Saturday, May 4, 2013

Raymon Gerard v. Commissioner case brief

Raymon Gerard v. Commissioner case brief
37 T.C. 826,1962 U.S. Tax Ct.

CASE SYNOPSIS: Petitioner taxpayers sought review of respondent Commissioner of Internal Revenue's determination of a deficiency in their income tax based upon his disallowance of a medical expense deduction for the cost of installing a central air-conditioning unit in the taxpayers' home. The taxpayers contended that the expenditure was deductible under I.R.C. § 213 because the unit was required to combat the progression of cystic fibrosis in their daughter.

FACTS: The taxpayers' daughter was afflicted with cystic fibrosis, and one of the methods of combating the disease's progress was the maintenance of a relatively constant temperature and a high humidity. A room air-conditioning unit was not satisfactory because it restricted their daughter to one room to get its beneficial effects and such confinement was bad for her psychologically. Her physician recommended the installation of a central air-conditioning unit, and the taxpayers expended $ 1,300 to install the central air-conditioning unit. The parties stipulated that the unit increased the value of the home in the amount of $ 800.

HOLDING:
The court entered judgment in favor of the taxpayers finding that the cost of installing the air-conditioning unit was a deductible medical expense pursuant to I.R.C. § 213.

ANALYSIS:
Although I.R.C. § 263(a)(1) provided that no deduction was allowed for any amount paid out for permanent improvements made to increase the value of the taxpayers' home, the court held that the cost of installing the central air-conditioning was deductible to the extent that it exceeded the increased value of the taxpayers' home, which was $ 500 according to the parties' stipulations.

CONCLUSION: The court entered judgment for the taxpayers finding that the cost of installing a central air-conditioning unit in their home was a deductible medical expense to the extent that it exceeded the increased value of the taxpayers' home.

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