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It is petitioners’ position that they are entitled for each
of the years at issue to deduct under section 162(a) as ordinary
and necessary business expenses the total amount of insurance
premiums that remain at issue.28 In support of their position,
petitioners argue that Mr. Frahm, as Ms. Frahm’s employer, paid
such total amount to Ms. Frahm, directly (i.e., reimbursed Ms.
Frahm for the insurance premiums that she paid to the insurers in
question) or indirectly (i.e., paid the insurance premiums to the
insurer in question), pursuant to a health plan within the
meaning of section 105(b).
27(...continued)
vidual who is an employee within the meaning
of section 401(c)(1), there shall be allowed
as a deduction under this section an amount
equal to the applicable percentage of the
amount paid during the taxable year for in-
surance which constitutes medical care for
the taxpayer, his spouse, and dependents.
(B) Applicable percentage.–-For purposes
of subparagraph (A), the applicable percent-
age shall be determined under the following
table:
For taxable years beginning The applicable
in calendar year-- percentage is--
1999 through 2001 . .. . . . .. . . .60
2002 . . . . . . . . .. . . . . . . .70
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).
28See supra note 25.
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