performs household duties and cares for the qualifying children of the 
taxpayer and also performs other services for the taxpayer. No 
allocation is required, however, if the expense for the other purpose 
is minimal or insignificant or if an expense is partly attributable to 
the care of a qualifying individual and partly to household services.
    (3) Household services. Expenses for household services may be 
employment-related expenses if the services are performed in connection 
with the care of a qualifying individual. The household services must 
be the performance in and about the taxpayer's home of ordinary and 
usual services necessary to the maintenance of the household and 
attributable to the care of the qualifying individual. Services of a 
housekeeper are household services within the meaning of this paragraph 
(d)(3) if the services are provided, at least in part, to the 
qualifying individual. Such services as are performed by chauffeurs, 
bartenders, or gardeners are not household services.
    (4) Manner of providing care. The manner of providing care need not 
be the least expensive alternative available to the taxpayer. The cost 
of a paid caregiver may be an expense for the care of a qualifying 
individual even if another caregiver is available at no cost.
    (5) School or similar program. Expenses for a child in nursery 
school, pre-school, or similar programs for children below the level of 
kindergarten are for the care of a qualifying individual and may be 
employment-related expenses. Expenses for a child in kindergarten or a 
higher grade are not for the care of a qualifying individual. However, 
expenses for before- or after-school care of a child in kindergarten or 
a higher grade may be for the care of a qualifying individual.
    (6) Overnight camps. Expenses for overnight camps are not 
employment-related expenses.
    (7) Day camps. (i) The cost of a day camp or similar program may be 
for the care of a qualifying individual and an employment-related 
expense, without allocation under paragraph (d)(2) of this section, 
even if the day camp specializes in a particular activity. Summer 
school and tutoring programs are not for the care of a qualifying 
individual and the costs are not employment-related expenses.
    (ii) A day camp that meets the definition of dependent care center 
in section 21(b)(2)(D) and paragraph (e)(2) of this section must comply 
with the requirements of section 21(b)(2)(C) and paragraph (e)(2) of 
this section.
    (8) Transportation. The cost of transportation by a dependent care 
provider of a qualifying individual to or from a place where care of 
that qualifying individual is provided may be for the care of the 
qualifying individual. The cost of transportation not provided by a 
dependent care provider is not for the care of the qualifying 
individual.
    (9) Employment taxes. Taxes under sections 3111 (relating to the 
Federal Insurance Contributions Act) and 3301 (relating to the Federal 
Unemployment Tax Act) and similar state payroll taxes are employment-
related expenses if paid in respect of wages that are employment-
related expenses.
    (10) Room and board. The additional cost of providing room and 
board for a caregiver over usual household expenditures may be an 
employment-related expense.
    (11) Indirect expenses. Expenses that relate to, but are not 
directly for, the care of a qualifying individual, such as application 
fees, agency fees, and deposits, may be for the care of a qualifying 
individual and may be employment-related expenses if the taxpayer is 
required to pay the expenses to obtain the related care. However, 
forfeited deposits and other payments are not for the care of a 
qualifying individual if care is not provided.
    (12) Examples. The provisions of this paragraph (d) are illustrated 
by the following examples:

    Example 1. To be gainfully employed, K sends his 3-year old 
child to a pre-school. The pre-school provides lunch and snacks. 
Under paragraph (d)(1) of this section, K is not required to 
allocate expenses between care and the lunch and snacks, because the 
lunch and snacks are incidental to and inseparably a part of the 
care. Therefore, K may treat the full amount paid to the pre-school 
as for the care of his child.
    Example 2. L, a member of the armed forces, is ordered to a 
combat zone. To be able to comply with the orders, L places her 10-
year old child in boarding school. The school provides education, 
meals, and housing to L's child in addition to care. Under paragraph 
(d)(2) of this section, L must allocate the cost of the boarding 
school between expenses for care and expenses for education and 
other services not constituting care. Only the part of the cost of 
the boarding school that is for the care of L's child is an 
employment-related expense under section 21.
    Example 3. To be gainfully employed, M employs a full-time 
housekeeper to care for M's two children, aged 9 and 13 years. The 
housekeeper regularly performs household services of cleaning and 
cooking and drives M to and from M's place of employment, a trip of 
15 minutes each way. Under paragraph (d)(3) of this section, the 
chauffeur services are not household services. M is not required to 
allocate a portion of the expense of the housekeeper to the 
chauffeur services under paragraph (d)(2) of this section, however, 
because the chauffeur services are minimal and insignificant. 
Further, no allocation under paragraph (d)(2) of this section is 
required to determine the portion of the expenses attributable to 
the care of the 13-year old child (not a qualifying individual) 
because the household expenses are in part attributable to the care 
of the 9-year-old child. Accordingly, the entire expense of 
employing the housekeeper is an employment-related expense. The 
amount that M may take into account as an employment-related expense 
under section

[[Page 45344]]

21, however, is limited to the amount allowable for one qualifying 
individual.
    Example 4. To be gainfully employed, N sends her 9-year-old 
child to a summer day camp that offers computer activities and 
recreational activities such as swimming and arts and crafts. Under 
paragraph (d)(7)(i) of this section, the full cost of the summer day 
camp may be for care.
    Example 5. To be gainfully employed, O sends her 9-year-old 
child to a math tutoring program for two hours per day during the 
summer. Under paragraph (d)(7)(i) of this section, the cost of the 
tutoring program is not for care.
    Example 6. To be gainfully employed, P hires a full-time 
housekeeper to care for her 8-year old child. In order to 
accommodate the housekeeper, P moves from a 2-bedroom apartment to a 
3-bedroom apartment that otherwise is comparable to the 2-bedroom 
apartment. Under paragraph (d)(10) of this section, the additional 
cost to rent the 3-bedroom apartment over the cost of the 2-bedroom 
apartment and any additional utilities attributable to the 
housekeeper's residence in the household may be employment-related 
expenses under section 21.
    Example 7. Q pays a fee to an agency to obtain the services of 
an au pair to care for Q's children, qualifying individuals, to 
enable Q to be gainfully employed. An au pair from the agency 
subsequently provides care for Q's children. Under paragraph (d)(11) 
of this section, the fee may be an employment-related expense.
    Example 8. R places a deposit with a pre-school to reserve a 
place for her child. R sends the child to a different pre-school and 
forfeits the deposit. Under paragraph (d)(11) of this section, the 
forfeited deposit is not an employment-related expense.

    (e) Services outside the taxpayer's household--(1) In general. The 
credit is allowable for expenses for services performed outside the 
taxpayer's household only if the care is for one or more qualifying 
individuals who are described in this section at--
    (i) Paragraph (b)(1)(i) or (b)(2)(i); or
    (ii) Paragraph (b)(1)(ii), (b)(2)(ii), (b)(1)(iii), or (b)(2)(iii) 
and regularly spend at least 8 hours each day in the taxpayer's 
household.
    (2) Dependent care centers--(i) In general. The credit is allowable 
for services performed by a dependent care center only if--
    (A) The center complies with all applicable laws and regulations, 
if any, of a state or local government, such as state or local 
licensing requirements and building and fire code regulations; and
    (B) The requirements provided in this paragraph (e) are met.
    (ii) Definition. The term dependent care center means any facility 
that provides full-time or part-time care for more than six individuals 
(other than individuals who reside at the facility) on a regular basis 
during the taxpayer's taxable year, and receives a fee, payment, or 
grant for providing services for the individuals (regardless of whether 
the facility is operated for profit). For purposes of the preceding 
sentence, a facility is presumed to provide full-time or part-time care 
for six or fewer individuals on a regular basis during the taxpayer's 
taxable year if the facility has six or fewer individuals (including 
the taxpayer's qualifying individual) enrolled for full-time or part-
time care on the day the qualifying individual is enrolled in the 
facility (or on the first day of the taxable year the qualifying 
individual attends the facility if the qualifying individual was 
enrolled in the facility in the preceding taxable year) unless the 
Internal Revenue Service demonstrates that the facility provides full-
time or part-time care for more than six individuals on a regular basis 
during the taxpayer's taxable year.
    (f) Reimbursed expenses. Employment-related expenses for which the 
taxpayer is reimbursed (for example, under a dependent care assistance 
program) may not be taken into account for purposes of the credit.
    (g) Principal place of abode. For purposes of this section, the 
term principal place of abode has the same meaning as in section 152.
    (h) Maintenance of a household--(1) In general. For taxable years 
beginning before January 1, 2005, the credit is available only to a 
taxpayer who maintains a household that includes one or more qualifying 
individuals. A taxpayer maintains a household for the taxable year (or 
lesser period) only if the taxpayer (and spouse, if applicable) 
occupies the household and furnishes over one-half of the cost for the 
taxable year (or lesser period) of maintaining the household. The 
household must be the principal place of abode for the taxable year of 
the taxpayer and the qualifying individual or individuals.
    (2) Cost of maintaining a household. (i) Except as provided in 
paragraph (h)(2)(ii) of this section, for purposes of this section, the 
term cost of maintaining a household has the same meaning as in Sec.  
1.2-2(d) without regard to the last sentence thereof.
    (ii) The cost of maintaining a household does not include the value 
of services performed in the household by the taxpayer or by a 
qualifying individual described in paragraph (b) of this section or any 
expense paid or reimbursed by another person.
    (3) Monthly proration of annual costs. In determining the cost of 
maintaining a household for a period of less than a taxable year, the 
cost for the entire taxable year must be prorated on the basis of the 
number of calendar months within that period. A period of less than a 
calendar month is treated as a full calendar month.
    (4) Two or more families. If two or more families occupy living 
quarters in common, each of the families is treated as maintaining a 
separate household. A taxpayer is maintaining a household if the 
taxpayer provides more than one-half of the cost of maintaining the 
separate household. For example, if two unrelated taxpayers with their 
respective children occupy living quarters in common and each taxpayer 
pays more than one-half of the household costs for each respective 
family, each taxpayer is treated as maintaining a household.
    (i) Reserved.
    (j) Expenses qualifying as medical expenses--(1) In general. A 
taxpayer may not take an amount into account as both an employment-
related expense under section 21 and an expense for medical care under 
section 213.
    (2) Examples. The provisions of this paragraph (j) are illustrated 
by the following examples:

    Example 1. S has $6,500 of employment-related expenses for the 
care of his child who is physically incapable of self-care. The 
expenses are for services performed in S's household that also 
qualify as expenses for medical care under section 213. Of the total 
expenses, S may take into account $3,000 under section 21. S may 
deduct the balance of the expenses, or $3,500, as expenses for 
medical care under section 213 to the extent the expenses exceed 7.5 
percent of S's adjusted gross income.
    Example 2. The facts are the same as in Example 1, however, S 
first takes into account the $6,500 of expenses under section 213. S 
deducts $500 as an expense for medical care, which is the amount by 
which the expenses exceed 7.5 percent of his adjusted gross income. 
S may not take into account the $6,000 balance as employment-related 
expenses under section 21, because he has taken the full amount of 
the expenses into account in computing the amount deductible under 
section 213.

    (k) Substantiation. A taxpayer claiming a credit for employment-
related expenses must maintain adequate records or other sufficient 
evidence to substantiate the expenses in accordance with section 6001 
and the regulations thereunder.
    (l) Effective/applicability date. This section and Sec. Sec.  1.21-
2 through 1.21-4 apply to taxable years ending after August 14, 2007.


Sec.  1.21-2  Limitations on amount creditable.

    (a) Annual dollar limitation. (1) The amount of employment-related 
expenses that may be taken into account under Sec.  1.21-1(a) for any 
taxable year cannot exceed--

[[Page 45345]]

    (i) $2,400 ($3,000 for taxable years beginning after December 31, 
2002, and before January 1, 2011) if there is one qualifying individual 
with respect to the taxpayer at any time during the taxable year; or
    (ii) $4,800 ($6,000 for taxable years beginning after December 31, 
2002, and before January 1, 2011) if there are two or more qualifying 
individuals with respect to the taxpayer at any time during the taxable 
year.
    (2) The amount determined under paragraph (a)(1) of this section is 
reduced by the aggregate amount excludable from gross income under 
section 129 for the taxable year.
    (3) A taxpayer may take into account the total amount of 
employment-related expenses that do not exceed the annual dollar 
limitation although the amount of employment-related expenses 
attributable to one qualifying individual is disproportionate to the 
total employment-related expenses. For example, a taxpayer with 
expenses in 2007 of $4,000 for one qualifying individual and $1,500 for 
a second qualifying individual may take into account the full $5,500.
    (4) A taxpayer is not required to prorate the annual dollar 
limitation if a qualifying individual ceases to qualify (for example, 
by turning age 13) during the taxable year. However, the taxpayer may 
take into account only amounts that qualify as employment-related 
expenses before the disqualifying event. See also Sec.  1.21-1(b)(6).
    (b) Earned income limitation--(1) In general. The amount of 
employment-related expenses that may be taken into account under 
section 21 for any taxable year cannot exceed--
    (i) For a taxpayer who is not married at the close of the taxable 
year, the taxpayer's earned income for the taxable year; or
    (ii) For a taxpayer who is married at the close of the taxable 
year, the lesser of the taxpayer's earned income or the earned income 
of the taxpayer's spouse for the taxable year.
    (2) Determination of spouse. For purposes of this paragraph (b), a 
taxpayer must take into account only the earned income of a spouse to 
whom the taxpayer is married at the close of the taxable year. The 
spouse's earned income for the entire taxable year is taken into 
account, however, even though the taxpayer and the spouse were married 
for only part of the taxable year. The taxpayer is not required to take 
into account the earned income of a spouse who died or was divorced or 
separated from the taxpayer during the taxable year. See Sec.  1.21-
3(b) for rules providing that certain married taxpayers legally 
separated or living apart are treated as not married.
    (3) Definition of earned income. For purposes of this section, the 
term earned income has the same meaning as in section 32(c)(2) and the 
regulations thereunder.
    (4) Attribution of earned income to student or incapacitated 
spouse. (i) For purposes of this section, a spouse is deemed, for each 
month during which the spouse is a full-time student or is a qualifying 
individual described in Sec.  1.21-1(b)(1)(iii) or (b)(2)(iii), to be 
gainfully employed and to have earned income of not less than--
    (A) $200 ($250 for taxable years beginning after December 31, 2002, 
and before January 1, 2011) if there is one qualifying individual with 
respect to the taxpayer at any time during the taxable year; or
    (B) $400 ($500 for taxable years beginning after December 31, 2002, 
and before January 1, 2011) if there are two or more qualifying 
individuals with respect to the taxpayer at any time during the taxable 
year.
    (ii) For purposes of this paragraph (b)(4), a full-time student is 
an individual who, during each of 5 calendar months of the taxpayer's 
taxable year, is enrolled as a student for the number of course hours 
considered to be a full-time course of study at an educational 
organization as defined in section 170(b)(1)(A)(ii). The enrollment for 
5 calendar months need not be consecutive.
    (iii) Earned income may be attributed under this paragraph (b)(4), 
in the case of any husband and wife, to only one spouse in any month.
    (c) Examples. The provisions of this section are illustrated by the 
following examples:

    Example 1. In 2007, T, who is married to U, pays employment-
related expenses of $5,000 for the care of one qualifying 
individual. T's earned income for the taxable year is $40,000 and 
her husband's earned income is $2,000. T did not exclude any 
dependent care assistance under section 129. Under paragraph (b)(1) 
of this section, T may take into account under section 21 only the 
amount of employment-related expenses that does not exceed the 
lesser of her earned income or the earned income of U, or $2,000.
    Example 2. The facts are the same as in Example 1 except that U 
is a full-time student at an educational organization within the 
meaning of section 170(b)(1)(A)(ii) for 9 months of the taxable year 
and has no earned income. Under paragraph (b)(4) of this section, U 
is deemed to have earned income of $2,250. T may take into account 
$2,250 of employment-related expenses under section 21.
    Example 3. For all of 2007, V is a full-time student and W, V's 
husband, is an individual who is incapable of self-care (as defined 
in Sec.  1.21-1(b)(1)(iii)). V and W have no earned income and pay 
expenses of $5,000 for W's care. Under paragraph (b)(4) of this 
section, either V or W may be deemed to have $3,000 of earned 
income. However, earned income may be attributed to only one spouse 
under paragraph (b)(4)(iii) of this section. Under the limitation in 
paragraph (b)(1)(ii) of this section, the lesser of V's and W's 
earned income is zero. V and W may not take the expenses into 
account under section 21.

    (d) Cross-reference. For an additional limitation on the credit 
under section 21, see section 26.


Sec.  1.21-3  Special rules applicable to married taxpayers.

    (a) Joint return requirement. No credit is allowed under section 21 
for taxpayers who are married (within the meaning of section 7703 and 
the regulations thereunder) at the close of the taxable year unless the 
taxpayer and spouse file a joint return for the taxable year. See 
section 6013 and the regulations thereunder relating to joint returns 
of income tax by husband and wife.
    (b) Taxpayers treated as not married. The requirements of paragraph 
(a) of this section do not apply to a taxpayer who is legally separated 
under a decree of divorce or separate maintenance or who is treated as 
not married under section 7703(b) and the regulations thereunder 
(relating to certain married taxpayers living apart). A taxpayer who is 
treated as not married under this paragraph (b) is not required to take 
into account the earned income of the taxpayer's spouse for purposes of 
applying the earned income limitation on the amount of employment-
related expenses under Sec.  1.21-2(b).
    (c) Death of married taxpayer. If a married taxpayer dies during 
the taxable year and the survivor may make a joint return with respect 
to the deceased spouse under section 6013(a)(3), the credit is allowed 
for the year only if a joint return is made. If, however, the surviving 
spouse remarries before the end of the taxable year in which the 
deceased spouse dies, a credit may be allowed on the decedent spouse(s 
separate return.


Sec.  1.21-4  Payments to certain related individuals.

    (a) In general. A credit is not allowed under section 21 for any 
amount paid by the taxpayer to an individual--
    (1) For whom a deduction under section 151(c) (relating to 
deductions for personal exemptions for dependents) is allowable either 
to the taxpayer or the taxpayer's spouse for the taxable year;
    (2) Who is a child of the taxpayer (within the meaning of section 
152(f)(1) for taxable years beginning after

[[Page 45346]]

December 31, 2004, and section 151(c)(3) for taxable years beginning 
before January 1, 2005) and is under age 19 at the close of the taxable 
year;
    (3) Who is the spouse of the taxpayer at any time during the 
taxable year; or
    (4) Who is the parent of the taxpayer's child who is a qualifying 
individual described in Sec.  1.21-1(b)(1)(i) or (b)(2)(i).
    (b) Payments to partnerships or other entities. In general, 
paragraph (a) of this section does not apply to services performed by 
partnerships or other entities. If, however, the partnership or other 
entity is established or maintained primarily to avoid the application 
of paragraph (a) of this section to permit the taxpayer to claim the 
credit, for purposes of section 21, the payments of employment-related 
expenses are treated as made directly to each partner or owner in 
proportion to that partner's or owner's ownership interest. Whether a 
partnership or other entity is established or maintained to avoid the 
application of paragraph (a) of this section is determined based on the 
facts and circumstances, including whether the partnership or other 
entity is established for the primary purpose of caring for the 
taxpayer's qualifying individual or providing household services to the 
taxpayer.
    (c) Examples. The provisions of this section are illustrated by the 
following examples:

    Example 1. During 2007, X pays $5,000 to her mother for the care 
of X's 5-year old child who is a qualifying individual. The expenses 
otherwise qualify as employment-related expenses. X's mother is not 
her dependent. X may take into account under section 21 the amounts 
paid to her mother for the care of X's child.
    Example 2. Y is divorced and has custody of his 5-year old 
child, who is a qualifying individual. Y pays $6,000 during 2007 to 
Z, who is his ex-wife and the child's mother, for the care of the 
child. The expenses otherwise qualify as employment-related 
expenses. Under paragraph (a)(4) of this section, Y may not take 
into account under section 21 the amounts paid to Z because Z is the 
child's mother.
    Example 3. The facts are the same as in Example 2, except that Z 
is not the mother of Y's child. Y may take into account under 
section 21 the amounts paid to Z.


Sec. Sec.  1.44A-1 through 1.44A-4  [Removed]

0
Par. 4. Sections 1.44A-1, 1.44A-2, 1.44A-3, and 1.44A-4 are removed.


Sec.  1.214-1  [Removed]

0
Par. 5. Section 1.214-1 is removed.


Sec. Sec.  1.214A-1 through 1.214A-5  [Removed]

0
Par. 6. Sections 1.214A-1, 1.214A-2, 1.214A-3, 1.214A-4, and 1.214A-5 
are removed.

PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

0
Par. 7. The authority citation for part 602 continues to read as 
follows:


    Authority: 26 U.S.C. 7805.

0
Par. 8. In Sec.  602.101, paragraph (b) is amended to remove entries 
1.44A-1 and 1.44A-3.

Kevin M. Brown,
Deputy Commissioner for Services and Enforcement.
    Approved: August 2, 2007.
Eric Solomon,
Assistant Secretary of the Treasury (Tax Policy).
 [FR Doc. E7-15753 Filed 8-13-07; 8:45 am]
BILLING CODE 4830-01-P