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the owner of an unincorporated business, is entitled to deduct
all the ordinary and necessary expenses paid or incurred during
the taxable year in carrying on a trade or business, sec. 162(a),
including any amount paid to an employee pursuant to an employee
benefit plan for an expense that such employee pays or incurs,
sec. 162(a)(1); sec. 1.162-10, Income Tax Regs.26 However, a
taxpayer who owns an unincorporated business is not entitled to
deduct health insurance costs that he pays or incurs for himself,
his spouse, and his dependents except as provided in section
162(l).27
25(...continued)
for Mr. Frahm’s Wellmark Secure Blue Select policy and Mr.
Frahm’s long-term care policy, petitioners are entitled to deduct
under sec. 162(l) 70 percent of those premiums.
26See Albers v. Commissioner, T.C. Memo. 2007-144; Francis
v. Commissioner, T.C. Memo. 2007-33.
27As applicable here, sec. 162(l)(1) provides that a tax-
payer is entitled to deduct 60 percent of any amount that such
taxpayer paid or incurred during 2000 and 2001 and 70 percent of
any amount that such taxpayer paid or incurred during 2002 for
insurance that constituted medical care for such taxpayer, such
taxpayer’s spouse, and such taxpayer’s children. Sec. 162(l)
provides in pertinent part:
SEC. 162. TRADE OR BUSINESS EXPENSES.
* * * * * * *
(l) Special Rules for Health Insurance Costs of
Self-Employed Individuals.--
(1) Allowance of deduction.--
(A) In general.–-In the case of an indi-
(continued...)
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