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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Last modified: March 27, 2008