128 T.C. No. 14
UNITED STATES TAX COURT
CALIFORNIANS HELPING TO ALLEVIATE MEDICAL PROBLEMS, INC.,
Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 20795-05. Filed May 15, 2007.
P provided counseling and other caregiving services
(collectively, caregiving services) to its members, who were
individuals with debilitating diseases. P also provided its
members with medical marijuana pursuant to the California
Compassionate Use Act of 1996, codified at Cal. Health &
Safety Code sec. 11362.5 (West Supp. 2007). P charged its
members a membership fee that generally reimbursed P for its
costs of the caregiving services and its costs of the
medical marijuana. R determined that all of P’s expenses
were nondeductible under sec. 280E, I.R.C., because, R
determined, the expenses were incurred in connection with
the trafficking of a controlled substance.
Held: Sec. 280E, I.R.C., precludes P from
deducting its expenses attributable to its provision of
medical marijuana.
Held, further, P’s provision of its caregiving
services and its provision of medical marijuana were
separate trades or businesses for purposes of sec.
280E, I.R.C.; thus, sec. 280E, I.R.C., does not
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