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on account of the employer-employee relationship or the family
relationship. Cf. Denman v. Commissioner, 48 T.C. 439 (1967);
Shelley v. Commissioner, T.C. Memo. 1994-432; Martens v.
Commissioner, T.C. Memo. 1990-42, affd. without published opinion
934 F.2d 319 (4th Cir. 1991); Jenkins v. Commissioner, T.C. Memo.
1988-292, affd. without published opinion 880 F.2d 414 (6th Cir.
1989); Furmanski v. Commissioner, T.C. Memo. 1974-47. In this
case, petitioner must prove that Mrs. Haeder was his bona fide
employee during the years in issue and, if so, that any expenses
claimed with respect to her alleged employment were reasonable in
amount and paid for services she actually rendered as an
employee.
Section 1.162-10(a), Income Tax Regs., includes expenditures
for “a sickness, accident, hospitalization, medical expense,
* * * or similar benefit plan” among examples of deductible
business expenses “if they are ordinary and necessary expenses of
the trade or business.” See also Smith v. Commissioner, T.C.
Memo. 1970-243. In addition, section 105(b) generally allows an
employee to exclude from gross income amounts received from an
employer for expenses of medical care, as defined in section
213(d), of the employee, the employee’s spouse, or his or her
dependents. Petitioner must prove that the medical plan expenses
claimed on the Schedules C for the years in issue were ordinary
and necessary expenses paid pursuant to a medical expense plan.
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