- 28 -
for Mr. Frahm’s long-term care policy. Section 1.105-2, Income
Tax Regs., provides:
If the taxpayer incurs an obligation for medical care,
payment to the obligee in discharge of such obligation
shall constitute indirect payment to the taxpayer as
reimbursement for medical care. Similarly, payment to
or on behalf of the taxpayer’s spouse or dependents
shall constitute indirect payment to the taxpayer.
During 2001, pursuant to the AgriPlan/AgriBiz medical
reimbursement plan, Mr. Frahm, as Ms. Frahm’s employer, made a
payment to the insurer on behalf of Ms. Frahm’s spouse (i.e., Mr.
Frahm) for the premiums for Mr. Frahm’s long-term care policy.
On the record before us, we find that Mr. Frahm, as Ms. Frahm’s
employer, paid pursuant to that plan indirectly to Ms. Frahm the
amount of those premiums for the medical care of her spouse. See
sec. 105(b); sec. 1.105-2, Income Tax Regs. On that record, we
further find that the amount that Mr. Frahm, as Ms. Frahm’s
employer, paid pursuant to the AgriPlan/AgriBiz medical reim-
bursement plan indirectly to Ms. Frahm during 2001 for the
premiums for Mr. Frahm’s long-term care policy constitutes an
ordinary and necessary business expense of Mr. Frahm’s farming
business within the meaning of section 162(a). See sec.
162(a)(1); sec. 1.162-10, Income Tax Regs.
Based upon our examination of the entire record before us,
we find that petitioners are entitled to deduct under section
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Next
Last modified: March 27, 2008