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medical expenses were not business expenses, but rather were
personal expenses of Mr. and Ms. Poyda. See Haeder v.
Commissioner, supra. Personal, living, and family expenses
generally are not deductible. See sec. 262(a). As respondent
concedes, these expenses would be deductible by petitioners, to
the extent allowed under section 213(a), without reference to the
tree farm. However, such a deduction would not affect
petitioners’ tax liability.3 Although neither party addressed
the applicability of section 162(l) in this case, we note that
because petitioners incurred a loss in the farming activity
section 162(l) does not entitle petitioners to deduct a portion
of the insurance premiums. See sec. 162(l)(2)(A).
Finally, a Rule 155 computation will be required in this
case to correct an adjustment made in the notice of deficiency
with respect to taxable year 1996. Petitioners deducted $4,977
in employee benefits on the Schedule F in that year.
Respondent’s adjustment of $5,000 overstates petitioners’ self-
employment income by $23.
Reviewed and adopted as the report of the Small Tax Case
Division.
3Petitioners have zero taxable income in each of 1995 and
1996. The deficiencies in this case arise solely from increases
in petitioners’ self-employment income and petitioners’ adjusted
gross income (the latter causing an adjustment to the earned
income credit). A deduction under sec. 213(a) would affect
neither the amount of petitioners’ self-employment income nor the
amount of their adjusted gross income. See secs. 62(a), 1402(b).
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