Richard Sharvy v. Commissioner of Internal Revenue

Sharvy appeals from a Tax Court determination that he was not eligible to use the income averaging provisions of IRC § 1301 et seq. on his tax return for 1969 because he had not provided over one-half of his own support for all four base period years as required by IRC § 1303(c)(1). Sharvy’s major source of income during these base period years was a tax-exempt NDEA graduate fellowship for study at Wayne State University. He argues that the fellowship was income to him out of which he furnished his own support. We acknowledge the logical force of his argument, but must reject it because of the specific legislative history which shows that Congress did not intend for students recently supported by tax-exempt fellowships to receive the benefits of income averaging.

Congress specifically indicated its concern “that the individual be a member of the labor force in both the computation year and in the 4 base period years.” H.Rep.No. 749, 1964-1 Cum.Bull. (Part 2) 238, U.S. Code Cong. & Admin.News 1964, p. 1423. The support requirement was put in to achieve this result. The Congress, however, did provide for specific exceptions to the support requirement. Among these exceptions is one…