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for Self-Employed Individuals,” dated March 29, 1999, and Rev.
Rul. 71-588, 1971-2 C.B. 91, in setting up the plan.4 Each
document permits, under certain circumstances, a sole-proprietor
employer-spouse to deduct medical benefits provided to an
employee-spouse, and the employee-spouse to exclude those same
benefits from his or her gross income.
Mr. Speltz
Mr. Speltz has provided childcare services (and other
general services) for the daycare since 2000 and has been
reimbursed under the daycare’s accident and health plan for a
limited amount of medical care expenses and insurance premiums as
compensation for his services.
Mr. Speltz also worked full time during the years at issue
as a machinist for Fastenal Company, Inc. (Fastenal). Mr.
Speltz’s hours at Fastenal were from approximately 6 a.m. until
approximately 2:15 p.m. Mr. Speltz had medical and dental
insurance through Fastenal. Mr. Speltz’s spouse and dependents
were eligible to receive benefits. Mr. Speltz also had a snow
removal and lawncare service during 2000 and 2001.
Mr. Speltz began working for the daycare when he returned
home from his full-time job on weekdays, around 2:30 p.m., and he
4Internal Revenue Service Coordinated Issue Papers and
Revenue Rulings are generally not entitled to deference in this
Court. See Lunsford v. Commissioner, 117 T.C. 159, 182 (2001);
see also N. Ind. Pub. Serv. Co. v. Commissioner, 105 T.C. 341,
350 (1995), affd. 115 F.3d 506 (7th Cir. 1997).
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