Hot tubs and

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Hot tubs and 213
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Sequence of research work

• Topical service to get background
• IRC
• Reg
• Cases and rulings to determine what primary
  purpose and directly related mean

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Law Write-up

• Have a logical order, such as IRC, regs,
  cases/rulings
• If using more than one IRC section, keep related
  code and regulation summaries together in the
  sequence

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How much to include in court case or ruling
summary

• Enough so we know what ruling was about and why
  the court or IRS ruled the way it did (the
  rationale for the holding).
• We need the facts to see how similar they are to
  our facts
• We need the rationale to be able to know what is
  important and how we apply rulings to our facts

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Example for critique

• Rev. Rul. 83-33, 1983-1 C.B. 70 taxpayers cost
  of constructing a special swimming pool to treat
  severe osteoarthritis, to the extent the
  expenditure exceeds any resulting increase in the
  value of taxpayers related property, was
  deductible as a medical expense under 213. Costs
  to operate and maintain the pool are deductible
  in the tax year paid under 213.

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Example for critique - 2

• Haines v. Commr., 71 T.C. 644 (1979) a medical
  expense deduction was denied for the cost of a
  swimming pool that the taxpyaer built at his
  home. The court held that the pool was not
  primarily related to the taxpayers medical care.
  Having a pool at home was for the mere
  convenience of the taxpayer, rather than a
  medical necessity, due to the following factors

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Example 2 continued

1. The need for special therapy for the taxpayers
   leg continued for only a limited period of time,
2. The pool was not enclosed so as to be usable
   throughout the year, and
3. The pool had no special equipment to help with
   the taxpayers physical therapy needs.

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Example for critique - 3

• A portion of a medical deduction was disallowed
  in a case where the expenses incurred to
  construct the pool were excessive. Ferris v.
  Comm., 421 AFTR 2d 78-5674, 08/15/1978.

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Example for critique 4

• Seymour v. Commissioner, 111 T.C. 1111 (1950)
  Not every expenditure prescribed by a physician
  or for the physical comfort of the individual
  qualifies as a medical expense.

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Example for critique - 5

• Cherry, T.C. Memo 1983-470 Expenditures for
  operating and maintaining a swimming pool were
  deductible medical expense, as such expenses were
  paid for the primary purpose of and were
  directly related to medical care. Factors
  considered in establishing medical necessity were
  the following

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Example continued

• Use of the pool was related to taxpayers medical
  condition. Swimming in the pool mitigated his
  emphysema and bronchitis.
• Taxpayer investigated alternative and less
  expensive forms of exercise and the availability
  of pools in the community prior to deciding to
  invest in his own pool. This careful approach
  showed that the taxpayer purchased and maintained
  the pool as a medical requirement and not for
  mere convenience.
• Taxpayer used the pool consistently, at least two
  times a day. His medical condition worsened in
  the absence of the regular pool exercises. The
  pool was enclosed to allow exercise all year
  long.
• While there was not special design for the pool,
  non was needed for the taxpayers medical
  problem.
• Pool use for entertainment was occasional.
  Recreational use was incidental to its primary
  medical purpose.

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Amount of deduction

• Is a formal appraisal needed?
• Who should get the information?

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Additional reminders

• Use proper citations
• Cite where authority can be found
• Cases need to indicate court and year
• Should you say IRS will disallow or the IRS
  will question
• Conclusion should be the brief answer. Rationale
  for it belongs in the Analysis section.

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Additional reminders - 2

• File memo is
• Date
• To Sams Tax File
• From Researchers name
• Re general topic
• Include at end Next steps or Follow-up Actions

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Additional reminders - 3

• Relevant Facts or Facts?
• Issue(s) or Specific Issue?