- 14 -
deductions might have been subject to reimbursement. Before
petitioner included his spouse’s medical expenses in his medical
expenses deduction for each year he should have, if, in fact he
did not, asked her about any reimbursements she might have
received.
Petitioner’s claim that the notification of benefits and
reimbursement process is confusing does not explain petitioner’s
failure to account for all of the reimbursements. Respondent’s
imposition of the negligence penalty on the portion of the
deficiency for each year attributable to petitioner’s overstated
medical expense deduction is sustained.4
We do not, however, sustain respondent’s imposition of the
penalty on that portion of each deficiency attributable to the
Schedule E deductions. As noted above, allowance of those
deductions is determined by the application of a facts and
circumstances test. Taking into account the relevant factors
previously discussed, reasonable minds could differ as to any
conclusion reached.
4 We also note that all but four of the checks from
petitioner’s and his spouse’s joint checking account that were
presented at trial were signed by petitioner’s spouse and related
to her personal medical expenses. Petitioner presented no
evidence that these expenses were personally paid by him, and not
his spouse. With this in mind and taking into account the fact
that petitioner and his spouse filed separate returns for each
year in issue, we consider it questionable that petitioner
deducted all of the medical expenses paid by checks drawn from
the joint checking account. See Higgins v. Commissioner, 16 T.C.
140, 142-144 (1951).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011