Rev. Rul. 70-198

Advice has been requested regarding the Federal income tax treatment of transportation furnished a Job Corps enrollee under Title I-A of the Economic Opportunity Amendments of 1967, Public Law 90-222, 42 U.S.C. 2711, under the circumstances described below.

The stated purpose of the Job Corps program is to assist young persons who need and can benefit from an unusually intensive program operated in a group setting to become more responsible, employable and productive citizens.

Section 2727 Title I-A of the Economic Opportunity Amendments of 1967 provides that enrollees shall be deemed employees of the United States for purposes of the Internal Revenue Code of 1954 and Title II of the Social Security Act, and any service performed by an individual as an enrollee shall be deemed for such purposes to be performed in the employ of the United States.

Upon completion of his participation in the program, an enrollee is furnished transportation to his home or to a place of employment with another employer. The Job Corps enrollee in the instant case was furnished such transportation in 1969.

Section 61(a) of the Internal Revenue Code of 1954 defines gross income as all income from whatever source derived, unless excluded by law.

Section 217(a) of the Code (prior to its amendment by the Tax Reform Act of 1969, Public Law 91-172 [C.B. 1969-3, 10]) states the general rule that a deduction shall be allowed for moving expenses paid or incurred during the taxable year in connection with the commencement of work by the taxpayer as an employee at a new principal place of work. Section 217(c) of the Code (prior to its amendment by the Tax Reform Act of 1969) restricts this rule by providing that no deduction for moving expenses is allowable unless the taxpayer's new principal place of work is at least 20 miles farther from his former residence than was his former principal place of work, or if he had no former principal place of work, is at least 20 miles from his former residence, and during the 12-month period immediately following his arrival in the general location of his new principal place of work, the taxpayer is a full-time employee, in such general location, during at least 39 weeks.

Inasmuch as the Job Corp enrollee is an employee of the United States, the transportation furnished him is part of the remuneration for services performed by the enrollee.

Accordingly, the fair market value of the transportation furnished the Job Corp enrollee upon completion of the program is compensation for services and includible in his gross income under section 61(a) of the Code.

However, if the requirements enumerated in section 217 of the Code are met, the Job Corp enrollee may be entitled to a deduction for moving expenses paid or incurred during the taxable year in connection with the commencement of work by the enrollee as an employee at a new principal place of work.