Tobacco Documents Online

ROUTE TO RETURNTO ~ o federcr-d tax co dinator 2d February 8, 1979 In this Issue: No medical expense deduction for treatment to break the smoking habit, p. 33 IRS bars step-up in basis of corporate assets on buy-out of, some shareholders, p. 34 Corporation, used solely to avoid usury law treated as corporate taxpayer, p. 34 IRA changes explained by IRS, p. 35 Gift tax returns should be filed using June '77 version of Form 709, p. 35 Favorable term loan to relative may be hit by gift tax, p. 35 Costs of management survey are currently deductible, p. 36 Payments received for easements held taxable gain, p. 36 Not all gifts to "thrift shops" qualify as charitable contributions, p. 37 Interest on certain bearer COs reported on Form 1099-®CD, p. 37 IRS explains how to figure goodwill under the formula method, p. 37 Federal' Tax Calendar - March '79, p. 38 Swapping like-kind mortgaged property can be taxwise expensive, p. 38 Employee benefit plan reporting simplified for church and gov't units, p. 39 IRS cracking down on illegal protest-type activities, p. 39 Trustee's discretionary power kills gift tax exclusion despite general. savings clause, p. 39 1 1- No medical expense deduction for treatment to break the smoking habit An individual who smoked 2-3 packs of cigarettes a day enrolled in a course at a treatment center designed to break his smoking habit. He had developed "cigarette hacks" or coughs and felt that "this treatment could alleviate this condition and improve [his] gen- eral condition as well as lower the possibilities of developing serious respiratory and circula- tory diseases." A physician had recommended that the treatment be taken to alleviate the coughs. In a Technical Advice Memorandum, IRS said' the costs are not deductible as a medical expense. There is a distinction between treat- ments which are beneficial to the general health and well-being of an individual and those whose purpose is to cure or mitigate a specific illness or disease.* "Our research indicates that medical authorities do not at this time recog- nize smoking itself as a disease. . . . Although the cure of the habit of smoking is undoubtedly, beneficial to the general health and well-being of an individual, it fails to meet the criteria established for determining the deductibility of expenses incurred for 'medical care.' " (Letter Ruling 7906009) ® oes.rvanon: IRS has previously ruled that a medical expense deduction is allowable for amounts paid for treatment at a drug abuse center, in-patient treatment at a therapeutic center for alcoholism,* and for transportatiom expenses to attend meetings of Alcoholics Anonymous.* Copynght 1979by TheReseench Institute of Arnerica„ Inc.. (ISSNA163-996X),Copyrg ht is not cleimed in any,materiaL secured fEom oMicial U.S. Government sources. Vol:. 25. No.6: Published by The Research Institute of Americe, Inc., 589 Flftti.Avenue, New York„N.Y..10017- Federal Tax Coordinator 2d is issued weekly.at~.5fi69per.yeer:.second class postage paid at N:Y:. N.Y, end other mailing offices.. THE RESEARCH INSTITUTE OF AMERICA, INC,, 589 FIFTH AVENUE, NEW YORK, N. Y. 10017 33

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