Philip A. Saunders - Page 6




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                                             1993               1994                  
          Medical and dental expenses        $9,903.06      $10,075.89                
          7.5% of Adjusted gross income      4,413.76       5,273.53                  
               Medical expense deduction     5,489.30       4,802.36                  
               Included in the deduction for each year are expenses for               
          medical services, drugs, prescriptions, etc. for petitioner, his            
          spouse, and other members of his family, paid for by checks drawn           
          on a joint checking account maintained by petitioner and his                
          spouse.  Most of the expenses relate to petitioner’s spouse and             
          were paid for by checks written by her.  Petitioner and his                 
          spouse were covered under separate employment-based medical                 
          insurance plans.  The medical expense deductions also include               
          petitioner’s costs for his insurance coverage, that is $1,008 and           
          $875.68 for the years 1993 and 1994, respectively.  The 1994                
          medical expense deduction also includes Medicare taxes totaling             
          $1,707 that were withheld from petitioner’s and his spouse’s                
          wages.                                                                      
               Under her medical insurance plan, petitioner’s spouse                  
          received insurance reimbursements of $3,824.20 and $3,772.20 for            
          1993 and 1994, respectively, with respect to medical expenses               
          incurred by her.  These reimbursements are not taken into account           
          in the medical expense deduction claimed by petitioner for either           
          year.                                                                       
               In the notice of deficiency for each year in issue,                    
          respondent:  (1) Disallowed the “Deductible rental real estate              





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