Frank H. and Marla C. Black - Page 22

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               Respondent has negated all nontaxable sources of income                
          alleged by petitioners.  Respondent has shown that petitioners              
          did not receive any gifts or inheritances.  Most importantly,               
          respondent has negated petitioners’ cash hoard argument.                    
               During 1991 and 1992, Mr. Black paid medical insurance                 
          premiums of $6,307 and $4,744, respectively.  Respondent’s net              
          worth calculation treats such amounts as nondeductible                      
          expenditures.  However, respondent allowed deductions for 25-               
          percent of the premiums paid as self-employment health insurance.           
          See sec. 162(l)(1).                                                         
               Under section 213(a), personal medical and dental expenses             
          are deductible only to the extent they exceed 7.5 percent of                
          adjusted gross income (AGI).  Accordingly, petitioners are not              
          entitled to deduct the remaining 75 percent of the medical                  
          insurance premiums paid as personal medical expenses as they do             
          not exceed 7.5 percent of petitioners’ adjusted gross income.               
          Secs. 213(a), 162(l)(3)(A).  Petitioners have not proven that any           
          deduction above the 25 percent allowed is appropriate.                      
               Petitioners appear to argue that some portion of the medical           
          insurance premiums should be deductible under section 162(a) as             
          ordinary and necessary business expenses.  The parties have                 
          stipulated that Mr. Black had a health insurance policy covering            
          himself and his family as well as several employees.  However,              
          the record is silent as to what portion of the premiums paid was            

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