*166 Decision will be entered under Rule 50.
1. Petitioners, husband and wife, filed a joint income tax return for the year 1946. During the year 1946, the mother of petitioner Lola Harrison lived with petitioners during the entire year. The mother was 87 years of age. She had no income, and petitioners furnished her entire support for the year in question. Held, she was a dependent within the meaning of the applicable section of the Code and petitioners are entitled to a deduction on her account, as a dependent.
2. Petitioners had living with them during the year 1946, four children whose ages ranged from 9 to 15 years. These children were taken from an orphanage under an agreement by which petitioners were to clothe, feed, school, and take care of the children as members of the family. In return, the petitioners were to have the services of the children. The children were not the adopted children of petitioners. Held, the children were not the legal dependents of petitioners within the meaning of the applicable section of the Code and the Commissioner is sustained in his disallowance of petitioners' claim for four dependents on account of these children. Held, *167 further, petitioners are not entitled to take as an ordinary and necessary expense deduction of their farming and dairy business, amounts which they estimated they expended for food and clothing and other expenses which they incurred during the year in caring for these children. Such expenses were in the nature of personal, living, or family expenses and their deduction is prohibited by section 24 (a) (1) of the Code.
*540 The Commissioner determined a deficiency in petitioners' income tax for the year 1946 of $ 287. The deficiency seems to be due to the disallowance by the Commissioner of the claim for four dependents listed on the return. This action of the Commissioner was based on an internal revenue agent's report which was*168 adopted by the Commissioner in his determination of the deficiency. This revenue agent's report is in evidence and reads, in part, as follows:
Taxpayer was married and had no dependents for the year 1946. His wife filed a joint return with him.
*541 The taxpayer was a farmer, and received the majority of his income from the sale of dairy products.
The taxpayer claimed the following exemptions on his return:
Jene Davis, Foster son
Richard Sparks, Foster son
Bob Walton, Foster son
M. C. Whitley [sic], Foster son
On investigation I found that no blood relationship existed between either of these children and the taxpayer. I also found that none of them had been legally adopted by said taxpayer. I therefore am disallowing all four of these above claimed exemptions.The petition which has been filed lists the following assignments of error:
A. The Commissioner erred by failing to allow petitioners to deduct depreciation on farm machinery, as listed in their amended return.
B. The Commissioner erred by failing to allow a deduction for petitioner's mother, Mrs. T. C. Crowder, as a dependent, as listed in the amended return.
C. The Commissioner erred by failing to allow*169 certain business expenses in the carrying on of the farm as listed in the amended return of petitioners.
By stipulation of the parties the issue raised by petitioners' assignment of error A is no longer in the case. The parties have stipulated that a total of $ 339.20 is to be allowed the petitioner for depreciation during the taxable year. Effect will be given to this agreement in a computation under Rule 50.
FINDINGS OF FACT.
The petitioners who are husband and wife are individuals residing in Good Springs, Tennessee. They filed a joint Federal income tax return for the calendar year 1946 with the collector of internal revenue for the district of Tennessee.
The petitioner M. D. Harrison, sometimes hereafter referred to as petitioner, during 1946 operated a farm devoted to dairying and the raising of cotton. For a number of years the petitioner had been taking foster children from two orphanages. During 1946, there were four foster sons as follows: Eugene Davis, age 15, Richard Sparks, 14, M. C. Whitby, 11, and Bob Walton, 9. The petitioner had a standing agreement with the orphanages which was in effect during 1946. Under this agreement the petitioner was to clothe, feed, *170 school, and take care of the children as members of the family. In return, the petitioner was entitled to services from the children. However, there was no formal adoption. During 1946, the children took care of the garden, helped with the plowing, hoeing, and milking, and ran errands. The food for the children was largely produced on the farm. The petitioner had no records but estimated that he spent $ 300, exclusive of food, and $ 365 for food, or a total of $ 665 on the support of the four children during 1946.
*542 Mrs. T. C. Crowder, the mother of petitioner Lola Harrison, lived with petitioners during the entire year of 1946. Mrs. Crowder was 87 years of age and has been living with petitioners since 1945, when her husband died. Mrs. Crowder paid petitioners no room or board in 1946. She had no income and received no aid from any other source. She was entirely dependent upon petitioners for support in 1946, and they furnished her entire support.
OPINION.
There is no dispute between the parties as to the gross income of petitioners in the year 1946. The Commissioner has not questioned the correctness of petitioners' gross income as reported on their joint return. *171 On that joint return, petitioners not only claimed their own personal exemptions but also claimed credit for four dependents. By making these claims petitioners' return as filed showed no tax due. The Commissioner in his audit of the return disallowed the claim for credit of four dependents and that resulted in the deficiency which has been determined.
Petitioners filed a petition for review and in that petition assigned the three errors which we have enumerated in our preliminary statement as A, B, and C. These assignments of error petitioners had a right to make although petitioners claimed no such deductions on the original joint return which they filed. Respondent does not contend that petitioners do not have a right to make these assignments of error.
As we have already stated, the parties have stipulated the depreciation deduction which petitioners are entitled to receive and that issue is no longer in the case.
As to petitioners' assignment of error B, we think the evidence sustains petitioners' claim. Mrs. T. C. Crowder was the mother of petitioner Lola Harrison. After the death of Mrs. Crowder's husband in 1945, she went to live with petitioners and she lived with *172 them throughout the year 1946. Mrs. Crowder was 87 years of age, she had no income and petitioners furnished her entire support in 1946. Under these circumstances she was clearly a dependent of petitioners during the year 1946, and we so hold. Deduction should be allowed petitioners in accordance with this holding.
Assignment of Error C.
Under this assignment of error petitioner claims as deductions for ordinary and necessary business expenses, $ 665 which he claims to have expended in 1946 for food and clothing and other expenses on *543 account of four foster sons who were living with petitioners in 1946. Petitioners claim this deduction under the following provisions of the Code:
SEC. 23. DEDUCTIONS FROM GROSS INCOME.
In computing net income there shall be allowed as deductions:
(a) Expenses. --
(1) Trade or business expenses. --
(A) In general. -- All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered; * * *
Respondent contends that the alleged expenses are not deductible as ordinary*173 and necessary business expenses but that such expenditures were for personal, living, or family expenses and are not deductible by reason of the prohibition contained in section 24 of the Code, which reads:
SEC. 24. ITEMS NOT DEDUCTIBLE.
(a) General Rule. -- In computing net income no deductions shall in any case be allowed in respect of --
(1) Personal, living, or family expenses, except extraordinary medical expenses deductible under section 23 (x);
We think respondent must be sustained. Personal, living, and family expenses are not deductible even though somewhat related to one's occupation or the production of income. See Ralph D. Hubbard, 4 T. C. 121. It seems clear from the evidence in this case that the cost of food and clothing for the four children named in our findings of fact was primarily a personal or family type expense, with the business advantage only incidental. The petitioners did not hire the children as employees but, on the contrary, took them from the orphanage under the agreement that they would be taken into petitioners' home and would be cared for as if they were petitioners' own children. No salary was paid to *174 them and the children did work around the house, dairy farm, and garden as other children would ordinarily do under similar conditions. The petitioner was entitled to their services "just like any other parent raising children," and the right to services was incidental to the agreement to assume a "family expense," section 24 (a) (1), by taking care of the children "as one of the members of the family."The evidence is to the effect that petitioners treated these four foster sons well and their action in taking them into their home, caring for them, teaching them how to work, sending them to school, and things of that sort, was altogether admirable, we think, and they are to be commended for it. We do not think, however, that the $ 665 estimated expenditures by petitioner are deductible as ordinary and necessary business expenses of petitioners' farming business. If the *544 four children had been petitioners' adopted children petitioners would have been entitled to four dependency deductions as they claimed on their original joint return. But it turns out that they were not adopted children, and, therefore, the Commissioner's action in disallowing the deduction for these *175 four alleged dependents is sustained.
For reasons we have already given above, we cannot sustain petitioners' assignment of error C to the effect that the Commissioner should have allowed a deduction of $ 665 as ordinary and necessary expenses because of expenditures which petitioners made in 1946 in the care and keeping of these four children in their home.
Decision will be entered under Rule 50.