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4. Medical Expenses
In the notice of deficiency, respondent adjusted
petitioners' gross medical expenses as reported on Schedules A,
lines 1a and 1, of their 1989, 1990, and 1991 returns (decreasing
the amounts reported for 1989 and 1990, and increasing the amount
reported for 1991). At trial, respondent stated that the gross
amounts reported were not in dispute. We consider respondent to
have conceded the gross amounts of medical expenses reported on
the returns. Respondent argues only that the amount of medical
expenses petitioners may deduct must be recalculated in light of
any adjustments to their adjusted gross income by reason of this
opinion.
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 income. Accordingly, we hold
that petitioners' allowable medical expense deductions for the
taxable years at issue must be recalculated to reflect any
adjustments to their adjusted gross income by reason of this
opinion.
5. State Sales Taxes
On their 1990 Schedule A, Form 1040, petitioners claimed a
deduction for "other taxes" in the amount of $1,964. Respondent
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