§213 — Medical, dental, etc., expenses

Non-issues The surgical procedures involved in this case are startling, and to avoid distraction from the actual issues, it is expedient to affirm what is not at issue here : Neither the tax collector nor the Tax Court sits as aboard of medical review, as if it were reconsidering, validating, or overruling the medical profession's judgments about what medical care is appropriate or effective for what medical conditions .

7491(a) may shift the burden of proof to the Commissioner in specified circumstances, we need not decide which party bears the burden of proof because the outcome in this case does not depend on the burden of proof .

It is unclear whether the Commissioner has considered the issue of the deductibility of monthly service fees since 1993.

An expenditure for medical care is deductible ifit is strictly confined to expenses incurred primarily .·7- [*7] for the prevention or alleviation ofa physical or mental defect or illness.

We hold that they are not, except inasmuch as their expenses for travel health insurance may be deductible under section 213(a).

We hold that they are not, except inasmuch as their expenses for travel health insurance may be deductible under section 213(a).

We hold that they are not, except inasmuch as their expenses for travel health insurance may be deductible under section 213(a).

Regulations promulgatedpursuant to section 213 provide that "[d]eductions for expenditures for medical care allowable under section 213 will be confined strictly to expenses incurred primarily for the prevention or alleviation ofa physical or "Because sec.

Therefore, under the clear language of section 72(t) (2) (]B), we hold that the portion of the defaulted loan that equals the amount of the deduction allowed for medical expenses under section 213 is excepted from the 10-percent additional tax under section 72(t); regrettably for petitioner, the balance of such loan is subject to the additional tax.

M As, previously stated, we hold tihat petitioner has not established thatethe $5 56Ë reimbursed expenses paidsto decedênt' s caïegivers are deductible as medical expenses under section 213 (a) To reflect thetparties concessions and our holdings hereïn, Decision will be entered under Rule 155 .

Accordingly, we hold that petitioner is entitled to a medical expense deduction only for the $3,235.37 she paid for prescription drugs, $424 paid for doctor's visits, - 8 - and $298.34 paid for travel to doctors that the parties stipulated.

) ;ED JUL 2 12010 may look behind the notice of deficiency to determine whether it is valid; (2) whether petitioner or respondent bears the burden of proof pursuant to sections 7491(a)3 and 6201(d) ; (3) whether petitioner is entitled to deductions, pursuant to section 213, for medical and dental expenses of $9,871, subject to the 7 .5- percent-of-adjusted-gross-income limitation of section 213(a), as itemized deductions for tax year 2005 ; .(4) whether petitioner is entitled to deductions, pur

2,500 Prescription drugs 1,300 10,200 - 3 - The 7.5 percent of adjusted gross income limitation pursuant to section 213(a) reduced this amount by $3,771 so that the net medical expense deduction was $6,429.

Respondent contends that, since the procedures were classified as cosmetic by petitioner’s surgeon,4 they were cosmetic for purposes of applying section 213(d)(9).

After concessions, the issue for decision is whether petitioner may deduct as a medical care expense under section 213 amounts paid in 2001 for hormone therapy, sex reassignment surgery, and breast augmentation surgery that petitioner contends were incurred in connection with a condition known as gender identity disorder.

Medical Care Expenses As a general rule, section 262(a) prohibits a deduction for “personal, living, or family expenses.” An exception to this general rule is provided by section 213 for certain medical care expenses.

72(t)(2)(B) and section 72(t)(2)(E).1 Section 72(t)(2)(B) provides that the following distributions are not subject to the additional tax: (B) Medical expenses.--Distributions made to the employee * * * to the extent such distributions do not exceed the amount allowable as a deduction under section 213 to the employee for amounts paid during the taxable year for medical care (determined without regard to whether the employee itemizes deductions for such taxable year). The deduction allowed under

The issues for decision are whether petitioners have substantiated $5,704 in medical and dental expenses under section 213 and whether petitioners are entitled to deduct $38,829 in alleged casualty losses under section 165.1 1 All section references are to the Internal Revenue Code in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.

and remodeling were not part of a general plan of rehabilitation because they were separate and distinct projects, conceived of independently, undertaken for different purposes, and performed by separate contractors; and (4) using the principles of section 213 (which allows individuals to deduct certain personal medical expenses that are capital in nature) and section 1.162-10, Income Tax Regs, (which allows a trade or business to deduct medical expenses paid to employees on account of sickness)

After a concession, the issues for decision are: (1) What portions of monthly services fees paid by petitioners for lifetime residence at a continuing care retirement community are alloca-ble to medical care under section 213; and (2) whether petitioners are entitled to deduct additional amounts under section 213 for medical use of pool, spa, and exercise facilities at the retirement community.

Dickie (petitioner) as a musician was an activity "not engaged in for profit" within the meaning of section 183 for the taxable years at issue, (2) whether petitioner is entitled to a medical expense deduction under section 213 for taxable year 1994, and (3) whether petitioners are liable for accuracy-related penalties for the taxable years at issue.

However, the additional tax does not apply “to the extent such distributions do not exceed the amount allowable as a deduction under section 213” for medical ex- penses.

The regulations promulgated under section 213 also require that taxpayers adequately substantiate their claimed medical expense deductions.

The following exception is relevant: (B) Medical expenses.--Distributions made to the employee * * * to the extent such distributions do not exceed the amount allowable as a deduction under section 213 to the employee for amounts paid during the taxable year for medical care * * *.

t has conceded deductions of$1,131 for union dues. S_e_e supra p. 26. The $669 remaining in dispute for each year chiefly represents premiums paid for supplemental health insurance, which could be deductible (ifat all) only as medical expenses under section 213. During the tax periods at issue health insurance premiums paid by an employee were deductible only to the extent they exceeded 7.5% ofadjusted gross income (AGI). See sec. 213(a).5 Petition- ers' AGI for 2011 and 2012 far exceeds $8,920

(2)(B) provides an exception to this rule: With exceptions not relevant here, an early distribution from a qualified retirement plan is not subject to the 10% additional tax to the extent it does not exceed "the amount allowable as a deduction under section 213 * * * for amounts paid during the taxable year for medical care (determined without regard to whether the * * * [taxpayer] itemizes deductions for such taxable year)." Section 213(a) in turn allows as a deduction "the expenses paid during

A further exception appears in section 72(t)(2)(B), captioned "[m]edical expenses." It provides, with exceptions not relevant here, that an early distribution from a qualified retirement plan is not subject to the 10% additional tax to the extent it does not exceed "the amount allowable as a deduction under section 213 * * * for amounts paid during the .

A taxpayer claiming a deduction under section 213 must "furnish the name and address ofeach person to whom payment for medical expenses was made and the amount and date ofthe payment thereofin each case." Sec.

" We have characterized section 213 as carving Put "a-limite d exception" to the general rule .in section 262 that prohibits the deduction of personal, living, or family expenses .

Applicable to petitioners' contention that they used a portion of their IRA distributions to pay for medical expenses is section 72(t)(2)(B), which provides : (B) Medical expenses .--Distributions made to the employee * * * to the extent such distributions do not exceed the amount allowable as a deduction unde r section 213E73 to the employee for amounts paid during the taxable year for medical care (determined without regard to whether the employee itemizes deductions for such taxable year) .

Medical Expenses Section 72(t)(2)(B) provides an exception to application of the section 72(t) additional tax for "Distributions made * * * to the extent such distributions do not exceed the amount allowable as a deduction under section 213 * * * for amounts paid during the taxable year for medical care" .

The exception relevant to the case at hand, found in section 72(t)(2)(B), provides that the following distributions are not subject to the additional tax: Distributions made to the employee * * * to the extent such distributions do not exceed the amount allowable as a deduction under section 213 to the employee for amounts paid during the taxable year for medical care (determined without regard to whether the employee itemizes deductions for such taxable year).

espective of the lack of a profit motive. Sec. 183(b)(2). We similarly find that the cost incurred by petitioners for Jennifer’s medical expenses is a personal family expense, the deduction of which is prohibited by section 262, except as allowed by section 213. Jennifer was covered by the health insurance policy owned by her father. Petitioner purported to create a “Self Insured Medical Plan Aspiring Artists Company”. - 15 - Under the “plan”, petitioner agreed that Aspiring Artists would pay up

stained. As to 1994, we find that petitioner’s medical expense deduction for that year is also overstated to the extent that it includes amounts withheld for Medicare from his and his spouse’s wages. Medicare taxes do not qualify for deduction under section 213. Sec. 1.213-1(e)(4)(i)(a)(3), Income Tax Regs. Taking into account the increase to petitioner’s 1994 adjusted gross income resulting from our holding regarding the Schedule E deductions, petitioner’s concession with respect to the medical

Under section 213, individuals are entitled to an itemized deduction for amounts paid for medical care to the extent that these expenses exceed 7.5 percent of the individual's adjusted gross income. Petitioner's adjusted gross income was $41,471. Therefore, petitioner may deduct medical expenses only to the extent that they exceed $3,110. The substantiat

To substantiate medical and dental expenses under section 213, a taxpayer must provide the name and address of each person to whom payment was made and the amount and date of each payment.

Medical Expenses Under section 213, individuals are allowed to deduct the expenses paid for the "medical care" of the taxpayer, the taxpayer's spouse, or a dependent, to the extent the expenses exceed 7.5 percent of adjusted gross income and are not compensated for by insurance or otherwise.

Section 213 allows a deduction for expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, his spouse, or a dependent, to the extent that such expenses exceed 7.5 percent of the adjusted gross income. The taxpayer must substantiate any deductions - 8 - claimed under section 213 by fur

To substantiate medical and dental expenses under section 213, a taxpayer must provide the name and address of each person to whom payment was made and the amount and date of each payment.

penses in the total amount of $7,960. In the statutory notice of deficiency, respondent disallowed any deduction for $2,696 of the claimed expenses on the ground that petitioner did not establish that the disallowed amount meets the requirements of section 213. This disallowed amount represents the costs which petitioner claimed for his special diet. Section 213(a) allows as a deduction the expenses paid during the taxable year, not compensated by insurance or otherwise, for the medical care of

670.36 of the claimed medical expenses in issue, which approximates the amount 3 Respondent's adjustments to petitioners' medical expense deductions for 1993 and 1994, to the extent based on his adjustments to petitioners' adjusted gross income and sec. 213 limitations for 1993 and 1994, are computational and will be resolved by the Court's holding on the first issue in this case. - 15 - claimed by petitioners and disallowed by respondent for certain acupuncture treatments. Section 213(a) allows

of this record, the Court is unable to ascertain whether the medical expenses claimed on the return in fact exclude the expenses for hearing aids, or the extent to which any of these items may represent allowable unreimbursed medical expenses under sec. 213. - 10 - issue. Consequently, we hold that petitioners are liable for tax on Social Security benefits pursuant to section 86. Accuracy-Related Penalty Respondent determined that petitioners are liable for an accuracy-related penalty under sect

Section 213 allows a deduction for expenses paid for medical care of the taxpayer, his spouse, or a dependent, which is not compensated for by insurance or otherwise, to the extent that such expenses exceed 7.5 percent of adjusted gross income. The amount of the deduction for medical expenses obviously depends upon the taxpayer's adjusted gross inc

v. Commissioner, 315 F.2d 731, 736–37 (9th Cir. 1963), aff’g T.C. Memo. 1961-256. Against this backdrop, section 183 was enacted in 1969 and effective for taxable years beginning after December 31, 1969. Tax Reform Act of 1969, Pub. L. No. 91-172, § 213, 83 Stat. 487, 571–72. The present text of section 183(a) through (c) provides: Sec. 183. Activities not engaged in for profit (a) General rule.—In the case of an activity engaged in by an individual or an S corporation, if such activity is not

Lucas’ diabetes did not render him “unable to engage in any substantial gainful activity” within the meaning of section 72(m)(7) and its accompanying regulations.

74), that depreciation has been held not to be an expenditure or payment for purposes of a charitable contribution deduction under sec. 170, see Orr v. United States, 343 F.2d 553 (5th Cir. 1965), or for purposes of a medical expense deduction under sec. 213, see Gordon v. Commissioner, 37 T.C. 986 (1962). In distinguishing those decisions, the Supreme Court stated: Section 263 is concerned, however, with the capital nature of an expenditure and not with its timing, as are the phrases “payment *

74), that depreciation has been held not to be an expenditure or payment for purposes of a charitable contribution deduction under sec. 170, see Orr v. United States, 343 F.2d 553 (5th Cir. 1965), or for purposes of a medical expense deduction under sec. 213, see Gordon v. Commissioner, 37 T.C. 986 (1962). In distinguishing those decisions, the Supreme Court stated: Section 263 is concerned, however, with the capital nature of an expenditure and not with its timing, as are the phrases “payment *

74), that depreciation has been held not to be an expenditure or payment for purposes of a charitable contribution deduction under sec. 170, see Orr v. United States, 343 F.2d 553 (5th Cir. 1965), or for purposes of a medical expense deduction under sec. 213, see Gordon v. Commissioner, 37 T.C. 986 (1962). In distinguishing those decisions, the Supreme Court stated: Section 263 is concerned, however, with the capital nature of an expenditure and not with its timing, as are the phrases “payment *

Medical and Dental Expenses Section 213 allows a deduction for the cost ofmedical care not paid for by insurance.

26, 1999).¹4 For example, if"the threshold amount ofmedical deductions under section 213" changes as the result ofa partnership-level determination, that computational adjustment "do[es] not ¹4Sec.

26, 1999).¹4 For example, if"the threshold amount ofmedical deductions under section 213" changes as the result ofa partnership-level determination, that computational adjustment "do[es] not ¹4Sec.

26, 1999).¹4 For example, if"the threshold amount ofmedical deductions under section 213" changes as the result ofa partnership-level determination, that computational adjustment "do[es] not ¹4Sec.

26, 1999).¹4 For example, if"the threshold amount ofmedical deductions under section 213" changes as the result ofa partnership-level determination, that computational adjustment "do[es] not ¹4Sec.

26, 1999).¹4 For example, if"the threshold amount ofmedical deductions under section 213" changes as the result ofa partnership-level determination, that computational adjustment "do[es] not ¹4Sec.

26, 1999).¹4 For example, if"the threshold amount ofmedical deductions under section 213" changes as the result ofa partnership-level determination, that computational adjustment "do[es] not ¹4Sec.

26, 1999).¹4 For example, if"the threshold amount ofmedical deductions under section 213" changes as the result ofa partnership-level determination, that computational adjustment "do[es] not ¹4Sec.

26, 1999).¹4 For example, if"the threshold amount ofmedical deductions under section 213" changes as the result ofa partnership-level determination, that computational adjustment "do[es] not ¹4Sec.

26, 1999).¹4 For example, if"the threshold amount ofmedical deductions under section 213" changes as the result ofa partnership-level determination, that computational adjustment "do[es] not ¹4Sec.

t has conceded deductions of$1,131 for union dues. S_e_e supra p. 26. The $669 remaining in dispute for each year chiefly represents premiums paid for supplemental health insurance, which could be deductible (ifat all) only as medical expenses under section 213. During the tax periods at issue health insurance premiums paid by an employee were deductible only to the extent they exceeded 7.5% ofadjusted gross income (AGI). See sec. 213(a).5 Petition- ers' AGI for 2011 and 2012 far exceeds $8,920

While these items are no doubt beneficial to petitioners and their family, section 213 does not allow a deduction for amounts spent to purchase a medicine or drug for which no prescription is required.

A taxpayerwho claims a deduction under section 213 must "furnish the name and address ofeach person to whom payment for medical expenses was made and the amount and date ofthe payment thereofin each case." Sec.

ical care (determined without regard to whether the employee itemizes deductions for such taxable year)." Section 213 in turn allows as a deduction "the expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care ofthe taxpayer, his spouse, or a dependent (as defined in section 152, determined without regard to subsections -6- (b)(1), (b)(2), and (d)(1)(B) thereof), to the extent that such expenses exceed 7.5 percent ofadjusted gross income."4 Although

"[m]edical expenses." It provides, with exceptions not rele- vant here, that an early distribution from a qualified retirement plan is not subject to the 10% additional tax to the extent it does not exceed "the amount allowable as a deduction under section 213 * * * for amounts paid during the taxable year for medical care." As in effect for 2010, section 213(a) allowed as a deduction "the expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care oft

-6- allowable as a deduction under section 213 to the employee for amounts paid during the taxable year for medical care (determined without regardto whetherthe employee itemizes deductions for such taxable year)." Section 213 in turn allows as a deduction "the expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care ofthe taxpayer, his

n Security denied the claim and petitioner found it necessaryto sue, alleging breach of contract and breach ofthe covenant ofgood faith and fair dealing. The $65,000 7 The exclusion does not extend to amounts attributable to deductions allowed under sec. 213 (relating to medical expenses) for any prior taxable year. See Watts v. Commissioner, T.C. Memo. 2009-103, 2009 WL 1391414, at *5 n.10. - 26 - that petitionerreceived in settlement ofhis suit essentially represented a substitute for what he

Section 213 carves out a limited exception to the general rule in section 262 that prohibits the deduction ofpersonal, living, or family expenses. Jacobs v. Commissioner, 62 T.C. 813, 818 (1974). Section 1.213-1(e)(1)(ii), Income Tax Regs., provides that medical care deductions will be confined strictly to expenses incurred primarily for the preven

n 2004. Respondent concedes that petitioner is entitled to deduct $561 claimed on her Schedule C for insurance but argues that the remaining $352 should be reported on her Schedule A as a personal medical expense subject to the limitations found in section 213. At trial petitioner conceded that this $352 was a personal medical expense. 2. Interest The parties disagree as to whether petitioner is entitled to a $1,600 deduction for interest expenses she claims to have paid with respect to three cr

(a) In General.--Except in the case ofamounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- (1) amounts received under workmen's compensation acts as compensation for personal injuries or sickness; - 8 - [*8] (2) the amount ofany damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums

A taxpayerwho claims a deduction under section 213 must "furnishthe name and address ofeach person to whompayment for medical expenses was made and the amount and date ofthe paymentthereofin each case." Sec.

Medical and Dental Expenses Under section 213, individuals are allowed to deduct medical and dental expenses paid during the taxable year that are not compensated for by insurance or otherwise, but only to the extent the expenses exceed 7.5% ofadjusted gross mcome.

A taxpayerwho claims a deduction under section 213 "shall furnish the name and address ofeach person to whom payment for medical expenses was made and the amount and date ofthe payment thereofin each case." Sec.

A taxpayerwho claims a deduction under section 213 must "furnishthe name and address ofeach person to whompayment for medical expenses was made and the amount and date ofthe paymentthereofin each case." Sec.

A taxpayerwho claims a deduction under section 213 must "furnishthe name and address ofeach person to whompayment for medical expenses was made and the amount and date ofthe paymentthereofin each case." Sec.

A taxpayerwho claims a deduction under section 213 must "furnish the name and address ofeach person to whom payment for medical expenses was made and the amount and date ofthe paymentthereofin each case." Sec.

(a) In General.-Except in the case ofamounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include- (1) amounts received under workmen's compensation acts as compensation for personal injuries or sickness; Regulations promulgated under section 104 further explain the exclusion: Section 104(a)(1) excludes from gross income amounts which are

(a) In General.--Exceptin the case ofamounts attributable to - 6 - [*6] (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- * * * * * * * (2) the amount ofany damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account ofpersonal physical injuries or physical sickness; In interpreting

— Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include — • (1) amounts received under workmen’s compensation acts as compensation for personal injuries or sickness; Regulations promulgated under section 104 further explain the exclusion: Section 104(a)(1) excludes from gross income amounts which

executed documents for two additional plans, also effective as of November 2, 2001: (1) A "Medical Reimbursement Plan of Westsphere Management Corp." whereby Westsphere, "in addition to providing any basic medical insurance coverage for its employees", agreed to reimburse employee medical expenses, as defined in section 213, and (2) a "Diagnostic Medical Reimbursement Plan" whereby Westsphere, "in addition to providing any basic medical insurance coverage for its officers", - 9 - agreed to reim

Regs., says: Changes in a partner's tax liability with respect to affected items that do not require partner-level determinations (such as the threshold amount of medical deductions under section 213 that changes as the result of determinations made at the partnership level) are computational adjustments that are directly assessed.

ses allegedly relate, Zhang cannot deduct temployee benefits provided to herself. A sole proprietorship and its proprietor are the same entity. See Osborne v. Commissioder, T.C. Memo. 2002-11. Moreover, although medical expenses åre deductible under sec. 213 even if they are expenses not rülated to a business, Zhang has not demonstrated that the portion of the $22,000 consisting of her own medical expenses, if any, was not (continued...) !i - 17 - a. Zhang's Credibility Zhang did not testify cre

To substantiate medical expenses under section 213, the taxpayer must furnish the name and address of each person to whom payment was made and the amount and date of each such payment.

f November 2, 2001: (1) A "Medical Reimbursement Plan of Westsphere Management Corp." whereby Westsphere, "in addition to providing any basic medical insurance coverage for its employees", agreed to reimburse employee medical expenses, as defined in section 213, and (2) a "Diagnostic Medical Reimbursement Plan" whereby Westsphere, "in addition to providing any basic medical insurance coverage for its officers", - 9 - agreed to reimburse them and their families for expenses of "diagnostic medical

Regs., says: Changes in a partner’s tax liability with respect to affected items that do not require partner-level determinations (such as the threshold amount of medical deductions under section 213 that changes as the result of determinations made at the partnership level) are computational adjustments that are directly assessed.

Medical .Expenses Under section 213, individuals are allowed to deduct the expenses paid for the "medical care" of the taxpayer, the taxpayer's spouse, or a dependent, to the extent the expenses exceed 7 .5 percent of adjusted gross income and are not compensated for by insurance or otherwise .

e shall sometimes refer to the allowance that is, or was, excludible from gross income under sec. 107 and its predecessors as the excludible parsonage allowance. 'According to respondent, The Senate Committee Report does not mention the provi- sion [sec. 213 (b) (11) of the Revenue Act of 1921], and the House Conference Report indicates only that the House accepted the Senate version with an amendment making an unspecified "clerical change." See S. Rep. No. 275 at 14 (1921); H.R. Conf. Rep. No.

The disallowance of petitioner's $31,570 business expense deduction increases petitioner's adjusted gross income by a like amount, and thus the 7 .5-percent floor imposed .by section 213 is increased by -11- $2,367 .75 ($31,570 x' 0 .075 = $2,367 .75) .

-15- express provision of their deductibility under section 213 (medical expenses) alone.

re liable for self-employment taxes on the gross receipts reported on Schedules C of-their 2004, 2005, and 2006 returns and on gain realized-on the sale of section -1245 property in 2004, if any; (5) whether petitioners are entitled to deduct under section 213 medical expenses of $17,083 for 2006; and (6) whether petitioners are liable Efor accuracy-related penalties under section 6662(a) for the years at issue.

ion 105(b) . .Under the employee benefit program'the medical and dental expenses.. to be paid. or reimbursed would be . those for which the employee . was not compensated by insurance or otherwise and which would be treated as medical expenses under section 213 . The amount that would be paid or reimbursed was limited to $10,000 per person per calendar year . The employee benefit program covered reimbursements for medical or medical-related insurance , medical .or medical-related services, life

Section 213 allows a deduction for medical expenses of the'taxpayer, his spouse, and his dependents . Sections 151 and 152 define a dependent to include,a taxpayer's child under the age of 19 or a child who is a student under the age of 24 over half of whose support was received from the taxpayer . Petitioners did not show that their son was their

72(t)(2)(B), (E) Section 72(t)(2),(B) provides an exception to the section 72(t) additional tax for distributions made to the employee to the extent such distributions do not exceed the amount allowabl e as a deduction under section 213 to the employee for amounts pai d during the taxable year for medical care .

(a) In General .--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc ., expenses)(cid:127)for any prior taxable year, gross income does not include-- (1) amounts received under workmen's compensation acts as compensation for personal injuries or sickness ; (2) the amount of any ,damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums

(a) In General .--Except ; in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical,-.

1997) . Computational affected items include those items on a partner's return that vary if there is a change in the individual partner's adjusted -13- gross income, for example, the threshold; dollar limit for the~i medical expense deduction under section 213 . Sec . 301 .6231(a)(6)-1T(a)(1), Temporary Proced . & Admin . Regs, 64 Fed . Reg . .3840 (Jan . 26, 1999) . Once the-part ership-level ! ;l proceedings are completed, the Commissioner is permitted to . . .I? assess a computational adjustm

(a) In General .--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc ., expenses) for any prior taxable year, gross income does not include-- (2) the amount of any damages (other than punitive, damages) received (whether by suit or.

Expenditures which merely provide a general healt h benefit are not deductible because deductions allowable under section 213 are confined strictly to expelfses paid primarily for the prevention or alleviation of a physic l or mental defect or illness .

Section 213 permits a deduction for medical expenses that taxpayers incur and which insurance does not cover, but only to the extent that the expenses exceed 7 .5 percent of the taxpayer's adjusted gross income . Further, section 1 .213-1(h), Income Tax Regs ., requires taxpayers to substantiate their medical expenses by providing the names and add

Section 1.213-1(e)(1)(ii), Income Tax Regs ., provides that amounts expended for illegal operations or treatments are not deductible and that deductions allowed under section 213 will be confined strictly to'expenses incurre d primarily for the prevention or alleviation of a physical or mental defect or illness .

Medical and Dental Expenses Section 213 permits a deduction for medical and dental expenses to the extent the expenses exceed 7 .5 percent of 2Petitioners do not claim the benefit of sec .

To substantiate deductions for medical expenses under section 213, the taxpayer must furnish the name and address of each person to whom payment for medical expenses was made and the amount and date of each payment .

espectively; a d°'(4) medical'/dental expenses of,$56 .69 for 2001 . Self-employed in ividuals may deduct 60 percent and 70- percent of their heal--h insurance premiums for .2001 and 2002, respectively, and may deduct the excess thereof pursuant to< section 213 . . Sec. 16 (1)'(1), (3) . Petitioner claimed,self- employed health'insur nce :deductions of $1,.574'and $1,991 for 2001 and 2002,-respec ively . Respondent has made no adjustment to petitioner's claim d $1,574 self-employed health insura

following two exceptions are relevant : (A) In general .--Distributions which are-- * * * * * * * (v) made to an employee after separatio n from service after attainment of age 55 , * * * * * * * (B) Medical expenses .--Distributions made to the employee * * * to the extent such distributions do not exceed the amount allowable as a deduction under section 213 to the employee for amounts paid during the taxable year for medical care * * * .

(a) In General .--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc ., expenses) for any prior taxable year, gross income does not include-- (2) the amount of any damages (other than punitive damages ) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal physical injuries or physical sickness ; * * * For purposes of par

(a) In General .-- Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc ., expenses) for any prior taxable year, gross income does not include-- (2) the amount of any damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal physical injuries or physical sickness ; * * * * * * * - 6 - * * *

(a) In General .--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc ., expenses) for any prior taxable year, gross income does not include-- (2) the amount of any damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal physical injuries or physical sickness ; * * * For purposes of par

(a) In General.--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- * * * * * * * (2) the amount of any damages received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal injuries or sickness; The regulations under section 104 provide that the term “damag

(a) In General .--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc ., expenses) for any prior taxable year, gross income does not include-- (2) the amount of any damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal physical injuries or physical sickness ; 5 For the first time, in t

(a) In General.--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- * * * * * * * (2) the amount of any damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal physical injuries or physical sickness; * * * * * * *

While section 213 permits a deduction for medical expenses of a taxpayer or a dependent, a taxpayer must substantiate claimed medical expense deductions. Sec. 1.213- 1(h), Income Tax Regs. Petitioners presented no documentary evidence or testimony as to specific expenses incurred in this connection. Petitioners are not entitled to any amount for a medica

The court concluded that Antarctica is a foreign country for purposes of the FLSA and based its conclusion on the particular language of the FLSA. Smith v. Raytheon Co., supra at 401-402. In the instant case, we are revisiting the same issue we discussed in Martin v. Commissioner, supra. Although the statutory and regulatory provisions

. Many of the entries on the Quicken report contain notes such as “not covered”, “co pay”, or “copayment”. Section 213(a) generally allows a deduction for expenses paid during a taxable year, not compensated for by insurance or 7 As discussed below, sec. 213 allows a deduction for medical or dental expenses to the extent that they exceed 7.5 percent of adjusted gross income. - 35 - otherwise, for medical care of the taxpayer, his or her spouse, or dependents, to the extent that such expenses exc

The language of section 72(t)(2)(B) provides as follows: Medical expenses. Distributions made to the employee * * * to the extent such distributions do not exceed the amount allowable as a deduction under section 213 to the employee for amounts paid during the taxable year for medical care (determined without regard to whether the

The court concluded that Antarctica is a foreign country for purposes of the FLSA and based its conclusion on the particular language of the FLSA. Smith v. Raytheon Co., supra at 401-402. In the instant case, we are revisiting the same issue we discussed in Martin v. Commissioner, supra. Although the statutory and regulatory provisions

(a) In General.--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include–- * * * * * * * (4) amounts received as a pension, annuity, or similar allowance for personal injuries or sickness resulting from active service in the armed forces of any country or in the Coast and Geodetic Survey or the Public Health Servi

. Commissioner, 89 T.C. 676 (1987). 2Respondent concedes medical expenses in the amount of $18,904, leaving at issue expenses in the amount of $28,666 ($47,570-$18,904). Respondent also concedes that any medical expenses allowed as a deduction under sec. 213 shall be deemed paid for by a portion of petitioner’s withdrawal from his thrift savings plan and are therefore excepted from the additional tax under sec. 72(t). Respondent further concedes that petitioner’s filing status is married filing

(a) In General.--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- * * * * * * * (2) the amount of any damages received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal injuries or sickness * * * - 32 - Neither the statute nor the legislative history o

(a) In General.--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- * * * * * * * (2) the amount of any damages received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal injuries or sickness; The reference to personal injuries in this former version of t

In General.--Except in the case of amounts attributable to (and not in exçess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- (2) the amount of any damages received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal injuries or sickness; * * * * * * * * * * Paragraph (2) shall not apply to any punitive damages in

Section 72(t)(2)(B) provides that the additional tax shall not - 7 - apply to distributions made to employees “to the extent such distributions do not exceed the amount allowable as a deduction under section 213 to the employee for amounts paid during the taxable year for medical care (determined without regard to whether the employee itemizes deductions for such taxable year).” The deduction allowed under section 213(a) is for “the expenses paid during the taxable year * * * for medical care *

Under section 213, individuals are allowed to deduct the expenses paid for the "medical care" of the taxpayer, the taxpayer's spouse, or a dependent, to the extent the expenses exceed 7.5 percent of adjusted gross income and are not compensated for by insurance or otherwise. The Court has determined that under section 152(e) petitioner's children do not

d a Federal income tax deficiency for petitioners’ 2000 taxable year in the amount of $1,642. After concessions, the issue for decision is whether petitioners are entitled to deduct a portion of their transportation costs as a medical expense under section 213. Background Some of the facts have been stipulated and are so found. The stipulations of the parties, with accompanying exhibits, are incorporated herein by this reference. During the year 2000 and through the time the petition was filed i

Section 72(t)(2)(B) provides that the following distributions are not subject to the additional tax: (B) Medical Expenses.--Distributions made to the employee * * * to the extent such distributions do not exceed the amount allowable as a deduction under section 213 to the employee for amounts paid during the taxable year for medical care (determined without regard to whether the employee itemizes deductions for such taxable year).

(a) In General.--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- * * * * * * * (2) the amount of any damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal physical injuries or physical sickness; * * * * * * *

That section provides for an exception from the 10-percent additional tax for distributions made to employees “to the extent such distributions do not exceed the amount allowable as a deduction under section 213 to the employee for amounts paid during the taxable year for medical care (determined without regard to whether the employee itemizes deductions for such taxable year).” Respondent did not question petitioner’s claim that 2 All section references are to the Internal Revenue Code as amend

(a) In General.--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., - 7 - expenses) for any prior taxable year, gross income does not include-- * * * * * * * (2) the amount of any damages received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal injuries or sickness; The reference to personal injuries in this former versi

Section 213 allows a deduction for expenses paid during the taxable year, not compensated by insurance or otherwise, for medical care of the taxpayer, his spouse or a dependent (as defined in section 152), to the extent that such expenses exceed 7.5 percent of adjusted gross income.

(a) In General.–-Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- * * * * * * * (2) the amount of any damages received (whether by 6 No question has been raised with respect to the burden of proof or production under sec.

(a) In General.--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- * * * * * * * (4) amounts received as a pension, annuity, or similar allowance for personal injuries or sickness resulting from active service in the armed forces of any country or in the Coast and Geodetic Survey or the Public Health Servi

84, §213B.2.a (West Supp. 2003), provides that, if there is no surviving spouse, the decedent’s estate is distributed in undivided equal shares to the surviving children of the decedent and the issue of any deceased child.8 Under Oklahoma State law, 8Oklahoma State law also provides that, when a person dies intestate leaving real property, title to the

(a) In General.--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- * * * * * * * (2) the amount of any damages received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal injuries or sickness; The reference to personal injuries in this former version of t

(a) In General.–-Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- * * * * * * * (2) the amount of any damages received (whether by 6 No question has been raised with respect to the burden of proof or production under sec.

Section 72(t)(2)(B) provides for an exception to the additional tax for: Distributions made to the employee * * * to the extent such distributions do not exceed the amount allowable as a deduction under section 213 to the employee for amounts paid during the taxable year for medical care (determined without regard to whether the employee itemizes deductions for such taxable year).

Deductions for expenditures for medical care allowable under section 213 will be confined strictly to expenses incurred primarily for the prevention or alleviation of a physical or mental defect or illness.

Deductions for expenditures for medical care allowable under section 213 will be confined strictly to expenses incurred primarily for the prevention or alleviation of a physical or mental defect or illness.

In General.--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- * * * * * * * (2) the amount of any damages received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal injuries or sickness; * * * - 7 - petitioners may not exclude the United payments f

In General.--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- * * * * * * * (2) the amount of any damages received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal injuries or sickness; 4 For the year in issue, personal injuries included both physi

In General.--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- * * * * * * * (2) the amount of any damages received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal injuries or sickness; * * * - 7 - petitioners may not exclude the United payments f

In General.--Except in the case of amounts attributable to (and not in excess of) deduc.tions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- (2) the amount.

In General.--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- * * * * * * * (2) the amount of any damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal physical injuries or physical sickness; * * * * * * *

(a) In General.--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- * * * * * * * (2) the amount of any damages received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal injuries or sickness; (3) amounts received through accident or health insurance for

Section 213 allows a deduction for expenses paid during the taxable year, and not compensated for by insurance or otherwise, for medical care of a taxpayer, his spouse, or a dependent to the extent that those expenses exceed 7.5 percent of the taxpayer’s 3Each petitioner and respondent signed the first stipulation of settled issues filed in this ca

(a) In General.--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- * * * * * * * (2) the amount of any damages received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal injuries or sickness; (Section 104(a)(2) was amended by section 1605(a) of the Small

Section 104(a) states in relevant part as follows: (a) In general.–- Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include–- * * * * * * * (2) the amount of any damages received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal injuries or sickness; As is noted, “interest” on funds relating to pers

487, 571-572, to deal with "hobby losses"; i.e., losses in an activity not engaged in for profit. Section 183(d) provided a presumption that an activity is engaged in for profit if a gross income test is satisfied for 2 out of 5 consecutive years. The time periods were modified by later statutes. Special rules were provided for c

chool system. P unsuccessfully sued the public school district to obtain reimbursement for the tuition of a residential private school for S. S attended the private school, and P has been allowed to deduct the tuition costs as medical expenses under sec. 213, I.R.C. P claimed a deduction for the legal expenses incurred in the lawsuit against the public school as medical expenses under sec. 213, I.R.C. R disallowed the deduction because the lawsuit was not necessary for S to attend the private sc

Section 213 in relevant part provides: SEC. 213(a). Allowance of Deduction.--There shall be allowed as a deduction the expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer * * * to the extent that such expenses exceed 7.5 percent of adjusted gross income. The taxpayer must substantia

oncerning the impact of the asbestos removal (continued...) -25- concurrently, the asbestos removal and remodeling were not part of a general plan of rehabilitation because they were separate and distinct projects, conceived of independently, undertaken for different purposes, and performed by separate contractors; and (4) using the principles of section 213 (which allows individuals to deduct certain personal medical expenses that are capital in nature) and section 1.162-10, Income Tax Regs.

In General.--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- (1) amounts received under workmen's compensation acts as compensation for personal injuries or sickness * * * The regulations further provide that the exclusion under section 104(a)(1) applies in the case of amounts received "under a statu

Section 936(h)(1) provides that any income of an electing corporation attributable to intangible property is deemed to be the income of, and is taxable to, the shareholders of the section 936 corporation.

fied dependent care programs. Petitioners have neither proven nor argued that their situation meets the requirements of section 5Petitioners elected the standard deduction on their return and, therefore, make no claim for an itemized deduction under sec. 213. - 6 - 129. We sustain respondent's disallowance of the deduction for child care expenses. Petitioner testified that $600 of the amount claimed as employee benefits was a reimbursement to petitioner Kathleen Turner for travel expenses she in

74), that depreciation has been held not to be an expenditure or payment for purposes of a charitable contribution deduction under sec. 170, see Orr v. United States, 343 F.2d 553 (5th Cir. 1965), or for purposes of a medical expense deduction under sec. 213, see Gordon v. Commissioner, 37 T.C. 986 (1962). In distinguishing those decisions, the Supreme Court stated: Section 263 is concerned, however, with the capital nature of an expenditure and not with its timing, as are the phrases “payment *