CARASSO v. COMMISSIONER OF INTERNAL REVENUE

The Commissioner determined a deficiency in petitioners' income tax in the amount of $133.84 for the year 1956. The sole issue is whether he properly disallowed medical expenses in the amount of $628.50 out of a total of $2,367 claimed on petitioners' return. Findings of fact and opinion were filed on June 29, 1960, but, on petitioners' motion for reconsideration, such findings of fact and opinion were withdrawn on July 15, 1960, for reconsideration.

Petitioners, husband and wife, reside in Brooklyn, New York, and filed their 1956 Federal joint income tax return with the district director of internal revenue at Brooklyn.

The husband, Max Carasso, hereinafter referred to as petitioner, was an employee of Abalene Pest Control Service, Inc. His work involved a considerable amount of travel.

In early February 1956, while in Burlington, Vermont, on business for his employer, petitioner was stricken with a serious illness that resulted in two emergency operations, in which the major portion of his stomach was removed. He was hospitalized at the Mary Fletcher Hospital in Burlington, Vermont, during the period February 5, 1956, through February 22, 1956. He lost 50 pounds in weight. Upon being released from the hospital he was unable to go home because of his weakened condition, and remained at the house of some friends for a brief period, when he finally returned to Brooklyn. However, his weakness persisted, and on March 6, 1956, on his doctor's recommendation he flew to Bermuda, accompanied by his wife, for further convalescence. He remained there for 9 days. Upon returning to Brooklyn, he convalesced further for at least 6 more weeks, and when he thereafter returned to work, it was only on a part-time basis.

Included in the medical expenses claimed in the return was a total of $493.50 incurred in the Bermuda trip for both petitioner and his wife. These expenses were included in the amount of $628.50 disallowed by the Commissioner. The Bermuda trip was undertaken solely for medical reasons; it was in no sense a vacation trip. Petitioner's condition was such that he could not have made the trip alone, and his wife's presence and assistance were essential. Many of the services performed by her were such as might have been performed by a nurse. The $493.50 expenses incurred in connection with the Bermuda trip were composed of the following items:

Hotel ..................... $108.00 Fare ...................... 217.80 Meals ..................... 162.00 Exit tax .................. 5.70 -------- 493.50

The remaining $135 disallowed by the Commissioner was not specifically identified by the Government, but petitioner in fact incurred all the medical expenses set forth in the return.

WITHEY, J., dissenting:

I dissent from the opinion of the majority in this case upon two grounds, only one of which I discuss herein. As to the other ground, I concur in the dissent of Judge Pierce filed herein. In Robert M. Bilder, 33 T.C. 155, we correctly determined that in allowing the deduction of the taxpayer's meals and lodging incurred in Florida, it was not proper to consider the congressional history of section 213(e)(1)(B) of the 1954 Code. It is axiomatic that where courts need aid in understanding what Congress has said, they should resort to the history of legislation. It is because Congress had not spoken in section 213(e)(1)(B) upon the subject of meals and lodging but had spoken only on the deductibility of transportation expense that we did not feel called upon to resort to the history of that subparagraph of the statute. Congress had generally in subparagraph (A) of the section made the amounts paid for meals and lodging deductible when proximately related to the treatment, cure, or mitigation of a disease, but it has not, by the clear and unambiguous specific inclusion of transportation expense in subparagraph (B) among deductible medical expense, altered or amended subparagraph (A). The majority improperly seeks to fill a legislative void with the words of congressional committee reports which only by reading such reports as they do, appear to express an intent to exclude meals and lodging from deductible medical expense. This constitutes the grossest kind of judicial legislation. The reference to transportation expense in subparagraph (B) cannot by any stretch of the imagination be read to include the expense of meals and lodging incurred by a taxpayer while not being transported. Where Congress has in other legislation sought to cover both categories of expense, reference has been made to "travel expense" not "transportation expense." Although one term may include the other they are not synonymous.

PIERCE, J., dissenting:

I think that the Court, in its opinion herein, has failed to meet squarely or deal adequately with the basic question here presented — which I regard to be a question of major importance, both to the Internal Revenue Service and to taxpayers generally. That question is: Whether expenses paid or incurred by a taxpayer primarily for and essential to "convalescence" away from home, following two major surgical operations, qualify for deduction as "expenses * * * for medical care," as defined in section 213(a)(1)(A) and (B) of the 1954 Code, and also as set forth in section 1.213 of the recently promulgated Income Tax Regulations pertaining to "medical care." More specifically, the question here is whether said statutory definition, in providing that "[t]he term 'medical care' means amounts paid — (A) for the * * * cure, mitigation, [or] treatment of disease * * * or (B) for transportation primarily for and essential to medical care referred to in subparagraph (A)" (emphasis supplied) — is sufficiently broad to comprehend expenses paid primarily for and essential to the "convalescence."

The specific items of convalescent expense involved in the instant case, are: In-transit "transportation" of the petitioner, to and from the place of convalescence; expenses for board and room, incurred by the petitioner in a "private establishment" (two hotels) where he resided for 9 days; and both the transportation and the board and room of the petitioner's wife, whose presence and assistance were found by the Court to be essential, and many of whose services were also found by the Court to be similar to those which might have been provided by a "nurse."

The fact that the above-stated question is directly presented in the instant case, is evidenced by: The petitioner's return, in which he made claim to the deductions for "medical care"; by his petition to this Court, in which he assigned error in the denial of such deductions; by the Court's findings of fact, which disclose the seriousness of the illness and the indispensability of the wife's presence on the convalescence trip; and also by the Court's conclusions that the trip was undertaken solely for medical reasons, and was in no sense a vacation trip.

2. The inadequacy of the Court's opinion is, in my view, indicated by the following. The Court did not give sufficient consideration to the complete statutory definition of "medical care" contained in section 213(e). Indeed, it entirely ignored the application of subparagraph (A) thereof, which I believe contains the controlling provisions; and it relied solely on subparagraph (B) pertaining to "transportation," notwithstanding that this subparagraph is, by its own terms, specifically made dependent on the provisions of subparagraph (A). I find no warrant or justification whatever, for the Court's complete bypassing of the provisions of subparagraph (A), by employment of the statement: "There is no showing that the meals and hotel items herein were proximately related to medical care, apart from their being included in the travel expense." I believe that the application of subparagraph (A) is in no way dependent on subparagraph (B) which was added after the conjunction "or," that marks an alternative.

The Court rested its decision primarily upon two quotations from the report of one of the legislative committees — one of which quotations makes reference only to "ordinary" living expenses; and the other of which quotations omits both the initial sentence and the final sentence of that paragraph of the report from which the quotation was taken. I regard said final sentence to be of particular importance, because of the expanded meaning attributed to the committee report by the Treasury Department, in paragraphs (e)(ii), (iv), and (v) of the above-mentioned new regulations.

Furthermore, the Court made no reference whatever to paragraphs (e)(ii) and (e)(v) of the regulations, which contain provisions that relate specifically to the deductibility of "nurse's board," and also to "meals and lodging" in a hospital, or in "an institution other than a hospital," or in a "private establishment" which provides "care" similar to that obtainable in such institutions.

Said regulations provide in substance that whether expenses for care in such an "institution" or "private establishment" qualify for deduction as "medical care," is " primarily a question of fact which depends upon the condition of the individual and the nature of the services he receives (rather than the nature of the institution)." (Emphasis supplied.)

I think that the Court should have considered and applied the provisions of the new regulations, and also should have determined whether they are applicable to convalescent expenses. I also think that, since the Court allowed deduction for the wife's transportation on the convalescence trip, on the theory that she was an essential quasi-nurse, it should consistently have allowed deduction for this quasi-nurse's board, under subsection (e)(ii) of the above-mentioned new regulations.

3. There are at least three cases in which it has been decided that medical deductions are allowable for board and room during convalescence in a private establishment away from home. L. Keever Stringham, 12 T.C. 580, reviewed by the Court, affd. 183 F.2d 579 (C.A. 6); Robert Bilder, 33 T.C. 155, pending on appeal (C.A. 3); Estate of Harry W. Embry v. Gray, 145 F. Supp. 603 (W.D. Ky.), appeal dismissed on motion of appellant-district director 244 F.2d 718 (C.A. 6).

The Stringham and Embry cases were decided under section 23(x) of the 1939 code, which contains a definition of "medical care," that is substantially identical to that incorporated in section 213(e)(1)(A) of the 1954 Code. The Bilder case, like the instant case, was decided by this Court under the 1954 Code; and as above noted, it is now pending on appeal before the Court of Appeals for the Third Circuit.

All of these cases are, in my view, either out of harmony or in conflict with the Court's decision in the instant case. Yet, the Court did not distinguish any of these cases; did not cite any of them except the Bilder case; and in the Bilder case, it referred only to what it regarded to be a procedural error of this Court, without in any way indicating that the result reached therein was incorrect.

The question involved in this and the above-cited cases is a narrow one; and we should not vacillate. I think that the answer to such question is sufficiently uncertain, that this Court should, as a matter of sound judicial procedure, have deferred issuance of its conflicting Opinion in the instant case until the Court of Appeals for the Third Circuit has rendered its decision in the Bilder case.