- 45 - as to the underpayments resulting from Dr. Rinker’s claimed gross receipts and business deductions. c. Deductions for Home Mortgage Points The record also indicates that petitioners relied on Mr. Hertz to determine the proper amount of their deduction for personal interest. Dr. Rinker testified that she gave Mr. Hertz all of the records relating to her home mortgage and relied on him to determine the proper deduction because she had “no idea, looking at mortgage papers, what is tax-deductible and what isn’t. And I just told * * * [Mr. Hertz] to figure it out.” We therefore conclude that petitioners had reasonable cause and acted in good faith as to the underpayment attributable to petitioners’ erroneous deduction of home mortgage points. d. Deductions for Personal Medical Expenditures The record does not reveal that petitioners had reasonable cause and acted in good faith with respect to their claimed $11,693 in deductible medical expenses. Regardless of whether the erroneous deductions were results of Mr. Hertz’s negligence or otherwise, petitioners had significant “warning signs” that their deductions for medical expenditures were improper. As noted above, petitioners carried employer-provided medical insurance, and many of the claimed expenditures were covered by the terms of the insurance policy. See Allen v. Commissioner, 925 F.2d at 353. We therefore sustain respondent’s applicationPage: Previous 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 Next
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