                  T.C. Memo. 1998-85



                UNITED STATES TAX COURT



    STEPHEN A. LENN AND KSENIA LENN, Petitioners v.
      COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 3981-96.              Filed February 26, 1998.



     P has a son, S, who is disabled within the meaning
of the Individuals with Disabilities Education Act,
Pub. L. 91-230, sec. 601, 84 Stat. 175 (1970), as
amended, and is entitled to special educational
benefits from the public school system. P
unsuccessfully sued the public school district to
obtain reimbursement for the tuition of a residential
private school for S. S attended the private school,
and P has been allowed to deduct the tuition costs as
medical expenses under sec. 213, I.R.C. P claimed a
deduction for the legal expenses incurred in the
lawsuit against the public school as medical expenses
under sec. 213, I.R.C. R disallowed the deduction
because the lawsuit was not necessary for S to attend
the private school. P contends that the reasoning of
Gerstacker v. Commissioner, 414 F.2d 448 (6th Cir.
1969), revg. and remanding 49 T.C. 522 (1968), which
permitted the taxpayer to deduct the legal expenses
                               - 2 -


     incurred to involuntarily commit his wife in order to
     legitimate a method of medical treatment, should be
     extended to the facts of this case.
          Held: The reasoning of Gerstacker v. Commissioner,
     supra, does not apply to the facts of this case, and P
     is not entitled to deduct the legal expenses under sec.
     213, I.R.C.



     James H. Rownd and Stephen L. Kadish, for petitioners.

     Katherine Lee Wambsgans, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION

     GERBER, Judge:   Respondent determined a deficiency in

petitioners Stephen A. and Ksenia Lenn's 1991 Federal income

taxes of $4,464 and in petitioner Stephen A. Lenn's 1992 Federal

income taxes of $8,788.   After concessions, the issue for our

consideration is whether petitioners may deduct legal expenses

that they incurred to obtain reimbursement for the costs of

medical treatment as section 2131 medical expenses.

                          FINDINGS OF FACT2

     At the time the petition in this case was filed, petitioner

Stephen A. Lenn resided in Bratenahl, Ohio, and petitioner Ksenia

Lenn resided in Boca Raton, Florida.    In 1991, petitioners were

     1
       Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
     2
       The stipulation of facts and the attached exhibits are
incorporated therein by this reference.
                                - 3 -


married and filed a joint Federal income tax return.    In 1992,

petitioners divorced, and Stephen A. Lenn (petitioner) filed a

separate return and elected the "Head of household" filing

status.    Petitioner Ksenia Lenn is a party to this proceeding

only for the 1991 tax year.

       Petitioner has a son, Daniel Lenn, from a previous marriage.

Before 1991, Daniel lived with his mother in Portland, Maine.      In

1982, when Daniel was in the first grade, he was diagnosed with a

learning disability.    Daniel is disabled within the meaning of

the Individuals with Disabilities Education Act (IDEA), Pub. L.

91-230, sec. 601, 84 Stat. 175 (1970), as amended.    The IDEA

requires that in order to receive Federal funding for education

of handicapped children, a State must offer to a disabled child

an individualized educational program (IEP) that addresses the

child's individual needs in a way that is reasonably calculated

to enable the child to receive educational benefits.    20 U.S.C.

sec. 1400(c) (1970), as amended.    Daniel attended public school

through the eighth grade in the Portland School District under a

series of IEP's, one for each school year, pursuant to the IDEA.

Although Daniel was a special education student, he attended

regular classes with nondisabled students for most of the school

day.    Because of his learning disability, Daniel had poor

interpersonal skills and had difficulty interacting with his

classmates, who frequently teased and ostracized him.
                                - 4 -


     In 1991, Daniel was hospitalized for a 30-day period for

depression and suicidal ideation.   At that time, Daniel was

diagnosed with significant cognitive deficits.   A doctor treating

Daniel during his hospitalization recommended that he enroll in a

summer program at a school for children with learning

disabilities.    The summer program would be used to design an IEP

that could be implemented by the Portland School District in the

following school year.   During the summer of 1991, Daniel

enrolled in a summer program at Eagle Hill School in Hardwick,

Massachusetts.   Eagle Hill is a private school for learning

disabled children who have emotional and educational problems

related to their learning disabilities.   Petitioner requested

that the Portland School District pay for the summer program.

The School District would pay for the summer program only if it

was part of Daniel's IEP.   During Daniel's hospitalization,

doctors also recommended a neuropsychological evaluation, which

was performed by Amy Weinstein, Ph.D., in May and June 1991 on

the request of the Portland School District.   Daniel was

diagnosed with a severe nonverbal learning disability known as

developmental dyslexia, a genetic disorder that impedes a child's

normal development.   This was the first time that the severity of

Daniel's learning disability was identified.   Weinstein's report

also recommended additional testing.
                                - 5 -


     In July 1991, Daniel underwent a series of educational,

psychological, and neurological testing at the Cleveland Clinic

Foundation.    At petitioner's request, the Portland School

District delayed preparing an IEP for Daniel's 1991-92 school

year until it received the report from the Cleveland Clinic.

Daniel was diagnosed as having pervasive developmental disorder,

a form of autism, and attention deficit hyperactivity disorder.

Professionals at the Cleveland Clinic, including Dr. Vanessa K.

Jensen, Psy.D., a pediatric psychologist, recommended that Daniel

be placed in a residential program.

     After receiving the report from the Cleveland Clinic, the

Portland School District prepared an IEP for the 1991-92 school

year.   The school district relied on the information that was

provided from Daniel's extensive testing in preparing the IEP.

Dr. Jensen reviewed Portland's proposed IEP.    She was concerned

with the large amount of time that Daniel would be in classes

with nondisabled students under the Portland IEP and was worried

that Daniel would suffer further teasing leading to further

emotional problems.    She also believed that Daniel needed

individual attention that was not available in a normal academic

environment.    Dr. Jensen had recommended that Daniel be placed in

a residential treatment program that could assist Daniel with

basic personal care from the time he woke in the morning until he

went to bed.    Dr. Jensen reviewed Eagle Hill's curriculum and the
                                - 6 -


IEP that Eagle Hill prepared for Daniel for the 1991-92 school

year and believed that Eagle Hill met Daniel's needs.

     Daniel had made little progress academically during the

3 prior years in the Portland School District.    Medical

professionals had advised petitioner that there was a risk that

Daniel's emotional condition could worsen and additional

hospitalization would be necessary if he returned to public

school.    Based on the psychological evaluations and advice

petitioner received, he was not satisfied with Portland's IEP and

enrolled Daniel at Eagle Hill for the 1991-92 school year.      The

annual costs for Eagle Hill were about $40,000.    Petitioner

requested that the Portland School District pay all or part of

Daniel's tuition.    The school district refused to pay the

tuition, and petitioner initiated an administrative due process

hearing.   The purpose of the hearing was to determine whether the

IEP proposed by the Portland School District for the 1991-92

school year was adequate to meet Daniel's needs and whether

residential placement was necessary.    A special education due

process hearing was held in October and November of 1991.      In the

administrative proceeding, petitioner maintained that a 24-hour

residential program was necessary to treat Daniel's learning

disability as well as to address his social and emotional needs.

     On December 13, 1991, the hearing officer determined that

Portland's IEP for Daniel for the 1990-91 school year, during
                                - 7 -


which Daniel was hospitalized, did not meet the legal standards

set forth in the IDEA.    However, the officer found that

Portland's IEP for Daniel's 1991-92 school year represented a

major change in educational services from the previous year's

IEP.    The officer determined that the proposed IEP was reasonably

calculated to enable Daniel to receive educational benefits in an

environment that was less restrictive than Eagle Hill and

satisfied the legal standards of the IDEA.     The hearing officer

denied petitioner's request for reimbursement of Daniel's tuition

at Eagle Hill.    On January 10, 1992, petitioner initiated suit

against the Portland School Committee and the State of Maine,

Department of Education, in the U.S. District Court for the

District of Maine to appeal the determination of the

administrative due process hearing.     On December 14, 1992, the

District Court affirmed the decision of the administrative

hearing officer.    Petitioner appealed the District Court decision

to the U.S. Court of Appeals for the First Circuit.     On July 15,

1993, the U.S. Court of Appeals upheld the decision of the

District Court denying petitioner reimbursement for the costs of

Eagle Hill.    Lenn v. Portland School Comm., 998 F.2d 1083 (1st

Cir. 1993).

       Daniel attended Eagle Hill for the majority of his high

school education beginning in the summer of 1991 and graduating

in 1995.    Daniel did not attend Eagle Hill for a portion of the
                                - 8 -


1993-94 school year.    Petitioner paid for Daniel's tuition by

borrowing money from financial institutions, from friends, and

against his retirement account.    Daniel also received a partial

scholarship from the school for the 1994-95 school year and a

reduced tuition rate for the spring 1994 quarter.     At the time he

instituted the legal proceedings against the school district,

petitioner believed that he would not be able to afford the costs

of Daniel's tuition until his graduation because of his financial

situation and obligations.    Petitioner was concerned about his

future income potential as a lawyer.      In addition, petitioner's

and Daniel's mother's health insurance coverage for Daniel was

almost exhausted as a result of Daniel's psychological and

psychiatric expenses.

     During 1991 and 1992, petitioner paid legal fees in

connection with the legal proceedings against the Portland School

District in the amounts of $12,573 and $21,541, respectively.

Petitioner deducted the legal fees as medical expenses under

section 213.   In the notice of deficiency, respondent determined

that petitioner was not entitled to deduct the legal expenses

under section 213.   Respondent allowed petitioners to deduct the

cost of the tuition at Eagle Hill as a section 213 medical

expense.

                               OPINION

     Section 213 permits a deduction for expenses paid for

medical care during the taxable year, not compensated for by

insurance or otherwise.    Sec. 213(a).   Medical care is a personal
                                - 9 -


expense, and section 213 is an exception to the general rule of

section 262 that personal, living, and family expenses are not

deductible.    Section 213(d)(1) defines medical care as amounts

paid

          (A) for the diagnosis, cure, mitigation, treatment,
       or prevention of disease, or for the purpose of
       affecting any structure or function of the body,

          (B) for transportation primarily for and essential
       to medical care referred to in subparagraph (A), or

          (C) for insurance * * * covering medical care
       referred to in subparagraphs (A) and (B).

The regulations provide that medical expense deductions "will be

confined strictly to expenses incurred primarily for the

prevention or alleviation of a physical or mental defect or

illness."    Sec. 1.213-1(e)(1)(ii), Income Tax Regs.

       To qualify as a medical expense deduction, the expense must

be for services that are directly or proximately related to the

diagnosis, cure, mitigation, treatment, or prevention of the

disease or illness.    Jacobs v. Commissioner, 62 T.C. 813, 818

(1974).    An expense that provides an "incidental benefit", Havey

v. Commissioner, 12 T.C. 409, 413 (1949), or that is merely in

some way connected to medical care, Gerstacker v. Commissioner,

414 F.2d 448 (6th Cir. 1969), revg. and remanding 49 T.C. 522

(1968), is not deductible.    Accordingly, petitioner would be

entitled to deduct the legal expenses in issue under section 213

if there is a direct or proximate relationship between the legal

fees and the treatment of a medical condition.
                              - 10 -


     In considering the deductibility of expenses that are not

purely medical in nature, we have turned to factors such as the

taxpayer's purpose or motive in incurring the expense, the effect

of the goods or services purchased on the medical condition, and

the origin of the expense.   Havey v. Commissioner, supra.     In

Jacobs v. Commissioner, supra, we applied a two-prong test to

determine whether an expense is directly or proximately related

to the treatment or prevention of a medical condition:   A

taxpayer must prove that the expenditure was an essential element

of the treatment for a medical condition and would not have

otherwise been incurred for nonmedical reasons.

     Petitioner contends that the attorney's fees from the legal

proceedings against the Portland School District were proximately

related to the medical care that Daniel received at Eagle Hill.

Petitioner contends that he reasonably believed that he would not

be able to afford medical treatment for Daniel through his high

school graduation unless the Portland School District paid for a

portion of the costs.   Accordingly, petitioner argues that the

legal proceedings against the school district were essential in

obtaining access to medical treatment for Daniel and were a

necessary part of that treatment.   Respondent contends that

Daniel could have received medical treatment at Eagle Hill

without petitioner's having to incur the legal expenses.

Accordingly, respondent maintains that the legal expenses were

not necessary to Daniel's medical care and are not deductible.
                              - 11 -


     As part of his argument that the legal expenses were

necessary to obtain medical care for Daniel, petitioner contends

that it was medically necessary to place Daniel in a residential

program to treat his physiological problems.    Petitioner

presented credible medical evidence of the severity of Daniel's

developmental disorder and the need to place him in a residential

facility.   Conversely, respondent argues that the residential

program was not necessary to treat Daniel's medical condition.

Respondent maintains that the independent hearing officer found

that residential care was not required for Daniel and that this

decision was affirmed by the U.S. District Court and the U.S.

Court of Appeals for the First Circuit.

     The question of whether Daniel needed to be placed in a

residential program was resolved in petitioner's earlier suits

against the Portland School District, and it is not necessary for

us to reconsider that issue here.   Petitioner has been permitted

to deduct the costs of the tuition at Eagle Hill as a section 213

medical expense.   The issue in this case is not whether

enrollment at Eagle Hill was necessary to alleviate Daniel's

medical condition.   Rather, we must determine whether the legal

expenses were directly or proximately related to the medical care

that Daniel received at Eagle Hill.    This question can be

answered without determining whether the residential care at

Eagle Hill was necessary to treat Daniel's medical condition.3


     3
       The cost of attending Eagle Hill School would also be
deductible without a determination that Daniel's attendance at
                                                   (continued...)
                              - 12 -


     Petitioner contends that the legal proceedings against the

Portland School District were necessary to secure access to

medical treatment for his son and that Gerstacker v.

Commissioner, supra, is controlling.   In Gerstacker, the U.S.

Court of Appeals for the Sixth Circuit, to which this case is

appealable, held that where involuntary commitment of a patient

is necessary to render medical treatment, the legal expenses that

are necessary for the commitment proceeding are deductible

medical expenses.   The taxpayer wife had a history of mental and

emotional problems.   On two prior occasions, the wife ran away

from treatment facilities after being voluntarily hospitalized.

Doctors advised the husband that his wife could not be

successfully treated unless she was involuntarily confined and

recommended that the taxpayer-husband institute guardianship

proceedings over his wife, which led to her involuntary

confinement and medical treatment for her mental and emotional

condition.   Both the husband and wife hired attorneys in the

guardianship proceedings whose legal fees were deducted by the

taxpayers as medical expenses.




     3
      (...continued)
the school was necessary to treat his medical condition. The
costs of a special school for mentally or physically disabled
persons is a deductible medical expense if the principal reason
for attending the school is to alleviate the disability. Fay v.
Commissioner, 76 T.C. 408 (1981); sec. 1.213-1(e)(1)(v)(a),
Income Tax Regs. The deductible costs include meals, lodging,
and education provided by the school that are incidental to the
special services performed. Fay v. Commissioner, supra.
                                - 13 -


     In Gerstacker v. Commissioner, supra, the Court of Appeals

found that the commitment proceedings were essential to render

medical treatment to the taxpayer wife.     The court stated:

          It seems obvious to this Court that a commitment
     proceeding was necessary to render medical treatment in
     the present case where Mrs. Gerstacker would not stay
     in the hospital voluntarily. It also is obvious that
     commitment proceedings played a role in medical
     treatment, and that except for Mrs. Gerstacker's
     illness these legal expenses would not have been
     incurred. * * * [Id. at 450.]

The court held that where legal expenses are necessary to

"legitimate a method of medical treatment", they are proximately

related to the medical treatment and are deductible as medical

care under section 213.     Id. at 453.   The court further held,

however, that legal fees for the management of the guardianship

estate and the conduct of the wife's affairs during the existence

of the guardianship were not deductible as medical expenses

because these services were not essential to legitimate medical

treatment and therefore were not proximately related to the

wife's medical condition.

     Petitioner argues that at the time he incurred the legal

expenses, he reasonably believed that he would not be able to

afford long-term medical treatment for Daniel at Eagle Hill

unless the Portland School District paid for at least a portion

of the costs.   Accordingly, petitioner argues that the legal

proceedings against the school district were necessary to obtain

medical care for his son.    Under petitioner's theory, the fact

that Daniel received the medical care despite the fact petitioner

lost the lawsuit against the school district is not relevant.
                               - 14 -


Otherwise, according to petitioner, the deductibility of legal

expenses under section 213 would incorrectly depend on the

success of the litigation.    Petitioner has not satisfied the

underlying requirement of a medical expense deduction as set

forth in Gerstacker v. Commissioner, 414 F.2d 448 (6th Cir.

1969), that the expense be an essential part of medical

treatment.    Accordingly, it is not necessary for us to determine

whether, in the context of a medical expense deduction, the legal

proceeding must be successful for the taxpayer to deduct the

legal expenses.   Because Daniel attended Eagle Hill even though

the school district did not contribute to the costs, it is far

from clear that the legal expenses in this case were essential to

obtain medical treatment.    Obviously, Daniel could have attended

Eagle Hill without petitioner's instituting legal action against

the school district.

       This case is distinguishable from Gerstacker v.

Commissioner, supra, because petitioner did not institute the

legal action to legitimate or authorize medical treatment for his

son.    The barrier to medical care in Gerstacker was legal in

nature.    However, in this case, there was no legal impediment to

Daniel's enrollment at Eagle Hill.      The barrier to, or burden on,

the receipt of medical care was the financial cost of Daniel's

treatment at Eagle Hill.    Petitioner argues that under the

reasoning of Gerstacker v. Commissioner, supra, the standard for

the deductibility of legal expenses should be whether a

reasonable person in petitioner's financial situation would have
                                - 15 -


instituted legal action against the Portland School District for

reimbursement of the tuition at Eagle Hill and thereby secure

treatment for a child.

     Petitioner's legal action against the Portland School

District was not an essential or integral part of Daniel's

medical treatment at Eagle Hill.    Although residential care was

recommended for Daniel by a mental health professional, the

lawsuit was not commenced upon a doctor's recommendation as was

the case with the involuntary confinement proceeding in

Gerstacker v. Commissioner, supra.       Respondent argues that

petitioner was financially motivated to initiate the legal

proceedings against the Portland School District and was not

motivated by medical necessity.    We agree.    The legal fees in

issue were incurred to obtain reimbursement for the costs of the

medical care that Daniel received and not to obtain the medical

care, as petitioner contends.    This is so whether or not

petitioner reasonably believed that he would not be able to pay

for Daniel to attend Eagle Hill without contribution from the

school district.   Although section 213 does contain an income-

based limitation on the deductibility of medical expenses, there

is nothing in the legislative history that indicates Congress

intended to base the deductibility of a particular type of

expense on the taxpayer's financial status.      Petitioner incurred

the legal expenses to determine who would pay for his son's

treatment at Eagle Hill.   The expenses were not necessary for

Daniel to attend Eagle Hill.
                                - 16 -


     Legal expenses incident to medical care have been allowed as

a medical expense deduction only when the legal expenses are

"'necessary to legitimate a method of medical treatment'".

Levine v. Commissioner, 695 F.2d 57, 61 (2d Cir. 1982), affg.

T.C. Memo. 1981-437 (quoting Gerstacker v. Commissioner, supra at

453).   Petitioner's action against the Portland School District

was not to legitimate medical treatment.     Rather, petitioner

instituted the legal action to ensure that Daniel could receive

medical treatment that was arguably necessary to treat his

cognitive deficits without petitioner's having to bear the

financial burden of that treatment.      The legal action against the

Portland School District, had petitioner been successful, would

not have alleviated or treated Daniel's learning disabilities or

psychological problems.   It would have merely alleviated the

financial burden often faced by families in providing medical

care to their family members.

     Petitioner asks us to expand the holding of Gerstacker v.

Commissioner, supra, to the situation where a taxpayer institutes

legal proceedings to seek payment for the costs of medical care

that is otherwise obtainable and possibly already received.       We

find that there is not a proximate relationship between the legal

expenses incurred to obtain reimbursement for medical care and

the medical care received.   Petitioner's legal expenses are not

deductible medical expenses under section 213.     While the legal

expenses in issue may be connected to the son's treatment, they
                              - 17 -


lack the proximate relationship to the claimed illness to qualify

as an expense for medical care.

     Petitioners contend that the question of whether a direct or

proximate relationship exists depends on the taxpayer's dominant

motivation in incurring the expense.   Petitioner relies on the

standard of a proximate relationship used in the context of

determining whether a bad debt is connected to a taxpayer's

business, i.e., what the taxpayer's dominant motivation was in

incurring the debt that resulted in the bad debt, citing United

States v. Generes, 405 U.S. 93 (1972).   Petitioner contends that

his dominant motivation in initiating the legal proceedings

against the Portland School District was to secure funding for

Daniel's treatment at Eagle Hill.   Accordingly, petitioner

maintains that the legal expenses satisfy the dominant motivation

test set forth in Generes and are therefore proximately related

to Daniel's medical care.   Petitioner also argues that the legal

expenses are deductible as medical expenses under the origin of

claim doctrine.   Petitioner maintains that he commenced the legal

action to obtain medical care for his son, and thus the origin of

the legal expenses is the treatment of Daniel's disability.   The

dominant motivation test and the origin of claim doctrine cited

by petitioner are in some respects similar to the second part of

the Jacobs test, that the expenses would not have been incurred

for nonmedical reasons.

     In this case, petitioner might satisfy the second portion of

the Jacobs test that he would not have incurred the legal
                                - 18 -


expenses for nonmedical reasons.    Petitioner was prompted to send

Daniel to Eagle Hill in 1991 after his extensive hospitalization

and after psychological examinations of Daniel had made

petitioner aware, for the first time, of the severity of Daniel's

mental condition.   It is clear that Daniel attended Eagle Hill

because of his medical condition and that petitioner would not

have instituted legal action against the Portland School District

if Daniel did not have a severe learning disability.   However,

even accepting petitioner's contention that the legal expenses

would not have been incurred for nonmedical reasons, only legal

expenses that are essential to the rendering of medical treatment

at Eagle Hill are deductible.    Accordingly, petitioners are not

entitled to deduct the legal expenses incurred in the legal

proceedings against the school district under section 213.

     To reflect the foregoing and concessions,

                                     Decision will be entered

                                under Rule 155.
