T.C. Summary Opinion 2002-127
UNITED STATES TAX COURT
ROBERT AND MARTHA EMANUEL, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 10609-00S, 13639-01S. Filed October 3, 2002.
Larry C. Fedro and Cara Pavalock (specially recognized), for
petitioners.
Timothy Maher, for respondent.
PANUTHOS, Chief Special Trial Judge: These cases were heard
pursuant to the provisions of section 7463 of the Internal
Revenue Code in effect at the time the petitions were filed. The
decisions to be entered are not reviewable by any other court,
and this opinion should not be cited as authority. Unless
otherwise indicated, subsequent section references are to the
Internal Revenue Code in effect for the years in issue, and all
- 2 -
Rule references are to the Tax Court Rules of Practice and
Procedure.
Respondent determined that petitioners are liable for
deficiencies in Federal income taxes as follows:
Year Deficiency
1996 $2,891
1997 3,851
1998 3,238
After concessions,1 the issues for decision are: (1)
Whether petitioners are entitled to deductions for medical
expenses, and (2) whether petitioners are entitled to a deduction
for a charitable contribution for miles driven in their van.
1
Petitioners conceded respondent’s determination that the
payments Mrs. Emanuel received in 1996, 1997, and 1998 for
attendant care services provided to Mr. Emanuel are includable in
gross income. Respondent conceded that petitioners are entitled
to deduct as medical expenses $1,265 in 1998 for a modification
to their van to accommodate a wheelchair and scooter lift and
$300 in 1998 for maintenance of Mr. Emanuel’s scooter, and $1,094
in 1997 as a charitable contribution. As a result of the mutual
concessions all adjustments in the notices of deficiency either
have been resolved or are computational.
Petitioners asserted entitlement to a deduction for expenses
for “WC Young”, “Quest”, “After YMCA”, investment fees paid of
$223, income tax preparation fees of $240, and income tax
planning fees of $900, which were not claimed on the 1998 return.
Petitioners did not present any evidence concerning these issues.
Accordingly, we deem these issues conceded.
- 3 -
Petitioners assert they are entitled to deduct the following
medical expenses that were not claimed on the returns for the
years in issue:
Expense 1996 1997 1998
1
Attendant care services $15,834 $17,616 $15,474
Van cost -0- -0- 13,214
Gasoline 865 835 750
Child attendant care 1,324 1,366 1,399
Back-up generator -0- -0- 840
Pool maintenance 1,200 1,200 1,200
YMCA tuition 1,569 1,558 1,234
1
All amounts have been rounded to a whole dollar
figure.
Petitioners resided in Hollywood, Florida, at the time they
filed their petitions. Some of the facts have been stipulated
and are so found. These two cases were consolidated pursuant to
the Court’s order of January 15, 2002. For convenience we
combine our findings of fact and conclusions.
In the petitions and at trial, petitioners raised the
matters at issue here; accordingly, petitioners bear the burden
of proof. Rule 142(a)(1).2
1. Medical expenses
Petitioners allege they are entitled to various medical
expense deductions. We first discuss the requirements of section
2
Sec. 7491 does not apply to shift the burden of proof to
respondent because petitioners have neither alleged that sec.
7491 is applicable nor established that they complied with the
requirements of sec. 7491(a)(2)(A) and (B) to substantiate items,
maintain required records, and cooperate fully with respondent’s
reasonable requests.
- 4 -
213 and then consider the particular claims made by petitioners.
Certain expenses paid during the taxable year, not
compensated for by insurance or otherwise, for the medical care
of the taxpayer or a dependent (as defined in section 152) may be
allowed as a deduction to the extent that the expenses exceed 7.5
percent of the taxpayer’s adjusted gross income. Sec. 213(a). A
dependent includes a son more than half of whose support was
received from the taxpayer. Sec. 152(a)(1).
“Medical care” includes amounts paid for the diagnosis,
cure, mitigation, treatment, or prevention of disease or for the
purpose of affecting any structure or function of the body, under
section 213(d)(1)(A), and for transportation primarily for and
essential to medical care referred to in subparagraph (A), under
section 213(d)(1)(B). Medical care also includes amounts paid
for qualified long-term care services, as defined in section
7702B(c). Sec. 213(d)(1)(C). “Qualified long-term care
services” means necessary diagnostic, preventative, therapeutic,
curing, treating, mitigating, and rehabilitative services, and
maintenance or personal care services, which are required by a
chronically ill individual and are provided pursuant to a plan of
care prescribed by a licensed health care practitioner. Sec.
7702B(c)(1). A “chronically ill individual” means any individual
who has been certified by a licensed health care practitioner as
being unable to perform at least two activities of daily living
- 5 -
(eating, toileting, transferring, bathing, dressing, and
continence) for a period of at least 90 days due to a loss of
functional capacity, or requires substantial supervision to
protect himself from threats to health and safety due to severe
cognitive impairment. Sec. 7702B(c)(2). An amount paid for
qualified long-term care services that are provided by the spouse
or a relative of the individual is treated as not paid for
medical care for tax years beginning after December 31, 1996.3
Sec. 213(d)(11)(A).
Certain amounts paid for lodging that is not lavish or
extravagant while away from home and that is primarily for and
essential to medical care referred to in paragraph (1)(A) shall
be treated as amounts paid for medical care if the medical care
is provided by a physician in a licensed hospital or a related or
equivalent medical care facility and if there is no significant
element of personal pleasure, recreation, or vacation in the
travel away from home. Sec. 213(d)(2). The amounts taken into
account shall not exceed $50 for each night for each individual.
Id. An expenditure which is merely beneficial to the general
health of an individual, such as an expenditure for a vacation,
is not an expenditure for medical care. Sec. 1.213-1(e)(1)(ii),
3
Congress added sec. 213(d)(11) to the Health Insurance
Portability Act of 1996, Pub. L. 104-191, sec. 322(b)(2)(C), 110
Stat. 2061-2062, effective for tax years beginning after Dec. 31,
1996.
- 6 -
Income Tax Regs. Expenses paid for transportation primarily for
and essential to the rendition of the medical care are expenses
paid for medical care, but the deductible amount does not include
the cost of meals and lodging while away from home receiving
medical treatment. Sec. 1.213-1(e)(1)(iv), Income Tax Regs.
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. Sec. 1.213-1(e)(1)(ii), Income Tax
Regs.
Capital expenditures are generally not deductible. Sec.
263; sec. 1.213-1(e)(1)(iii), Income Tax Regs. However, a
capital expenditure may qualify as a deductible medical expense
if it has as its primary purpose the medical care of the taxpayer
or his dependent. Sec. 1.213-1(e)(1)(iii), Income Tax Regs.
Expenditures made for the operation or maintenance of a capital
asset may be deductible as medical expenses if they have as their
primary purpose the medical care, as defined in section 1.213-
1(e)(1)(i) and (ii), Income Tax Regs., of the taxpayer or his
dependent. Sec. 1.213-1(e)(1)(iii), Income Tax Regs.
A taxpayer is generally required to keep sufficient records
to enable the Secretary to determine the taxpayer’s correct
income tax liability. Sec. 6001; sec. 1.6001-1(a), Income Tax
Regs. In addition, the taxpayer shall furnish the name and
- 7 -
address of each person to whom payment for medical expenses was
made and the amount and date of the payment thereof in each case
in connection with claims for deductions under section 213. Sec.
1.213-1(h), Income Tax Regs.
The cost of educational services rendered to the mentally
handicapped can qualify as a medical expense. Fay v.
Commissioner, 76 T.C. 408, 412 (1981) (citing Fischer v.
Commissioner, 50 T.C. 164 (1968)); sec. 1.213-1(e)(1)(v), Income
Tax Regs. Medical care includes the entire cost of institutional
care for a person who is mentally ill and unsafe when left alone.
Sec. 1.213-1(e)(1)(v), Income Tax Regs. Whether a service
constitutes medical care will depend upon its therapeutic nature
to the individual, and not upon the title of the person rendering
the service or the general nature of the institution in which the
services are rendered. Fay v. Commissioner, supra. The services
provided must be directly or proximately related to the
mitigation, alleviation, or treatment of the individual’s disease
or disability. Fay v. Commissioner, supra, (citing Jacobs v.
Commissioner, 62 T.C. 813 (1974)).
If a mentally disturbed individual with learning
disabilities is sent to an educational institution
which also has resources for treating the mental
handicap, and if the principal reason for his
attendance at the institution is for the use of those
resources to alleviate or mitigate the mental handicap,
and if the institution’s educational program is only
incidental to its medical care function, the school
will be considered a “special school” [under section
1.213-1(e)(1)(v)(a), Income Tax Regs] * * * [Fay v.
- 8 -
Commissioner, supra at 412.]
The expenditures for the educational services will be deductible.
Greisdorf v. Commissioner, 54 T.C. 1684 (1970). If a school or
institution does not qualify as a “special school”, the costs of
medical services rendered are nevertheless deductible. Fay v.
Commissioner, supra; sec. 1.213-1(e)(1)(v)(b), Income Tax Regs.
Section 262 prohibits deductions for personal, living, or
family expenses.
a. Attendant care provider expense
Mr. Emanuel was injured in 1989 while employed by Eastern
Airlines and at the time of the trial was still unable to work.
Because of the injuries, Mr. Emanuel was awarded worker’s
compensation benefits. Mr. Emanuel is unable to walk a distance
greater than a hundred feet or to stand for more than a few
minutes consecutively and relies on a scooter for mobility. He
has also been unable to fully care for himself and has relied on
the assistance of Mrs. Emanuel to help him shower, dress, eat,
and exercise. In 1993, the Worker’s Compensation Court in Miami,
Florida, determined that Mr. Emanuel was to receive the
additional benefit of attendant care services and selected Mrs.
Emanuel as his attendant care provider.
Mrs. Emanuel was paid minimum wage for 10 hours of services
provided to Mr. Emanuel each day. The following amounts were
- 9 -
paid to Mrs. Emanuel by Eastern Airline’s disability insurance
carrier, American International Domestic Brokerage Group (AIG):
Year Amount
1996 $15,834
1997 17,616
1998 15,474
Petitioners maintain that they are entitled to deduct the amounts
paid to Mrs. Emanuel as medical expenses.4
Section 213 allows the taxpayer to deduct amounts paid for
medical expenses. A taxpayer may deduct amounts that the
taxpayer has paid for himself (or his dependent), but not amounts
that a third party has paid on the taxpayer’s behalf. See
McDermid v. Commissioner, 54 T.C. 1727 (1970). Because AIG paid
Mrs. Emanuel, petitioners cannot deduct as a medical expense the
payments received.
Petitioners argue that the funds paid to Mrs. Emanuel belong
to Mr. Emanuel and are his to “direct as he sees fit”, and that
he could have received the funds directly from AIG and paid Mrs.
Emanuel himself.5 Assuming, arguendo, that we were to accept
4
As previously indicated, petitioners now agree that the
amounts should have been reported as gross income in their
respective income tax returns.
5
Petitioners also cited a private letter ruling which
bears no factual resemblance to this case. In any event, private
letter rulings may be helpful but have no precedential force.
Rowan Cos., Inc. v. United States, 452 U.S. 247, 261 n.17 (1981);
Phi Delta Theta Fraternity v. Commissioner, 887 F.2d 1302, 1308
(6th Cir. 1989), affg. 90 T.C. 1033 (1988).
- 10 -
petitioners’ argument, the deduction would nevertheless be
disallowed because the payments received for worker’s
compensation would be considered as compensated for by insurance
or otherwise. Sec. 213(a). The deduction would also be
disallowed with respect to petitioners’ 1997 and 1998 tax years
because the amounts paid for the services provided to Mr.
Emanuel, which are qualified long-term care services as defined
under section 7702B(c), are treated as not paid for medical care
because the services were provided by Mr. Emanuel’s spouse. Sec.
213(d)(11)(A). Respondent is sustained on this issue.
b. New van
Petitioners replaced their old van with the purchase of a
new Chevrolet van in 1998 for $32,000. Petitioners purchased a
van, rather than another vehicle, such as an automobile, in order
to accommodate Mr. Emanuel’s scooter. Petitioners claim that
they are entitled to deduct $12,225 as a medical expense which
represents approximately the difference between the cost of the
new van, at $32,000, and the cost of a new car, such as a
Chevrolet Lumina, at $19,775.6
6
Petitioners argue that their position is supported by a
private letter ruling and two revenue rulings. None of these
rulings supports petitioners’ position. Revenue rulings do not
have the force of law. Lucky Stores, Inc. v. Commissioner, 153
F.3d 964, 966 n.4 (9th Cir. 1998), affg. 107 T.C. 1 (1996),
supplemented by T.C. Memo. 1997-70. As indicated, a taxpayer may
not rely on a private letter ruling issued to another taxpayer.
See supra note 5.
- 11 -
The difference between the cost of petitioners’ new van and
the cost of a new car is not deductible as an expense because
this expense was not incurred for the diagnosis, cure,
mitigation, treatment, prevention of disease, or to affect any
structure or function of the body, or for transportation
primarily for and essential to such medical care of Mr. Emanuel.
Sec. 213(a), (d)(1)(A) and (B). We conclude that petitioners are
not entitled to deduct the excess cost of the new van as a
medical expense.
c. Gasoline
Petitioners also claim a medical expense deduction for the
cost of the gasoline consumed by both their old van and their new
van. The amount claimed represents the difference between the
cost of the gasoline used by the vans and the cost of the
gasoline that would otherwise have been consumed by a standard
size automobile.
Petitioners estimated the amount of gasoline the new van
consumed and the amount which petitioners now claim as a medical
expense because they did not keep records of the actual gasoline
consumption. Petitioners estimated that they drove 10,000 miles
annually. They also estimated that the fuel consumption of a car
would be 20 miles to a gallon, and the fuel consumption of the
vans was 10 miles to the gallon. Mr. Emanuel explained that he
averaged the cost of a premium and regular gasoline to estimate
- 12 -
the cost of the gasoline used. He testified that he priced the
gasoline for 1996, 1997, and 1998 using prices available on a
website. Petitioners provided a written summary of their
gasoline expenses but did not provide supporting documentary
evidence for the summary. In addition, the amounts of expenses
in the summary are different from the amounts to which Mr.
Emanuel testified.
Petitioners did not provide any evidence that they incurred
these expenses for the cost of the gasoline in the course of
transportation primarily for and essential to medical care. Sec.
213(d)(1)(B). In addition, petitioners have not substantiated
the amounts claimed under section 1.213-1(h), Income Tax Regs.
We conclude that petitioners are not entitled to deduct the cost
of gasoline as a medical expense.
d. Attendant care
Petitioners’ son Christopher, who was 20 years old in 1996,
is microcephalic and suffers from severe mental retardation and
physical problems. He is unable to wash himself, dress himself,
take medication, and perform other basic functions, and he
requires constant assistance. Although petitioners received
Social Security payments, “SSI”, Medicare, and Mediwaiver on
behalf of Christopher, he qualifies as their dependent under
section 152(a)(1).
- 13 -
Petitioners took numerous trips to entertainment parks.
Petitioners traveled to Walt Disney World and the Universal
Studios Florida a total of four times during 1996, 1997, and
1998. Petitioners assert that the trips were therapeutic for
Christopher, and also for family vacations. An attendant care
provider traveled with petitioners to assist with the care of
Christopher. The care provider performed many services including
dressing Christopher, pushing his wheelchair, and accompanying
him on amusement rides.
Petitioners argue that they are entitled to deduct as
medical expenses for their dependent certain costs incurred on
behalf of the attendant care provider when traveling, such as the
airplane fare, lodging, and food. Petitioners provided to the
Court summaries listing the travel expenses incurred on behalf of
the care provider, such as food, hotel, gas and tolls, and
tickets, but they did not provide supporting documentary evidence
to substantiate the expenses. Because petitioners did not keep
receipts of expenses, they estimated the amounts that they now
claim as expenses. Mr. Emanuel explained that he was able to
provide a summary of expenses because he was in the habit of
contemporaneously maintaining a log of vacation expenses which he
subsequently entered onto his computer. Mr. Emanuel prepared the
summaries when they were first audited, which was sometime
between 1999 and 2001.
- 14 -
We are not satisfied that there was no significant element
of personal pleasure, recreation, or vacation in their trips to
Walt Disney World and Universal Studios Florida. Sec. 213(d)(2).
Moreover, petitioners have not substantiated the claimed travel
expenses. Sec. 1.213-1(h), Income Tax Regs. We conclude that
petitioners are not entitled to deduct the travel expenses for
the attendant care provider as a medical expense.
e. Backup generator
Christopher would scratch and bite himself in great distress
when the radio, television, and air conditioning in the home
could not operate due to a loss of power. Power outages would
occur in petitioners’ home three or four times a year.
Petitioners purchased a backup electrical generator for $840 in
1998 to avoid the distress to Christopher when the radio,
television, and air condition were not operating. The generator
was not used to provide electricity to medical equipment for
Christopher.
The electrical generator is a capital expenditure. Secs.
263, 213(d)(1)(A); sec. 1.213-1(e)(1)(iii), Income Tax Regs.
Petitioners’ explanation for the electrical generator is that
they purchased it to ease Christopher’s distress, but this does
not indicate a medical exigency. See Haines v. Commissioner, 71
T.C. 644 (1979). Although the electrical generator may have been
beneficial to Christopher because it operated the radio,
- 15 -
television, and air conditioner during power outages, it does not
have as its primary purpose medical care, that is, the cure,
mitigation, or treatment of Christopher’s condition. Sec. 1.213-
1(e)(1)(iii), Income Tax Regs. Petitioners have not alleged, nor
are there facts in the record that would suggest, that they are
entitled to deductions for the radio, television, and air
conditioner as medical expenses. Id.; see Gerard v.
Commissioner, 37 T.C. 826 (1962). We conclude that petitioners
are not entitled to deduct the cost of the backup generator as a
medical expense.
f. Pool maintenance
Petitioners claim that they are entitled to deduct as a
medical expense amounts paid to maintain the quality of the
swimming pool (i.e., chemicals, equipment, electricity) at their
home. Petitioners installed the swimming pool in their home in
1979 after Christopher’s pediatrician recommended that he swim to
develop his motor skills. He uses the pool about once a day with
Mrs. Emanuel’s assistance. The pool depth ranges from 3 to 5-1/2
feet. It has wide steps and a grab rail in the shallow end, but
it has no diving board or slide.
Mr. Emanuel’s doctors also recommended that he engage in
aquatic therapy in a swimming pool. Mr. Emanuel testified that
he used the pool at his house three or four times a day in good
- 16 -
weather. Mr. Emanuel testified that his other son almost never
used the swimming pool.
Both Christopher and Mr. Emanuel used the pool daily for
therapy related to their physical disabilities upon the advice of
doctors. The pool is tailored for use by both Christopher and
Mr. Emanuel, it is usable throughout the year, and Christopher
and Mr. Emanuel used the pool daily. See Haines v. Commissioner,
supra at 648. Other family members do not use the swimming pool
for recreation. Upon these facts, we conclude that the swimming
pool has as its primary purpose and is directly related to the
medical care of both Christopher and Mr. Emanuel. Sec. 1.213-
1(e), Income Tax Regs.
Petitioners did not maintain receipts of the expenses
incurred with respect to the maintenance of the pool; therefore,
they produced an estimate from the swimming pool supply store,
Pinch-A-Penny, from which they purchased supplies. The estimate
provided that the annual cost of maintaining a swimming pool such
as the one owned by petitioners was approximately $1,200.
Moreover, Mr. Emanuel provided testimony as to the items needed
to maintain the pool and their general cost. We find the
estimate from Pinch-A-Penny and Mr. Emanuel’s testimony to be
credible.
Although generally a taxpayer is required to keep records to
establish the amount of his deductions under section 6001, in
- 17 -
some situations, the Court may estimate the amount of medical
expenses and allow a deduction to that extent, notwithstanding
substantiating documentary evidence in the record. Cohan v.
Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930); Meyers v.
Commissioner, T.C. Memo. 1996-219. The Court is satisfied that
petitioners incurred $1,200 in pool maintenance expenses for each
of the years at issue, and petitioners are entitled to deduct the
expenses for 1996, 1997, and 1998 as medical expenses to the
extent allowable under section 213(a).
g. YMCA day camp
Christopher was enrolled in a YMCA program during the tax
years at issue the cost of which petitioners allege they are
entitled to deduct for each of the years at issue as dependent
medical expenses. The brochure for the YMCA program reflects
that it is structured to enhance physical and social growth in
the areas of recreation and leisure activities for special
populations.
The YMCA program was designed to assist a student like
Christopher with severe physical and mental disabilities with
physical growth and to treat his problems. Christopher’s
participation in the program was prompted by his mental and
physical disabilities, and the program had principally a
therapeutic value for him. See Greisdorf v. Commissioner, 54
T.C. 1684, 1690 (1970). We conclude that the YMCA program was
- 18 -
directly or proximately related to the mitigation or treatment of
Christopher’s disabilities and the principal reason for
Christopher’s attendance was to treat his disability. Therefore,
petitioners are entitled to deduct $1,569 in 1996, $1,558 in
1997, and $1,234 in 1998 as medical expenses to the extent
allowable under section 213(a).
2. Charitable contribution
Any charitable contribution which is made within the taxable
year may be allowed as a deduction. Sec. 170(a)(1). Any
contribution of $250 or more shall not be allowed unless the
taxpayer substantiates the contribution by a contemporaneous
written acknowledgment of the contribution by the donee
organization. Sec. 170(f)(8)(A). The written acknowledgment
must contain the following information:
SEC. 170(f)(8)(B) Content of Acknowledgement.– * * *
(i) The amount of cash and a description (but not
a value) of any property other than cash contributed;
(ii) Whether the donee organization provided any
goods or services in consideration, in whole or in
part, for any property described in clause (i);
(iii) A description and good faith estimate of the
value of any goods or services referred to in clause
(ii) or, if such goods or services consist solely of
intangible religious benefits, a statement to that
effect.
Although no deduction is allowed for a contribution of
services, unreimbursed out-of-pocket transportation expenses
incurred, such as mileage driven, while performing donated
- 19 -
services are deductible. Sec. 1.170A-1(g), Income Tax Regs. The
deductible standard mileage rate for computing the deduction for
the use of a passenger automobile driven in connection with
rendering services to a charitable organization is 12 cents per
mile for years beginning on or before December 31, 1997, and 14
cents per mile for years beginning after December 31, 1997. Sec.
170(i); Churukian v. Commissioner, T.C. Memo. 1980-205; see also
Rev. Proc. 95-54, 1995-2 C.B. 450; Rev. Proc. 96-63, 1996-2 C.B.
420; Rev. Proc. 97-58, 1997-2 C.B. 587.
Petitioners assert they are entitled to deduct as a
charitable contribution $425 relating to use of their van for
charitable purposes. Petitioners have not provided any facts
indicating that the use of the van was for the benefit of a
charity and not for the benefit of one of the family members.
See Seed v. Commissioner, 57 T.C. 265 (1971). In addition,
petitioners allege that Exhibit 16-P substantiates the mileage
driven; however, this exhibit does not indicate what the donee
charitable organization was or describe the charitable services
provided by petitioners. We conclude that petitioners are not
entitled to a charitable deduction for mileage driven.
- 20 -
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
Decisions will be entered
under Rule 155.