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medical reimbursement plan the claimed $3,586 of health insurance
premiums and the claimed $4,630 of medical and dental expenses to
reimburse her for expenses that she incurred, or paid, for the
medical care of herself, her spouse Mr. Albers, and/or her
dependent children. See sec. 105(b). On that record, we further
find that petitioners have failed to establish that any portion
of such claimed premiums and such claimed expenses is an ordinary
and necessary expense paid or incurred by Mr. Albers in carrying
on his farming business.18 See sec. 162(a); sec. 1.162-10,
Income Tax Regs.
Based upon our examination of the entire record before us,
we find that petitioners have failed to establish that they are
entitled under section 162(a) to the $8,216 deduction for “Em-
ployee benefit programs” claimed in petitioners’ Schedule F.19
18Petitioners’ reliance on Revenue Ruling 71-588, 1971-2
C.B. 91, is misplaced. In that revenue ruling, a taxpayer who
operated a sole proprietorship with several full time employees,
including his spouse, had an accident and health plan covering
all employees and their families. During the year involved in
Revenue Ruling 71-588, two employees, including the taxpayer’s
spouse, incurred expenses for medical care for themselves, their
spouses, and their children and were reimbursed pursuant to the
taxpayer’s plan. Revenue Ruling 71-588 held that the reimbursed
amounts received by the employees are not includible in their
gross income pursuant to sec. 105(b) and that such amounts are
deductible by the taxpayer under sec. 162(a). Revenue Ruling 71-
588, unlike the instant case, involved employees who incurred
certain expenses for medical care and who were reimbursed by
their employer for the expenses that they incurred.
19As discussed above, respondent allowed in the notice that
respondent issued to petitioners for their taxable year 2001
$2,151 of the claimed $3,586 of health insurance premiums as a
(continued...)
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