turns for the years at issue stated the taxpayer had lost all of his records and admitted that he estimated all of his claimed Schedule A and C deductions by approximately 5 to 10 percent as a result. Those deductions included unreimbursed medical expenses, including expenses related to the construction of a pool at his personal residence. The taxpayer argued that the pool was primarily for the treatment of medical ailments, namely for weight loss. COMMENT The court noted that in some circumstances, the regs under Code Sec. 213 allow a taxpayer to deduct a capital expenditure as a medical expense, but only to the extent the expenditure exceeded the increase in value of the underlying property resulting from the expenditure. Court’s analysis The Tax Court found that it was reasonable for the IRS to deny the taxpayer a deduction for maintenance costs for the pool because he had failed to prove the pool was primarily for the treatment of medical ailments. The court also found that the taxpayer could not take a deduction for the cost of installing a swimming pool for medical purposes because he had not presented evidence indicating when he paid for the pool and whether the expenditure exceeded the resulting increase in property value. The court noted that these costs would not, in any event, have exceeded the then 7.5-percent deductibility threshold for medical expenses. The taxpayer’s other claimed medical expense deductions were also not deductible, the court found. The taxpayer offered no evidence as to which expenses had not been reimbursed by his insurer. The court also disallowed most of the taxpayer’s claimed Schedule C deductions for business expenses. The court only allowed deductions for rental expenses paid in connection with his business, as well as deductions claimed on Schedule A for real estate taxes paid for two years. References: CCH Dec. 60,034(M); TRC INDIV: 42,064.20.
Posted on: Thu, 09 Oct 2014 12:42:08 +0000
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