                            148 T.C. No. 15



                  UNITED STATES TAX COURT



          KEVIN DEWITT SKAGGS, Petitioner v.
    COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 15944-16.                          Filed April 26, 2017.



       P was convicted of several felony offenses. After being taken
into the custody of the Kansas Department of Corrections, P was
transferred to a State hospital to receive mental healthcare while
incarcerated. He resided in the State hospital throughout 2015.
While in the hospital, P earned wages. P claimed the earned income
tax credit (EITC) on his 2015 income tax return. Under I.R.C. sec.
32(c)(2)(B)(iv), income earned while an inmate in a penal institution
is excluded for the purpose of determining eligibility for the EITC.

       Held: P was an inmate during the time he was confined to the
State hospital.

       Held, further, the State hospital in which P served a portion of
his sentence was a penal institution.
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             Held, further, P’s income from 2015 is not taken into account
      for the purpose of determining eligibility for the EITC.



      Kevin Dewitt Skaggs, pro se.

      Douglas S. Polsky and Randall L. Eager, Jr., for respondent.



                                     OPINION


      BUCH, Judge: This deficiency case comes before the Court as the result of

a timely petition filed by Kevin Dewitt Skaggs. The Commissioner has moved for

summary judgment on the sole issue in this case: whether Mr. Skaggs is entitled

to the earned income tax credit (EITC). The Commissioner argues that Mr.

Skaggs was an inmate in a penal institution for all of 2015 and as a result any

income from that period is excluded for the purpose of determining eligibility for

the EITC. Mr. Skaggs argues that he was a patient rather than an inmate and that

the facility in which he resided was a hospital rather than a penal institution. The

Commissioner contends that there is no genuine dispute of material fact and that

he should prevail as a matter of law. We agree and find in favor of the

Commissioner.
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                                    Background

      In 2008 Mr. Skaggs was sentenced to 310 months in prison after being

convicted of several felony offenses. He was taken into the custody of the Kansas

Department of Corrections soon after and remains in its custody to this day. His

earliest release date is May 30, 2029.

      From mid-2012 to mid-2016 Mr. Skaggs resided in the Larned State

Hospital. His initial transfer was recorded in the Kansas Department of

Corrections Physical Location History as an “Inter-Facility Movement” from the

Larned Correctional Mental Health Facility to the Larned State Hospital. The

Larned State Hospital is the home of the State security hospital, which was

established to treat mentally ill inmates and those committed by the State and to

hold them in custody. Kan. Stat. Ann. sec. 76-1305 (Supp. 2015). During 2015

Mr. Skaggs earned income from working part time, performing custodial duties for

the hospital.

      Mr. Skaggs filed a tax return for 2015 reporting $2,921 in income, including

$62 in taxes withheld by his employer. Mr. Skaggs also claimed an EITC of $224

on his 2015 return, for a total refund of $286. On June 8, 2016, the Commissioner

sent Mr. Skaggs a notice of deficiency denying his claimed EITC and determining

that his income for 2015 is not counted for the purpose of the EITC because he
                                         -4-

was an inmate for all of 2015. The Commissioner determined a $224 deficiency

and withheld Mr. Skaggs’ refund.

      While residing in Kansas, Mr. Skaggs filed a timely petition to challenge the

Commissioner’s determination. He argues that he was a patient and not an inmate

during the 2015 tax year and is entitled to the EITC. In his petition Mr. Skaggs

asserts that during his time at the Larned State Hospital, he ceased to be an inmate

and that the hospital was not a penal institution. Mr. Skaggs makes two claims in

support of his position that he was not an inmate during 2015. First, he argues that

he was not treated like an inmate, and second he argues that his wages were not

treated like the wages of an inmate in the custody of the Kansas Department of

Corrections. Mr. Skaggs asserts that he was subject to fewer restrictions than an

inmate. According to Mr. Skaggs, he was able to wear his own clothes rather than

those issued by an institution and he had a greater opportunity to communicate

with the outside world than inmates in the custody of the Kansas Department of

Corrections. Mr. Skaggs also contends that his wages were not subject to the

restrictions and mandatory deductions of the earnings of inmates in Kansas

correctional facilities. He argues that these differences in his treatment are

evidence that he was not an inmate.
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      The Commissioner filed a motion for summary judgment under Rule 121.1

Mr. Skaggs filed a response.

                                     Discussion

      In considering a motion for summary judgment under Rule 121 the Court

must view all facts in the light most favorable to the nonmoving party. Jacklin v.

Commissioner, 79 T.C. 340, 344 (1982); Espinoza v. Commissioner, 78 T.C. 412,

416 (1982). The motion can be granted only if there are no genuine disputes of

material fact and if the moving party is entitled to a judgment in its favor as a

matter of law. Rule 121(b).

      Section 32 governs the EITC. Under section 32(c)(2)(B)(iv), income earned

while an inmate in a penal institution is not included in income for the purpose of

the EITC.

      Neither the statute nor the regulations define the term “inmate” or “penal

institution” for the purpose of the EITC. Moreover, no other section of the

Internal Revenue Code offers a definition of the term “inmate” or “penal

institution”. When defining a term used in a statute, we must, whenever possible,

use the “ordinary, everyday” meaning of that term. Crane v. Commissioner, 331

      1
       Unless otherwise indicated, all Rule references are to the Tax Court Rules
of Practice and Procedure, and all section references are to the Internal Revenue
Code in effect for the year in issue.
                                         -6-

U.S. 1, 6 (1947). Black’s Law Dictionary 858 (9th ed. 2009) defines an inmate as

a “person confined in a prison, hospital or similar institution.” This definition is

similar to that in Merriam-Webster’s Collegiate Dictionary 602 (10th ed. 1996),

which defines an inmate as “a person confined (as in a prison or hospital)”.

Notably, both sources specifically include those confined to hospitals in the

definition of inmate.

      Dictionary definitions for the term “penal institution” are also instructive.

In its definition for the term “penal institution”, Black’s Law Dictionary 1247

directs readers to the term “prison”. The term “prison” is defined as “[a] state or

federal facility of confinement for convicted criminals--esp. felons.” Id. at 1314.

Merriam-Webster’s Collegiate Dictionary does not include a definition of “penal

institution” but defines a prison as “a place of confinement esp. for lawbreakers”.

Merriam-Webster’s Collegiate Dictionary 927 (10th ed. 1996).

      During 2015 Mr. Skaggs was confined to the Larned State Hospital. He

asserts that while confined there he was no longer an inmate for the purpose of the

EITC. But his records within the Kansas Criminal Justice Information System

show his transfer to the Larned State Hospital as an “Inter-Facility Movement”

rather than a release.
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      Additionally, Mr. Skaggs asserts that because he was not subject to some of

the same restrictions as inmates in Kansas correctional facilities he was not an

inmate. This contention, however, gives little insight into his status as an inmate.

Inmates are frequently treated differently according to any number of factors.

      Mr. Skaggs also argues that the Larned State Hospital is not a penal

institution. His chief evidence for this contention is that the Larned State Hospital

and the State security hospital are not included in the list of “Correctional

Institution[s]” in Kan. Stat. Ann. sec. 75-5202.

      The statutes that govern the State security hospital demonstrate that it is, in

fact, a penal institution. The Larned State Hospital is the home of the State

security hospital. Id. sec. 76-1305. The State security hospital was established

with “the purpose of holding in custody, examining, treating and caring for such

mentally ill persons as may be committed or ordered to the state security hospital

by courts of criminal jurisdiction or inmates with mental illness who are

transferred for care or treatment to the state security hospital from a correctional

institution”. Id. A patient or inmate can be transferred to the State security

hospital if it is determined that the patient is suffering from mental illness and is

either a risk to other patients or a security risk generally or has been “charged or

convicted of felony crimes and therefore is unable to receive proper care or
                                           -8-

treatment in a facility other than the state security hospital.” Id. sec. 76-1306.

Patients admitted directly to the State security hospital are kept in quarters

separate from those of inmates transferred from penal institutions. Id. An

inmate’s sentence is not tolled during his or her time in the State security hospital,

and inmates can be treated at the State security hospital only during their sentence.

Id. sec. 75-5209 (1997). Finally, an inmate can be released from the State security

hospital only once his or her sentence is over. Id. If an inmate is no longer in

need of treatment and has not completed his or her sentence, that inmate must be

returned to the custody of the secretary of the Department of Corrections. Id.

      The State security hospital serves two purposes: It is a mental healthcare

facility, and it is a facility that holds inmates in need of treatment. In holding

those inmates, it continues to deprive them of their liberty as punishment for their

crimes. The State security hospital steps into the shoes of the prison while

providing treatment. When the inmate is no longer in need of treatment, he or she

is transported back to the prison. Inmates receive credit for time served while in

the State security hospital as well as necessary mental healthcare that cannot be

provided anywhere else in the Kansas correctional system. Although the State

security hospital is not included in the list of correctional institutions, it is a penal
                                       -9-

institution because inmates are still undergoing punishment for a crime while they

receive treatment.

      Finally, Mr. Skaggs contends that he was not a participant in a prison work

program. This is irrelevant for the purpose of determining whether the resulting

income was includable for the purpose of determining eligibility for the EITC.

We have previously held that the source of the income, including whether the

employer was a government entity or private company and the location of

performance of services for which the income was paid, is irrelevant for the

purpose of determining eligibility for the EITC. Rogers v. Commissioner, T.C.

Memo. 2004-245, 88 T.C.M. (CCH) 393, 394 (2004); Wilson v. Commissioner,

T.C. Memo. 2001-139, 81 T.C.M. (CCH) 1745, 1748 (2001).

      For the foregoing reasons the Commissioner’s motion for summary

judgment will be granted.


                                             An appropriate order and decision

                                      will be entered.
