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necessary expenses under section 162(a).3 Respondent determined
that 60 percent of the $5,571 health insurance premium payments
for Mr. Francis was deductible under section 162(l) as the health
insurance costs of a self-employed individual. Petitioners
timely filed a petition.
OPINION
We are asked to decide whether petitioners are entitled to
deduct medical expenses under section 162(a) and, if not, whether
they are entitled to deduct the health insurance premiums
component of their medical expenses under section 162(l). The
parties agree that petitioners are entitled to deduct the $1,998
wage component of Mrs. Francis’s compensation for 2001; they
disagree as to whether her total compensation, including the
reimbursement under the plan, was reasonable in amount.
We look to the general rule that deductions are a matter of
legislative grace, and the taxpayer must show that he or she is
entitled to any deduction claimed. Rule 142(a); Deputy v. du
Pont, 308 U.S. 488, 493 (1940). This includes the burden of
substantiation. Hradesky v. Commissioner, 65 T.C. 87, 89-90
(1975), affd. per curiam 540 F.2d 821 (5th Cir. 1976).
In addition, taxpayers may fully deduct all ordinary and
necessary expenses paid or incurred during the taxable year
3Respondent made no determination in the deficiency notice
regarding the deductibility of the $3,931 out-of-pocket medical
expenses under sec. 213.
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