- 14 -
pursuant to an employee benefit plan for an expense that such
employee pays or incurs. Sec. 162(a)(1); sec. 1.162-10, Income
Tax Regs.13 However, a taxpayer, like Mr. Albers, who owns an
unincorporated business is not entitled to deduct health insur-
ance costs that he pays or incurs for himself, his spouse, and
his dependents except as provided in section 162(l).14
13See Francis v. Commissioner, T.C. Memo. 2007-33.
14As applicable here, sec. 162(l)(1) provides that a tax-
payer, like Mr. Albers, is entitled to deduct 60 percent of any
amount that such taxpayer paid or incurred during 2001 for
insurance that constituted medical care for such taxpayer, such
taxpayer’s spouse, and such taxpayer’s children. Sec. 162(l)
provides in pertinent part:
SEC. 162. TRADE OR BUSINESS EXPENSES.
* * * * * * *
(l) Special Rules for Health Insurance Costs of
Self-Employed Individuals.--
(1) Allowance of deduction.--
(A) In general.–-In the case of an indi-
vidual who is an employee within the meaning
of section 401(c)(1), there shall be allowed
as a deduction under this section an amount
equal to the applicable percentage of the
amount paid during the taxable year for in-
surance which constitutes medical care for
the taxpayer, his spouse, and dependents.
(B) Applicable percentage.–-For purposes of
subparagraph (A), the applicable percentage shall
be determined under the following table:
For taxable years beginningThe applicable
in calendar year-- percentage is–
1999 through 2001 . .. . . . . . . .60
(continued...)
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Last modified: November 10, 2007