- 41 -
transition in the event Mr. Duquette is no longer available to
lead the company.” Those are just words; they fail to establish
any corporate need for insurance should Norman’s death deprive
his one-man corporation of his services. Cf. Whipple Chrysler-
Plymouth v. Commissioner, T.C. Memo. 1972-55.
The plan also provided a self-insured medical benefit
consisting of "[p]ayment of Medical Expenses up to a maximum of
$2,000 per year, per employee." That language is the basis for
item (10), the $133 deduction for "medical bills". We find that,
even though it covered only the two shareholder employees, the
Duquettes, the plan qualified as a medical benefit plan under
section 105(b), see section 1.105-5(a), Income Tax Regs., and
that petitioner is entitled to deduct any medical expense
payments made under the plan. Seidel v. Commissioner, T.C. Memo.
1971-238; see sec. 1.162-10(a), Income Tax Regs. Norman’s
American Express bills covering the 1994 tax year (all of which
were paid by petitioner) show a $25 dentist bill and a $108
charge for prescription drugs. However, the January 16, 1994,
American Express statement shows both a charge and a credit for
the $108, and Norman’s payment was reduced by the amount of such
credit. We, therefore, find that petitioner is entitled only to
a $25 deduction for medical expense reimbursements under the
plan.
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