                         T.C. Memo. 1998-401



                       UNITED STATES TAX COURT



                  GARY JAMES TAYLOR, Petitioner v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



       Docket No. 20730-97.           Filed November 12, 1998.




       Gary James Taylor, pro se.

       Julie L. Payne, for respondent.



                         MEMORANDUM OPINION

       WOLFE, Special Trial Judge:   This case was heard pursuant to

the provisions of section 7443A(b)(3) and Rules 180, 181, and

182.   All section references are to the Internal Revenue Code in

effect for the tax year in issue, unless otherwise indicated.
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All Rule references are to the Tax Court Rules of Practice and

Procedure.

     The sole issue for determination is whether petitioner is

entitled to the earned income credit for the tax year 1994.

     This case was submitted fully stipulated.     The stipulation

of facts and the attached exhibits are incorporated herein by

this reference.   Petitioner resided in Monroe, Washington, when

the petition in this case was filed.

     During 1994, petitioner was incarcerated at the Washington

State Reformatory, a penal institution.     During his

incarceration, petitioner was employed by Washington Marketing

Group, Inc. (WMG), as a telemarketer.     For his services,

petitioner received wages from WMG in the amount of $5,054.10.

Petitioner included this amount in his 1994 Federal income tax

return and claimed an earned income credit in the amount of $300.

     Petitioner is not entitled to the earned income tax credit

he claimed on his 1994 tax return.     An eligible individual is

allowed an earned income credit for the taxable year in an amount

equal to the credit percentage of so much of the taxpayer's

earned income as does not exceed the earned income amount.      Sec.

32(a).   Earned income includes wages, salaries, tips, and other

employee compensation.   Sec. 32(c)(2)(A)(i).    However, earned

income does not include any amount received for services provided

by an individual while the individual is an inmate at a penal

institution.   Sec. 32(c)(2)(B)(iv).    The wages reported by
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petitioner on his 1994 income tax return were compensation for

services provided by petitioner while he was incarcerated;

therefore, this income is not earned income for purposes of the

credit.   With respect to the earned income credit, petitioner had

no earned income and is, therefore, not entitled to the credit.



                                            Decision will be entered

                                       for respondent.
