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In support of their position that the $5,066 for “Employee
benefit programs” claimed in petitioners’ 2001 Schedule C is
deductible under section 162(a), petitioners maintain that in
2001 Mr. Eyler paid pursuant to the unwritten health plan the
premiums for Mr. Eyler’s Wellmark health policy and that such
premiums are excludable from Ms. Eyler’s income under sections
105(b) and/or 106(a).10 As a result, according to petitioners,
the health insurance premiums at issue are deductible under
section 162(a) by Mr. Eyler as ordinary and necessary business
expenses of his tiling business. On the record before us, we
reject petitioners’ argument.
Section 105(b) on which petitioners rely provides in perti-
nent part:
9(...continued)
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 beginning The applicable
in calendar year-- percentage is--
1999 through 2001 . .. . . . . . . .60
The legislative history under sec. 162(l) establishes that
that statute was enacted “to reduce the disparity between the tax
treatment of owners of incorporated and unincorporated busi-
nesses.” S. Rept. 104-16, at 11 (1995); see also H. Rept. 104-
32, at 7-8 (1995).
10Although petitioners rely on secs. 105(b) and 106(a) in
petitioners’ opening brief, they rely only on sec. 105(b) in
petitioners’ answering brief.
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Last modified: March 27, 2008