Deduction allowed for payments to long-term caregivers.

• Author: Nevius, Alistair M.

The Tax Court held that payments made to an elderly woman's caregivers for personal care that she required due to her diminished capacity qualified as long-term care services and were therefore deductible under Sec. 213(d)(1)(C) (Estate of Baral, 137 T.C. No. 1 (2011)).

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Lillian Baral was diagnosed by her physician as suffering from dementia, and the physician determined that she required 24-hour-a-day assistance and supervision for medical reasons. Her brother (who handled Baral's financial affairs under a power of attorney) hired two individuals to provide that care and paid them $49,580 for their services in 2007. He also reimbursed them $5,566 for supplies they purchased.

Baral did not file an income tax return for 2007, so the IRS prepared a substitute return for her, under the provisions of Sec. 6020(b). The IRS determined that she had income of $94,229 for the year, and after her personal exemption and standard deduction it determined she had an income tax deficiency of $17,681 for the year. Baral died in 2008, and her estate sued to have the amounts paid for her long-term care and supplies, as well as $760 paid to her physician, allowed as medical expense deductions for 2007.

Amounts paid for qualified long-term care services are deductible as medical expenses under Sec. 213(d)(1). Qualified long-term care services include personal care services required by a chronically ill...