IRS Code §213(a) Medical Expense Deduction – Tax Court Analysis of Medical Expense Deduction – Pasadena Tax Attorney

Pasadena Tax Attorney:

Here is a quick summary of a recent US TAX COURT case against the Internal Revenue Service to challenge the tax deductibility of medical expenses incurred by taxpayers. The case involves taxpayers who deducted medical expenses related to in-vitro fertilization.

CHRISTINA MARIE THOMPSON MCGRATH, Petitioner v.
COMMISSIONER OF COMMISSIONER OF Internal Revenue Service
, Respondent Docket No. 3954-08.

IRS Tax Problem
The issue in this case is whether the petitioner is entitled to deduct medical expenses paid on her behalf by another person.

Relevant Internal Revenue Code

Internal Revenue Code §213(a) allows ” as a deduction the expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer.”

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CAN TAXPAYER DEDUCT MEDICAL EXPENSES PAID ON THEIR BEHALF BY THIRD PARTIES?

In 2005 the petitioner and her husband entered into an agreement for in vitro fertilization services. Petitioner’s father paid $39,542 for the services as a wedding gift to petitioner and her husband. The petitioner and her husband claimed a medical expense deduction of $34,313 of their 2005 individual income tax return, under section 213(a). In 2008 the petitioner received a full refund of the amount paid because the services were not successful. The respondent determined a deficiency in petitioner’s Federal income tax for 2008.

TAXPAYER CANNOT DEDUCT MEDICAL EXPENSES PAID BY A THIRD PARTY

The Internal Revenue Service claimed that the petitioner is not entitled to deduct the amount paid because her father paid for the services on her behalf. The Internal Revenue Service relied on a series of cases holding that taxpayers are not entitled to deduct medical expenses which they did not pay or which were reimbursed by some other source. Decision was entered for the Internal Revenue Service .