Source: https://openjurist.org/195/f2d/692/ochs-v-commissioner-of-internal-revenue
Timestamp: 2019-04-26 07:46:07+00:00

Document:
Julian G. Culver, New York City, attorney and counsel for petitioner, Samuel Ochs.
Ellis N. Slack, Acting Asst. Atty. Gen., A. F. Prescott and Louise Foster, Sp. Assts. to the Atty. Gen., for the respondent Commissioner of internal Revenue.
The question raised by this appeal is whether the taxpayer Samuel Ochs was entitled under Section 23(x) of the Internal Revenue Code to deduct the sum of $1,456.50 paid by him for maintaining his two minor children in day school and boarding school as medical expenses incurred for the benefit of his wife. The pertinent sections of the Internal Revenue Code1 and the Regulations2 are set forth in the margin.
'During the taxable year petitioner was the husband of Helen H. Ochs. They had two children, Josephine age six and Jeanne age four.
'On December 10, 1943, a thyroidectomy was performed on petitioner's wife. A histological examination disclosed a papillary carcinoma of the thyroid with multiple lymph node metastases, according to the surgeon's report. During the taxable year the petitioner maintained his two children in day school during the first half of the year and in boarding school during the latter half of the year at a cost of $1,456.50. Petitioner deducted this sum from his income for the year 1946 as a medical expense under section 23(x) of the Internal Revenue Code.
'During the taxable year, as a result of the operation on December 10, 1943, petitioner's wife was unable to speak above a whisper. Efforts of petitioner's wife to speak were painful, required much of her strength, and left her in a highly nervous state. Petitioner was advised by the operating surgeon that his wife suffered from cancer of the throat, a condition which was fatal in many cases. He advised extensive X-ray treatment after the operation. Petitioner became alarmed when, by 1946, his wife's voice had failed to improve, and believed that the irritation and nervousness caused by attempting to care for the children at a time when she could scarcely speak above a whisper might cause a recurrence of the cancer. Petitioner and his wife consulted a reputable physician and were advised by him that if the children were not separated from petitioner's wife she would not improve and her nervousness and irritation might cause a recurrence of the cancer. Petitioner continued to maintain his children in boarding school after the taxable year here involved until up to the end of five years following the operation of December 10, 1943, petitioner having been advised that if there was no recurrence of the cancer during that time his wife could be considered as having recovered from the cancer.
'During the taxable year petitioner's income was between $5,000 and $6,000. Petitioner's two children have not attended private school but have lived at home and attended public school since a period beginning five years after the operation of December 10, 1943. Petitioner's purpose in sending the children to boarding school during the year 1946 was to alleviate his wife's pain and suffering in caring for the children by reason of her inability to speak above a whisper and to prevent a recurrence of the cancer which was responsible for the condition of her voice. He also thought it would be good for the children to be away from their mother as much as possible while she was unable to speak to them above a whisper.
The Tax Court said in its opinion that it had no reason to doubt the good faith and truthfulness of the taxpayer and that his devotion and consideration for his wife were altogether admirable, but it nevertheless held that the expense of sending the children to school was not deductible as a medical expense under the provisions of Section 23(x) and the Treasury Regulations herein referred to.
In our opinion the expenses incurred by the taxpayer were non-deductible family expenses within the meaning of Section 24(a)(1) of the Code rather than medical expenses. Concededly the line between the two is a difficult one to draw, but this only reflects the fact that expenditures made on behalf of some members of a family unit frequently benefit others in the family as well. The wife in this case had in the past contributed the services- caring for the children- for which the husband was required to pay because, owing to her illness, she could no longer care for them. If, for example, the husband had employed a governess for the children, or a cook, the wages he would have paid would not be deductible. Or, if the wife had died, and the children were sent to a boarding school, there would certainly be no basis for contending that such expenses were deductible. The examples given serve to illustrate that the expenses here were made necessary by the loss of the wife's services, and that the only reason for allowing them as a deduction is that the wife also received a benefit. We think it unlikely that Congress intended to transform family expenses into medical expenses for this reason. The decision of the Tax Court is further supported by its conclusion that the expenditures were to some extent at least incurred while the wife was acting as a typist in order to earn money for the family. We do not think that the decisions discussed in the opinion of the Tax Court and the briefs of the parties have any real bearing upon the issues involved in this appeal.
I think that Congress would have said that this man's expense fell within the category of 'mitigation, treatment, or prevention of disease,' and that it was for the 'purpose of affecting (a) structure or function of the body.' The Commissioner argued, successfully in the Tax Court, that, because the money spent was only indirectly for the sake of the wife's health and directly for the children's maintenance, it could not qualify as a 'medical expense.' Much is made of the fact that the children themselves were healthy and normal- and little of the fact that it was their very health and normality which were draining away the mother's strength. The Commissioner seemingly admits that the deduction might be a medical expense if the wife were sent away from her children to a sanitarium for rest and quiet, but asserts that it never can be if, for the very same purpose, the children are sent away from the mother- even if a boarding school for the children is cheaper than a sanitarium for the wife. I cannot believe that Congress intended such a meaningless distinction, that it meant to rule out all kinds of therapeutic treatment applied indirectly rather than directly- even though the indirect treatment by 'primarily for the * * * alleviation of a physical or mental defect or illness.'2 The cure ought to be the doctor's business, not the Commissioner's.
The only sensible criterion of a 'medical expense'- and I think this criterion satisfies Congressional caution without destroying what little humanity remains in the Internal Revenue Code- should be that the taxpayer, in incurring the expense, was guided by a physician's bona fide advice that such a treatment was necessary to the patient's recovery from, or prevention of, a specific ailment.
In the final analysis, the Commissioner, the Tax Court and my colleagues all seem to reject Mr. Ochs' plea because of the nightmarish spectacle of opening the floodgates to cases involving expense for cooks, governesses, baby-sitters, nourishing food, clothing, frigidaires, electric dish-washers- in short, allowances as medical expenses for everything 'helpful to a convalescent housewife or to one who is nervous or weak from past illness.' I, for one, trust the Commissioner to make short shrift of most such claims.4 The tests should be: Would the taxpayer, considering his income and his living standard, normally spend money in this way regardless of illness? Has he enjoyed such luxuries or services in the past? Did a competent physician prescribe this specific expense as an indispensable part of the treatment? Has the taxpayer followed the physician's advice in most economical way possible? Are the so-called medical expenses over and above what the patient would have to pay anyway for his living expenses, i.e., room, board, etc? Is the treatment closely geared to a particular condition and not just to the patient's general good health or well-being?
My colleagues are particularly worried about family expenses, traditionally nondeductible, passing as medical expenses. They would classify the children's schooling here as a family expense, because, they say, it resulted from the loss of the wife's services. I think they are mistaken. The Tax Court specifically found that the children were sent away so they would not bother the wife, and not because there was no one to take care of them. Och's expenditures fit into the Congressional test for medical deductions because he was compelled to go to the expense of putting the children away primarily for the benefit of his sick wife. Expenses incurred solely because of the loss of the patient's services and not as a part of his cure are a different thing altogether. Wendell v. Commissioner, 12 T.C. 161, for instance, disallowed a deduction for the salary of a nurse engaged in caring for a healthy infant whose mother had died in childbirth. The case turned on the simple fact that, where there is no patient, there can be no deduction.
Thus, even here, expense attributed solely to the education, at least of the older child, should not be included as a medical expense. See Stringham v. Commissioner, supra. Nor should care of the children during that part of the day when the mother would be away, during the period while she was working part-time. Smith v. Commissioner, 40 B.T.A. 1038, affirmed 2 Cir., 113 F.2d 114. The same goes for any period when the older child would be away at public school during the day. In so far as the costs of this private schooling are thus allocable, I would limit the deductible expense to the care of the children at the times when they would otherwise be around the mother. If my views prevailed, this might require a remand to the Tax Court for such allocation.
'(x) Medical, dental, etc., expenses. Expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, his spouse, or a dependent specified in section 25(b)(3), to the extent that such expenses exceed 5 per centum of the adjusted gross income. * * * The term 'medical care', as used in this subsection, shall include amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body (including amounts paid for accident or health insurance).
'Sec. 24. Items not deductible.
'(1) Personal, living, or family expenses, except extraordinary medical expenses deductible under section 23(x).' 26 U.S.C.A. §§ 23(x), 24(a)(1).
The term 'medical care' as used in this section and in section 23(x) includes amounts paid for the diagnosis, care, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body (including amounts paid for accident or health insurance). * * * Allowable deductions under section 23(x) will be confined strictly to expenses incurred primarily for the prevention or alleviation of a physical or mental defect or illness. Thus, payments for expenses for hospital, nursing, (including nurses' board where paid by the taxpayer), medical, laboratory, surgical, dental and other diagnostic and healing services, for drugs and medical and dental supplies (including artificial teeth or limbs), and for ambulance hire and travel primarily for and essential to the rendition of the medical services or to the prevention or alleviation of a physical or mental defect or illness, are deductible.
1 Sen. Rep. 1631, 77th Cong., 2d Sess. (1942) 95-96.
2 The Commissioner has, in the past, shown more liberal tendencies in sanctioning somewhat unorthodox kinds of treatment as contemplated by the statute: He was allowed the deduction of fees paid to chiropractors and Christian Science practitioners. I.T. 3598, 1943 CB 157. Bureau letter, February 2, 1943. 433 CCH,Fed.Tax Rep. § 6175. He should not, in this context, lag behind the progress of the medical art. Especially in this case should the Commissioner realize the growing emphasis placed by medical practitioners upon peace of mind as a major factor in the recovery of patients from what were formerly thought to be entirely organic diseases. If the wife here had been recovering from a nervous breakdown, it could not be sensibly argued that the cure did not fit the disease. Are we ready now to discount the uncontroverted evidence of the doctor in this case that peace of mind and body (it takes not only mental but physical gymnastics to keep up with two children aged four and six) was essential to recovery from, and prevention of, a throat cancer?
3 See how these tests have been applied in other Sec. 23(x) cases: Usually when such deductions are disallowed, the taxpayers have failed to prove that the expenses were incurred primarily to alleviate a specific illness of the body or mind, i.e., they have not met the motive-test or the relation-test laid down in Havey.
The majority of Sec. 23(x) cases seems to have dealt, strangely enough, with Florida or Arizona winter vacations. One taxpayer closed up his business after a coronary occlusion and, in effect, retired to Florida. He wanted to deduct his year's rent and payment to a cleaning woman; Brody v. Commissioner, 8 T.C.M. 288. A second taxpayer and his wife took an extended holiday in the sunshine as an aftermath of ulcers and pneumonia; Keller v. Commissioner, 8 T.C.M. 685. Dobkin v. Commissioner, 15 T.C. 886, concerned a heart patient who took annual Florida vacations. Havey v. Commissioner, 12 T.C. 409, involved another heart patient who returned to old vacation haunts in New Jersey and Arizona as late as two years after the attack. All these five taxpayers were halted by the same stumbling block: None of them could show a direct relation between (1) the heart condition or the ulcers and (2) the Florida sunshine. The inference was unavoidable that the patient enjoyed a relief from the cold winds of winter for his general well-being; in some cases, he might very well have made the trip anyway according to his long-established vacation practices. The Commissioner and the Tax Court, on the other hand, have sanctioned deductions of funds paid for southern exposures in cases where the patients went South for relief from asthma, hay fever, or respiratory infections, i.e., where a direct relation was proved between the southern climate and treatment of the disease. Stringham v. Commissioner, 12 T.C. 580, affirmed 6 Cir., 183 F.2d 579.
One Sec. 23(x) case of disallowance of an alleged medical expense involved the installation of an oil furnace in war-time 1944. The taxpayer had always wanted one, and with the help of his physician's certification that it was bad for his sinuses to stoke a coal furnace, he finally got authorization from the authorities for an oil furnace. 'Capital expenditures of permanent benefit to a property, such as is the present item,' said the Tax Court, are not deductible as current expenses. 'Not every expenditure,' it warned 'prescribed by a physician is to be catalogued under this term.' Seymour v. Commissioner, 14 T.C. 1111.
4 He has so handled the Florida vacationers and the oil-furnace purchaser. See note 3, supra.

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