t c memo united_states tax_court charles d shaffran sr petitioner v commissioner of internal revenue respondent docket no 12611-12l date charles d shaffran sr pro_se miriam c dillard for respondent memorandum findings_of_fact and opinion vasquez judge this case arises from a petition for review filed in response to a notice_of_determination concerning collection action s under sec_6320 and or notice_of_determination in which respondent determined to sustain a lien notice filing and uphold a notice_of_intent_to_levy with respect to petitioner’s below-listed liabilities respondent determined that petitioner was liable for trust fund recovery penalties tfrps for the following periods taxable_period tfrp assessed amount dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure the issue for decision is whether petitioner is liable for the tfrps assessed against him we hold that he is not findings_of_fact some of the facts have been stipulated and are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference petitioner resided in florida at the time the petition was timely filed background petitioner spent much of his adult life in michigan working for ford motor co petitioner and his wife maria shaffran moved to florida in either or unless otherwise indicated all section references are to the internal_revenue_code in effect at all relevant times after he had suffered a heart attack and she had suffered three strokes petitioner wa sec_77 years old at the time of trial in date paul roberts organized the restaurant group of destin llc restaurant group which opened sunset charlie’s a beachside restaurant in miramar beach florida mr roberts was restaurant group’s owner and managing member during the tax periods in question along with petitioner’s son carlos d shaffran mr roberts oversaw sunset charlie’s day-to-day operations including payroll-related matters restaurant group maintained three bank accounts at whitney national bank an operating account a payroll account and a tax account mr roberts and carlos were authorized signatories on all three accounts and regularly signed checks drawn on them during sunset charlie’s existence petitioner visited the restaurant two or three times per week for several hours while there petitioner sat around at the bar and sometimes acted as a gofer for mr roberts and carlos much of restaurant group’s initial articles of organization dated date showed mr roberts as the sole managing member an amendment to the articles of organization dated date added angela j miller as a managing member an amendment to the articles of organization dated date added michael roberts as a managing member angela miller resigned on date michael roberts resigned in date petitioner’s time at the restaurant was social however under mr roberts’ and carlos’ direction petitioner occasionally trained bartenders received deliveries and provided suppliers with checks signed by mr roberts or carlos sometimes petitioner wrote out checks for carlos to sign because petitioner had more legible handwriting some of these checks were written to petitioner or mrs shaffran in partial repayment of a dollar_figure loan that she had extended to restaurant group in date mr roberts was out of town between august and petitioner signed four checks drawn on restaurant group’s operating account petitioner signed two of these checks to pay suppliers for deliveries that arrived when neither mr roberts nor carlos was available petitioner signed the other two checks which were payable to petitioner and mrs shaffran in partial repayment of her loan at the behest of mr roberts whitney national bank mrs shaffran’s three strokes left her physically disabled petitioner often brought her to sunset charlie’s so that she could get out of the house and enjoy the beachside views petitioner would also spend time at the restaurant while mrs shaffran received physical therapy at a nearby swimming pool both checks were for the amounts on the suppliers’ bills petitioner did not know what restaurant group’s bank balances were when he signed the checks mr roberts instructed petitioner to write the checks out and sign mr continued honored all four checks even though petitioner was not an authorized signatory petitioner did not sign any other checks on behalf of restaurant group or otherwise determine how it spent its available funds restaurant group struggled financially and did not remit employment_taxes to the internal_revenue_service irs for the third quarter of all four quarters of or the fourth quarter of restaurant group also fell behind on payments to its suppliers and its landlord in restaurant group was evicted from the location where it had operated sunset charlie’s it ceased doing business that year irs investigation and assessment of tax in date revenue_officer cynthia kane ro kane was tasked with investigating restaurant group’s failure to pay employment_taxes on date ro kane visited the premises where sunset charlie’s had operated ro kane spoke with the building manager who informed her that the continued roberts’ name because he was concerned about forging mr roberts’ name petitioner signed his own name on the checks instead restaurant group issued approximately checks during the third quarter of accordingly the percentage of checks that petitioner signed was less than of all checks that restaurant group issued during the third quarter of restaurant had been evicted in july or date in a followup telephone call the building manager told ro kane that mr roberts and carlos had held themselves out as sunset charlie’s owners the building manager described petitioner as an older man and incorrectly identified him as the restaurant’s bookkeeper ro kane was concerned that the period of limitations for the assessment of the tfrps was due to expire on date thus on date only days after she began her investigation ro kane recommended assessing tfrps against petitioner mr roberts carlos and the two other managing members angela miller and michael roberts in accordance therewith ro kane sent petitioner a letter trust fund recovery penalty letter dated date at his last_known_address a post office box he shared with carlos via certified mail the letter stated that the irs was proposing tfrps against petitioner it also stated that petitioner had days to file a formal protest with the irs contesting the proposed assessment of the tfrps petitioner did not receive or otherwise learn about the letter because carlos intercepted it and did not turn it over to petitioner the return receipt attached to the letter in the administrative record bears carlos’ signature not petitioner’s before issuing the letter ro kane did not secure restaurant group’s bank records or make any attempt to interview the individuals against whom she was proposing tfrps ro kane also failed to determine whether petitioner willfully failed to remit employment_taxes to the irs nonetheless ro kane went forward with her recommendation to assess tfrps against petitioner on the basis of the limited information she had collected during her brief investigation in date ro kane secured restaurant group’s bank records from whitney national bank after reviewing the bank records and discovering that angela miller and michael roberts had not signed any checks ro kane withdrew her recommendation to assess tfrps against them ro kane did not provide similar relief to petitioner because she confused petitioner’s signature with carlos’ and was therefore under the mistaken impression that petitioner regularly signed restaurant group’s checks on date the tfrps were assessed against petitioner on date the irs mailed petitioner a letter final notice_of_intent_to_levy and notice of your right to a hearing with respect to the tfrps levy notice on on a form_4183 recommendation re trust fund recovery penalty assessment prepared concurrently with the letter ro kane wrote due to the short statute and recent receipt of the case file cannot fully document willfulness of petitioner at this juncture date the irs issued petitioner a notice_of_federal_tax_lien filing and your right to a hearing under sec_6320 lien notice on date petitioner timely filed a collection_due_process cdp appeal of the levy notice and the lien notice in which he challenged the underlying liabilities the appeals settlement officer proposed placing petitioner in currently not collectible status and abating the tfrps for the tax periods ending date and petitioner did not agree to this proposal and the settlement officer issued a notice_of_determination sustaining the proposed collection actions petitioner timely filed a petition with this court a trial was held in jacksonville florida at the close of trial the court ordered the parties to file simultaneous briefs respondent timely filed his posttrial brief on date petitioner did not file a posttrial briefdollar_figure after the petition was filed respondent abated the tfrp against petitioner for the tax period ending date we granted respondent’s motion to dismiss on grounds of mootness for this tax period when a party does not file a brief on issues that have been tried we may consider those issues waived or conceded see eg 117_tc_117 n 84_tc_693 aff’d without published opinion 789_f2d_917 4th cir we will exercise our discretion not to do so here see eg rey v commissioner tcmemo_2016_58 opinion i jurisdiction and standard of review we first address our jurisdiction over this case and the applicable standard of review sec_6321 imposes a lien in favor of the united_states on all property and rights to property of a taxpayer liable for tax when a demand for payment of the tax has been made and the taxpayer fails to pay the tax sec_6320 provides that the secretary shall furnish the taxpayer with a notice_of_federal_tax_lien filing nftl within five business days after the notice of lien is filed sec_6331 authorizes the secretary to levy upon property and property rights of a taxpayer liable for tax if the taxpayer fails to pay the tax within days after notice_and_demand for payment is made sec_6330 provides that no levy may be made on any property or right to property of any person unless the secretary has notified such person in writing of the right to a hearing before the levy is made if a taxpayer requests a hearing in response to an nftl or a notice_of_levy pursuant to sec_6320 or sec_6330 a hearing shall be held before an impartial officer_or_employee of appeals sec_6320 b at the hearing the taxpayer may raise any relevant issue including spousal defenses challenges to the appropriateness of the collection actions and offers of collection alternatives sec_6320 sec_6330 in addition the taxpayer may challenge the existence or amount of the underlying tax_liability but only if the taxpayer did not receive a notice_of_deficiency or otherwise have an opportunity to dispute the liability sec_6320 sec_6330 sec_6320 and sec_6330 grant this court jurisdiction to review the commissioner’s determination that the proposed collection action was proper in reviewing the commissioner’s decision to sustain collection actions where the validity of the underlying tax_liability is properly at issue the court reviews the commissioner’s determination of the underlying tax_liability de novo 114_tc_604 114_tc_176 the court reviews any other administrative determination regarding proposed collection actions for abuse_of_discretion sego v commissioner t c pincite goza v commissioner t c pincite the liabilities in this case involve tfrps the commissioner is required to provide the taxpayer with notice of tfrps before assessment sec_6672 a letter provides a taxpayer with notice and the means of protesting a proposed tfrp assessment administratively with the commissioner 132_tc_301 when a letter is mailed the commissioner must follow the same mailing procedures that are provided for notices of deficiency in sec_6212 sec_6672 this court has held that the same evidence that establishes that the commissioner mailed a notice_of_deficiency to a taxpayer’s last_known_address should be sufficient to establish that the commissioner properly sent a letter mason v commissioner t c pincite citing hickey v commissioner t c memo respondent’s issuance of the letter by certified mail which was sent to petitioner at his last_known_address satisfies the notice requirement of sec_6672 see id thus the tfrp assessments made against petitioner are valid however a letter that was not received but was not refused by a taxpayer does not constitute an opportunity to dispute the taxpayer’s liability see id fitzpatrick v commissioner tcmemo_2016_199 at accordingly petitioner could challenge the underlying liabilities during his cdp hearing because he did not receive or reject a letter see lepore v commissioner tcmemo_2013_135 receipt of letter by taxpayer’s adult son did not provide taxpayer with an opportunity to challenge his liability for a tfrp petitioner did in fact challenge the underlying liabilities during his cdp hearing and the settlement officer determined that he was liable for them because petitioner properly raised the issue of the liabilities during his cdp hearing we review respondent’s determination of the underlying tax_liabilities de novo ii trust fund recovery penalties we next address whether petitioner is liable for the tfrps assessed against him employers have a duty to withhold income and employment_taxes from their employees’ wages sec_3102 sec_3402 these withheld funds are often referred to as trust_fund_taxes because sec_7501 characterizes such withholdings as a special fund held in trust for the united_states mason v commissioner t c pincite employees generally are allowed credits against their tax_liabilities for the amounts of taxes withheld from their wages regardless of whether the employer actually remits the funds to the government sec_31 sec_1_31-1 income_tax regs therefore when net wages are paid to an employee and the employer does not pay over the withheld funds the irs has no recourse against the employees 591_f2d_1151 5th cir dollar_figure in 661_f2d_1206 11th cir the court_of_appeals for the eleventh circuit adopted as binding precedent the decisions of the former court_of_appeals for the fifth circuit handed down before date an appeal of this case would lie in the eleventh circuit see continued sec_6672 provides a collection tool allowing the commissioner to impose penalties on certain persons who fail to withhold and pay over trust_fund_taxes see 431_f2d_742 5th cir the penalty under sec_6672 is equal to the total amount of the tax that was withheld but not paid over and is imposed on any person required to collect truthfully account for or pay over any_tax withheld who willfully fails to do so in this context the term person is often taken to mean a responsible_person and includes an officer_or_employee of a corporation who as such is under a duty to collect account for or pay over the withheld tax see sec_6671 mazo f 2d pincite mason v commissioner t c pincite therefore liability for a tfrp is imposed only on a responsible_person who willfully fails to collect account for or pay over the withheld tax mazo f 2d pincite before we address these elements we will comment on the testimony of petitioner as a trier of fact it is our duty to listen to the testimony observe the continued 54_tc_742 aff’d 445_f2d_985 10th cir we need not decide who has the burden_of_proof as to whether petitioner is a responsible_person who willfully failed to collect account for or pay over the withheld taxes because we decide the factual issues here on the preponderance_of_the_evidence demeanor of the witnesses weigh the evidence and determine what we believe kropp v commissioner tcmemo_2000_148 slip op pincite in 58_tc_560 we observed that the process of distilling truth from the testimony of witnesses whose demeanor we observe and whose credibility we evaluate is the daily grist of judicial life although there were a few immaterial inconsistencies in his testimony we generally found petitioner to be honest forthright and credible now we will address whether petitioner is a responsible_person within the meaning of sec_6672 respondent argues that petitioner is a responsible_person because he acted as a de_facto officer by signing four checks and writing out several others for carlos’ signature petitioner argues that he is not a responsible_person because he was not an owner or manager of restaurant group and lacked authority to sign checks or determine the priority of payment to its creditors for the reasons below we agree with petitioner and hold that he is not a responsible_person within the meaning of sec_6672 a responsible_person is any person required to collect account for or pay over withheld taxes mazo f 2d pincite whether someone is a responsible_person is a matter of status duty and authority not knowledge id pincite the essential question is whether the person had sufficient control_over corporate affairs to avoid nonpayment of the employment_taxes 825_f3d_1275 11th cir citing 819_f2d_1008 11th cir the court_of_appeals for the eleventh circuit has noted that indicia of responsibility include the holding of corporate office control_over financial affairs the authority to disburse corporate funds stock ownership and the ability to hire and fire employees 828_f2d_1499 11th cir in considering the individual’s status duty and authority the test is one of substance and the focus of the inquiry does not involve a mechanical application of any particular list of factors see 258_br_480 bankr m d fla citing heimark v united_states cl_ct the inquiry must focus on actual authority to control not on trivial duties id see also scott f 3d pincite holding that a reasonable trier of fact could find that a taxpayer is not a responsible_person even though the taxpayer was named the corporate secretary worked several hours per week and had duties including signing payroll checks prepared by a third party signing nonpayroll checks for routine expenditures and signing form sec_941 employer’s quarterly federal tax_return the preponderance_of_the_evidence establishes that petitioner lacked sufficient control_over restaurant group’s affairs to avoid the nonpayment of its employment_taxes during the tax periods in question petitioner was not an officer director employee13 or owner of restaurant group at any time he was never an authorized signatory on restaurant group’s bank accounts it is also clear from petitioner’s credible testimony and the administrative record that he did not have the authority to hire and fire restaurant group’s employees had no duty to and did not review or reconcile restaurant group’s bank statements and had no control_over disbursements and decisions pertaining to restaurant group’s bank accounts including the payroll account furthermore there is no evidence that petitioner had any involvement in the preparation or filing of restaurant group’s employment_tax returns or the payment of its employment_taxes we are not persuaded by respondent’s argument that petitioner is a responsible_person because he signed and or wrote out a small number of restaurant group’s checks the four checks bearing petitioner’s signature were all signed in the span of two weeks in date when mr roberts was out of town and before four of the five tax periods in question of these four checks less than of the checks restaurant group issued during the third quarter of while petitioner performed tasks for mr roberts and carlos as directed by them from time to time he did not work regular hours or receive a salary two were written and signed only after mr roberts had told petitioner to do so the other two were signed in unusual circumstances where petitioner was the only person available to take delivery of vendor orders such limited check signing activity does not support a finding that petitioner had sufficient control_over restaurant group’s affairs to avert the nonpayment of its employment taxesdollar_figure with respect to the checks written by petitioner but signed by carlos this practice only confirms that petitioner did not have authority to disburse restaurant group’s funds to be sure the exercise of check signing authority is a significant factor in determining whether someone has authority to choose which creditors to pay see 931_f2d_805 11th cir in contrast the preparation of checks for another’s signature does not connote such authority we have not found and respondent does not cite any authority to the contrary we note that ro kane who was working under enormous time pressure because of the looming expiration of the period of limitations erroneously concluded that petitioner had regularly signed restaurant group’s checks during the tax periods in question we believe ro kane would have withdrawn her recommendation to assess tfrps against petitioner had she not confused carlos’ signature with petitioner’s accordingly we find that petitioner is not a responsible_person for purposes of section dollar_figure in reaching our holding we have considered all arguments made and to the extent not mentioned we consider them irrelevant moot or without merit to reflect the foregoing decision will be entered for petitioner having determined that petitioner is not a responsible_person within the meaning of sec_6672 the court need not determine whether he willfully failed to collect account for or pay over the trust_fund_taxes for the tax periods in question


internal_revenue_service number release date index number -------------------------------- ------------------------ ----------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------------- id no ------------- telephone number --------------------- refer reply to cc psi b04 plr-144940-08 date date -------------------------------- ------- year donor ---------------- trust donor ----------------- trust attorney ------------------ year year ------- ------- ------------------------- dear ------------------------- this responds to your submission dated date and subsequent correspondence requesting an extension of time pursuant to sec_2642 of the internal_revenue_code and sec_301_9100-3 of the procedure and administration regulations to elect out of the generation-skipping_transfer gst tax exemption automatic allocation rules donor and donor are husband and wife in year donor created trust an irrevocable_trust for the benefit of donor and their children trust is funded with insurance policies on donor 1’s life during donor 1’s life income is to be accumulated and added to principal on donor 1’s death income and principal is payable to donor for donor 2’s support maintenance health and education and as donor shall appoint among their children on donor 2’s death the remaining corpus is divided among the children per stirpes with distributions to occur upon a child’s attainment of age and also in year donor formed trust an irrevocable_trust for the benefit of their children trust is funded with insurance policies on donor 2’s life during donor 2’s life income is to be accumulated and added to principal on donor 2’s death the corpus is distributable to the children per stirpes with distributions of corpus to occur upon a child’s attainment of age plr-144940-08 both trusts were drafted by attorney who after drafting the trusts provided no further advice to donor sec_1 and in year the deemed_allocation rules of sec_2632 became effective in year donor learned that under the deemed_allocation rules gst_exemption was being allocated to the transfers to trust sec_1 and and that to avoid the allocation of gst_exemption to a gst_trust a taxpayer must affirmatively elect out donor sec_1 and now seek a ruling granting an extension of time to elect out of the automatic allocation rule in the interim there have been no generation skipping transfers from the trusts and no inconsistent allocation of gst_exemption to any other transfers sec_2601 imposes a tax on every generation-skipping_transfer a generation- skipping transfer is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip sec_2602 provides that the amount of the tax is the taxable_amount multiplied by the applicable_rate sec_2641 defines the applicable_rate as the product of the maximum estate_tax rate and the inclusion_ratio with respect to the transfer under sec_2642 the inclusion_ratio with respect to any property transferred in a generation-skipping_transfer is generally defined as the excess of over the applicable_fraction the applicable_fraction as defined in sec_2642 is a fraction the numerator of which is the amount of gst_exemption under sec_2631 allocated to the trust or to property transferred in a direct_skip and the denominator of which is the value of the property transferred to the trust or involved in the direct_skip sec_2631 as effective in the year at issue provided that for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption of dollar_figure adjusted for inflation under sec_2631 which may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_2631 provides that any allocation under sec_2631 once made shall be irrevocable sec_2632 provides that if any individual makes an indirect_skip during such individual's lifetime any unused portion of such individual's gst_exemption shall be allocated to the property transferred to the extent necessary to make the inclusion_ratio for such property zero if the amount of the indirect_skip exceeds such unused portion the entire unused portion shall be allocated to the property transferred sec_2632 provides that the term indirect_skip means any transfer of property other than a direct_skip subject_to the tax imposed by chapter made to a gst_trust as defined in sec_2632 under sec_2632 and ii an individual may elect to have the automatic allocation rule contained in sec_2632 not apply to an indirect_skip or to any or all transfers made by such individual to a particular trust plr-144940-08 sec_2632 provides that an election under sec_2632 may be made on a timely filed gift_tax_return for the calendar_year for which the election is to become effective sec_26_2632-1 of the generation-skipping_transfer_tax regulations provides in part that the election is to be made by attaching a statement the election out statement to a form_709 filed on or before the due_date for timely filing of the form_709 for the calendar_year in which the first transfer to be covered by the election out was made the form_709 with the attached statement must be filed whether or not any transfer was made in the calendar_year for which the form_709 was filed and whether or not a form_709 otherwise would be required to be filed for that year the election out statement must identify the trust and specifically must provide that the transferor is electing out of the automatic allocation of gst_exemption with respect to the described transfer or transfers in the case of a transfer treated under sec_2513 as made one-half by the transferor and one-half by the transferor's spouse each spouse is treated as a separate transferor who must satisfy separately the election out requirements sec_2642 provides generally that the secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make an allocation of gst_exemption described in sec_2642 or and an election under sec_2632 or c such regulations shall include procedures for requesting comparable relief with respect to transfers made before the date of the enactment of this paragraph sec_2642 provides that in determining whether to grant relief under sec_2642 the secretary shall take into account all relevant circumstances including evidence of intent contained in the trust instrument or instrument of transfer and such other factors as the secretary deems relevant for purposes of determining whether to grant relief the time for making the allocation or election shall be treated as if not expressly prescribed by statute notice_2001_50 2001_2_cb_189 provides that under sec_2642 the time for allocating the gst_exemption to lifetime transfers and transfers at death the time for electing out of the automatic allocation rules and the time for electing to treat any trust as a generation-skipping_transfer_trust are to be treated as if not expressly prescribed by statute the notice further provides that taxpayers may seek an extension of time to make an allocation described in sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 sec_301_9100-3 provides the standards used to determine whether to grant an extension of time to make an election whose date is prescribed by a regulation and not expressly provided by statute in accordance with sec_2642 and notice_2001_50 taxpayers may seek an extension of time to make an allocation described in plr-144940-08 sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 sec_301_9100-3 provides in part that requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government sec_301_9100-3 provides in part except as provided in sec_301_9100-3 through iii that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly donor and donor are granted an extension of time of days from the date of this letter to make an election under sec_2632 that the automatic allocation rules do not apply to the transfers to trust and trust the election out will be effective as of year the elections should be made on amended form sec_709 for year and filed with the internal_revenue_service center cincinnati ohio a copy of this letter should be attached to each form_709 two copies are enclosed for that purpose except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination plr-144940-08 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely curt g wilson associate chief_counsel passthroughs special industries enclosures copy for sec_6110 purposes copy of this letter cc


internal_revenue_service department of the treasury index no washington dc number info release date dear person to contact sean m dwyer id no telephone number refer reply to cc ita - cor-123568-01 date date this letter responds to your letter dated date inquiring whether amounts paid as premiums for automobile homeowner’s medical dental and long-term care insurance qualify as investment_expenses since you did not comply with the requirements of revproc_2001_1 2001_1_irb_1 we cannot issue you a private_letter_ruling we are pleased however to provide general information that we believe resolves your inquiry in general sec_212 of the internal_revenue_code allows an individual a deduction for ordinary and necessary expenses paid_or_incurred for the production_or_collection_of_income or for the management_conservation_or_maintenance_of_property_held_for_the_production_of_income sec_1_212-1 of the income_tax regulations provides that expenses may be deducted under sec_212 only if the income if and when realized will be required to be included in income for federal_income_tax purposes or for the management conservation or maintenance of property held for the production of such income sec_1_212-1 provides that expenses paid_or_incurred in managing conserving or maintaining property_held_for_investment may be deductible even though the property is not currently productive and there is no likelihood that the property will be sold at a profit or otherwise be productive and even though the property is held merely to minimize a loss with respect thereto however sec_262 provides that no deduction is allowed for personal living or family_expenses except as expressly provided elsewhere in the code automobile insurance amounts paid for insurance of a personal asset such as an automobile are generally not allowed pursuant to sec_262 cardosi v commissioner tcmemo_1995_147 homeowner’s insurance sec_1_262-1 provides that the cost of insuring a dwelling owned and occupied by the taxpayer as a personal_residence is not deductible medical and dental insurance sec_213 provides that expenses paid during the taxable_year not_compensated_for_by_insurance_or_otherwise for medical_care of cor-123568-01 the taxpayer his spouse or dependent are deductible to the extent that such expenses exceed percent of adjusted_gross_income sec_213 d a defines medical_care as including 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 sec_213 provides that medical_care includes amounts paid for insurance covering medical_care premiums for insurance contracts under which amounts are payable for expenses other than medical_care such as lost wages or loss of life limb or sight may not be deducted unless the amount allocable to medical_care is separately_stated sec_1_213-1 long-term care insurance sec_213 further provides that medical_care includes amounts paid for any qualified_long-term_care_insurance_contract sec_7702b provides that a qualified_long-term_care_insurance_contract covers only qualified_long-term_care_services and must be guaranteed renewable not provide for a cash_surrender_value that can be paid assigned pledged or borrowed against provide that refunds and dividends under the contract must be used only to reduce future premiums other than upon death of the insured or complete surrender or cancellation of the contract and generally not pay or reimburse expenses_incurred for services that would be reimbursed under medicare sec_7702b provides that qualified_long-term_care_services are necessary diagnostic preventative therapeutic curing treating mitigating and rehabilitative services and maintenance_or_personal_care_services provided to a chronically_ill_individual at the direction of a licensed_health_care_practitioner summary the costs of insuring personal assets such as an automobile or residence are non-deductible personal expenses the costs of medical dental and long-term care insurance are generally deductible as medical_expenses which are allowable only to the extent they exceed percent of adjusted_gross_income to more thoroughly explain the treatment of medical and long-term care insurance we have enclosed publication medical and dental expenses cor-123568-01 i hope this information is helpful please call sean dwyer at the number above if you have any questions sincerely associate chief_counsel income_tax accounting by robert a berkovsky chief branch enclosure