- 5 - Pharmacy in the amount of $1,255.13. Petitioner testified that these expenses were for prescriptions. He admitted that it was possible that some of these amounts were for items other than prescriptions. Petitioner presented canceled checks made out to Golden Rule Insurance in the amount of $5,473.37 and Liberty Fund Inc. in the amount of $40.50 The checks made out to Golden Rule Insurance were paid quarterly. Petitioner testified that they were for health insurance. Petitioner was not sure whether Liberty Fund Inc. was for health insurance. Petitioner also presented checks in the amount of $343 made out to doctors and medical laboratories. It is clear that petitioners incurred medical expenses. Under the Cohan doctrine, we estimate the allowable amounts of expenses as follows. We allow $880 for prescription expenses, all of the insurance payments to Golden Rule Insurance of $5,473.37, and all of the doctor and medical laboratory expenses of $343, for a total of $6,696.37, which is more than the $6,393 petitioners claimed on their return. This deduction is subject to a floor of 7.5 percent of adjusted gross income. Respondent disallowed $3,165 of interest expense. A deduction for interest paid on indebtedness during the year is generally allowed under section 163(a). However, section 163(h)(1) provides that no deduction is allowed for personal interest. "Personal interest" does not include any "qualifiedPage: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011