In September, $1998$ Cam and Mitchell adopted Jasmine, a beautiful homeless newborn from Vietnam.

The newlyweds rejoiced at the gift of youthful joy and brilliance that Jasmine brought to their Portland,

Oregon home. That joy was to be short$-$lived. Jasmine required emergency appendectomy surgery

shortly after arriving in the US$.$

Jasmine$$s appendectomy surgery went badly $$ the surgeon read the wrong patient chart and amputated

Jasmine$$s right leg. The hospital quietly settled the matter for $$877,000.$ That sum was placed in a trust

for Jasmine$$s lifetime assistance. The hospital also agreed to provide lifetime medical care for Jasmine

at no charge in exchange for a non$-$disclosure agreement.

Jasmine grew up and adapted to her special needs well excelling at wheelchair basketball. She earned a

spot on the $2012$ Junior Olympic team. Sadly, Cam and Mitchell had not fared well economically and

were generally unsophisticated in the realm of finance. Fortunately, Jasmine$$s financial advisor $($for her

trust$),$ Sam Shrewd, was quite adept at navigating the provisions of the tax code.

In July, $2009$ when Sam learned that Cam and Mitchell were behind on their mortgage payments $($and

were in danger of losing their home to foreclosure$)$ Sam devised a plan. Sam$$s plan was to apply to the

guardianship court and obtain permission for Jasmine$$s trust to lend money to Cam and Mitchell to buy

the house. The Oregon State Guardianship Court issued an order in October, $2009$ allowing Jasmine$$s

trust to lend Cam and Mitchell $$125,000$ to repay the existing home loan and replace the bank loan with

a loan from Jasmine$$s trust secured by a mortgage to be held by Jasmine$$s trust $($which was

administered by Sam$).$ If Cam and Mitchell were unable to pay on the mortgage loan from Jasmine$$s

trust, the trust could foreclose and would own the home.

Financial setbacks once again visited Cam and Mitchell in late $2009.$ Cam and Mitchell were unable to

make the mortgage payments to Jasmine$$s trust. The trust $($administered by Sam$)$ promptly foreclosed

and Jasmine$$s trust became owner of the home on December $15,2009.$

When preparing the $2009$ tax return for Jasmine, Sam claimed the First Time Home Buyer$$s tax credit in

the amount of $$8,000$ on Jasmine$$s tax return.

In $2012$ the IRS initiated an examination of Jasmine$$s tax return and, due to agent turnover requested

and was granted an extension of time to complete the audit examination. In $2015$ the IRS disallowed

the $$8,000$ credit based on the trust$$s acquisition of the home. Sam caused the trust to pay the IRS

assessment plus the penalties and interest and Jasmine sued for a refund in Federal District Court in

Portland. Was Jasmine entitled to the credit?