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Federal Tax Research, Tenth Edition Page 6-1
CHAPTER 6
Thomson Reuters Checkpoint
DISCUSSION QUESTIONS
6-1. The function of commercial tax services is to facilitate efficient, effective, and comprehensive searches by
organizing primary and secondary tax law sources. They also provide editorial content not available
elsewhere.
Page 192
6-2. While practitioners can retrieve most primary tax sources at no cost, this free access does not translate into
more effective research. This is because there is a voluminous amount of information and this takes time to
sort, read, and comprehend, which can lead to information overload and inefficiency. All this information
must be managed; otherwise, using the Internet for tax research is not effective. Consequently, Internet
access to primary sources cannot substitute for a subscription to comprehensive tax services.
Page 192
6-3. The four primary ways to search in Checkpoint are: (1) keyword, (2) contents, (3) index and (4) citation. A
keyword search is similar to using a search engine on the Internet such as Bing or Google. One additional
step that distinguishes a Checkpoint search from a typical search is the selection of the databases from
which to search. Simply enter the key words and search the selected databases. A contents search is
similar to flipping through the table of contents in a printed book. Each of the databases in Checkpoint
(both primary and editorial) contains a table of contents that can be browsed through to identify the
“chapter” that contains the relevant information. An index search is similar to a contents search except
instead of the table of contents, the alphabetically organized index of the database can be browsed for the
topics of import. A citation search is used when the source document of importance is already known and
the researcher simply wants to go directly to that document.
Page 194
6-4. Annotated databases are organized by the numerical structure of Code. As a result, an annotated service
usually keys off a Code section. The contents of that that portion of an annotated database conveniently
contain the related regulations, explanations and annotations (which are cases and rulings that affect that
section). A topical service divides the tax law into its functional components and organizes these
components by topic.
Page 195
6-5. Student responses may vary as the left sidebar is used like an additional tab in the search process in
Checkpoint. The left sidebar provides the following: Practice Areas (p. 192), the results list, Document
List, Contents to reveal the Breadcrumb (p. 205), and has quick access to both index and citation search
from the search screen (p. 196 and p. 210). When one of the related information buttons is used, the list of
related documents appears in the left sidebar (p. 206). The Links to related information are also located in
the sidebar (p. 207). The relevant court cases to enter into the RIA Citator are presented in the left sidebar
(p. 215).
Page 192, 196, 205, 206, 207, 210, and 215
6-6. Checkpoint subscriptions may vary and the practice areas may also vary. The table below presents some of
the more common practice areas and a description
Federal Tax A number of databases covering issues related to

Page 7-2 SOLUTIONS MANUAL
federal taxation, including explanations, tools and

practice aids to assist the tax professional. It also
includes primary source material.
State & Local State tax primary and editorial information
organized by state.
Pension and Benefits Legislative and regulatory information, both
primary and editorial, related to pension and
benefits compliance areas such as ERISA, COBRA,
PBGC and other pension related issues.
Estate Planning Coverage of topics of interest to estate and financial
planning professionals.
International A variety of legal, editorial and news sources related
to international trade, tariffs, and regulations.
Accounting and Audit Various products and services covering issues
related to accounting and auditing.
Page 196
6-7. Legislative: Internal Revenue Code, various other statutes that affect tax, Public Laws that affect taxes,
archived Code, the US Constitution.
Administrative: Regulations (final proposed and temporary); Circular 230; Administrative rulings such as
Revenue Rulings and Revenue Procedures; IRS Notices, Announcements and Releases; Letter Rulings and
Memoranda.
Judicial: Trial level (Tax, District) court decisions, Appellate-level decision and Supreme Court decisions
that are tax related.
Page 197-199
6-8. Primary source materials form the backbone of tax law. Primary materials are the typically the source of
“substantial authority” relied upon by researchers. Editorial materials are those that are prepared by subject
area experts for the commercial tax service. Editorial materials are written to be more understandable and
often provide links to the primary materials when available. Often researchers will use editorial materials
to better understand the primary sources.
Page 196, 199
6-9. The three editorial services provided by Checkpoint are: Federal Tax Coordinator (FTC), United State Tax
Reporter (USTR), and the Federal Tax Handbook. The FTC is the most comprehensive editorial source
provided by Checkpoint. It is organized by topic and contains a thorough explanation of each topical area
and links to primary sources. The USTR is organized by Code section and within each Code section the
regulations, explanations, committee reports and annotations (court cases dealing with the Code section)
can be found adjacent to the section itself. For tax concepts that cover multiple Code sections, the USTR
would need to be examined in each Code section for a comprehensive review. The Federal Tax Handbook
is a topically organized editorial source that provides brief explanations of most significant area of tax law.
Because it is less comprehensive, it can be much quicker to use.
Page 199-201
6-10. Performing a keyword search for all the Checkpoint databases at once is likely to produce results that
contain too many irrelevant sources rending the search useless. A more directed search increases the
probability that the researcher will find the relevant tax law more quickly.
Pages 202-203
6-11. The footnotes found in the Checkpoint editorial materials provide a trail that the researcher can follow from
editorial materials back to the primary sources. Recall that this is critical since “substantial authority” to
support a tax position generally requires primary source authority.
Page 212
6-12. The Related Information buttons allow the researcher to quickly find related sources of tax law to the
document that currently find themselves in. By using the Related Information buttons, the researcher has
immediate access to explanations, primary sources, regulations and many other documents that can help the
researcher understand the current document.
Pages 206, 208
6-13. A Terms & Connectors search lets you search for documents by specifying words and phrases that describe
your research question, along with specialized search connectors to filter and customize the search to get
more specific results. The Natural Language search method uses regular written language phrases to
generate search results.
Page 203
6-14. The Boolean connectors are:

&, AND – Finds results that contain both terms.
OR, | – Finds results that contain either term
NOT, ^ – Finds results that contain the first term but not the second term
The proximity connectors are:
/n – Finds results where the second terms is within n words of the first term
pre/# – Finds results where the second term is within # words of the first term
/s – Finds results where the terms are within 20 words of each other (any order)
pre/s – Finds results where the terms are within 20 words of each other (exact order)
/p – Finds results where the terms are within 50 words of each other (any order)
Pre/p – Finds results where the terms are within 50 words of each other (exact order)
atleast#() - Finds results where the terms appears at least # times
Wildcard characters
* - any character or number of characters can follow the string
? – any character can appear at that position in the string
- compound words that may or may not have the hyphen (e.g., e-mail, email, e mail)
# - disables automatic use of plural
Page 209
6-15. An index search benefits from the creation of the index which requires the tax meaning and context of the
words to be considered. For example, a keyword search finds every location that word is presented;
however an index will contextualize the word and provide subheadings under the key word to reduce the
number of irrelevant sources examined. In this way, the expertise of the individual that built the index is
utilized.
Page 210
6-16. A keyword search can be performed inside of an index search. This allows the researcher to advance
forward through the index by jumping from keyword to keyword using the Navigate by Keyword feature.
Page 212
6-17. A search for dependent results in any document with dependent or dependents. A search for “dependent”
provides the exact same result (since dependent is a single search term and not a phrase, adding quotes
results in no changes in the result). Using the wildcard version depend* expands the search to include
terms such as dependant, dependency and depending. Synonyms include child, juvenile, minor and ward.
Page 213
6-18. A contents search generally requires some experience or knowledge of the structure or organization of the
source of tax law to be searched. For example, the structure of the Federal Tax Coordinator is topical by broad
areas such as “income” and then varies across different types of entities (e.g., individual v. corporation). Some
pre-existing knowledge of the way the database is structured will prevent the researcher from having to drill down
into unrelated documents over and over again until the relevant source is found. In a similar way, a working
knowledge of the Code will assist the researcher in finding relevant tax materials using a contents search in an
annotated service such as the United States Tax Reporter.
Pages 213
6-19. A citation search is a quick way to find a specific tax law or ruling based on the citation of that law or
ruling. If for example, you are searching for a specific Code section, citation search may be the fastest way
to find that Code section – in Checkpoint, simply click Search by Citation and enter the citation. A citator,
on the other hand, allows the researcher to examine other cases or rulings that have been issued
subsequently to the document of interest that cite that document. This is used to help verify that the current
document is the most recent or prevailing law. Checkpoint uses RIA’s citator which can be accessed by
either using the Citator link from the document of interest or by finding the specific case or ruling citation
for which the analysis is required in the table of contents.
Page 205, 219
6-20. The precedential value of cases is its legal authority that considered when judges are writing opinions in
subsequent cases having similar facts or legal issues. The law attempts to maintain continuity in treatment
of similar issues so individuals can anticipate the application of the law to their own situations.
Page 218
6-21. The tax law changes daily due to new legislation, issuance of Regulations, administrative pronouncements,
and court cases. Since the tax law is constantly evolving, researchers must determine if subsequent events
have affected the legal standing of the sources upon which the tax solution relies. Checkpoint has the RIA
Citator to assist the researcher to examine any updates or changes to an area of tax law over a window of
time.
Page 219-220
6-22. A citator is a research tool that allows the tax researcher to both determine the history of a case and
evaluate the strength of its holdings. A citator may also facilitate locating cases more on point with the
client’s facts.
Pages 219-220
6-23. A cited case is the case that is being analyzed for its history or precedential value. It can also be referred to
as the main case. Citing cases are those cases which have made reference to the cited case. When one case
refers to another case, it cites the latter case. The name of the cited case and where it can be found is
referred to as a citation.
Page 219
6-24. A citator does not provide all types of information about a case or a ruling. Citators do not guide the
researcher to documents related to the case or ruling that do not specifically cite it nor do they indicate
when a case or ruling is no longer effective because of changes in the Code, unless the Code itself
specifically identifies the document or a subsequent document makes specific reference to the case being
superseded by the Code.
Page 219
6-25. An article found that is on-point with the tax issues allows the practitioner to use the author of the article as
a research associate, by capitalizing on the author’s expert judgments and references on the relevant topic
thereby saving hours of research time. The article’s references can lead the practitioner to the pertinent
primary tax sources. Researchers who ignore the tax periodicals might be accused, at best, of reinventing
the wheel and, at worst, of professional malpractice.
Page 225
6-26. Generally only primary sources of tax law, such as the Code, Regulations, or Revenue Rulings, are cited as
authority in professional tax research. Tax journals and newsletters are considered secondary sources of the
tax law. Traditionally, citing articles in professional tax research is limited to two situations: (1) If the
researcher is referring to the author's analysis and conclusions as stated in an article, (2) if the researcher
cannot find any controlling primary sources of law and a secondary source addresses the issue.
Pages 225
EXERCISES
The answers to the exercises are valid as of December, 2013. It is likely that there will be changes in the legal
services and the tax law after this manual is published. Further, it is likely that the services available to the students
will not be identical to the services available to the authors of this manual. Consequently, the student responses may
vary from those provided.
6-27. a. The RIA Checkpoint thesaurus alternatives for like-kind are: 1031, like kind, likeclass, and
likekind.
b. Expanding the Federal Tax Coordinator reveals the following subheadings: Analysis (FTC),
Checklists, Client Letters.
c. 1954.
d. The three points for accessing Current Legislation are: 1. Search Left sidebar: Legislation
Search; 2. Primary Source Materials: Current Pending/Enacted Legislation (RIA); 3. Legislation
(Editorial Analysis and Source Material).
6-28. a. Student responses will vary date of search.

b. The first two choices that are made when using the USTR Code Section are: 1. Choose the
USTR Tax Type (Income, Estate & Gift, and Excise) and 2. Choose Current or Repealed (Current
or Repealed).
c. The templates available in the Form/Line Finder are: Tax Year, Form Number, Form/Schedule
Line Number and Schedule
d. The “i-Tables” include: AFR Tables and IRS Valuation Tables, which includes Table B –
Interest for a term certain; Table R(2) – Two –life factors(other than CRUTs); Table S – Single
life factors; Table U(2) – Two-life factors (CRUTs)..
6-29. a. The templates for Estate Planning Practice Area are: Current Code, Final & Temporary
Regulations, Preambles to Final Regulations and Proposed Regulations. The templates for Payroll
Area are: Final & Temporary Regulations, and Proposed Regulations.
b. The oldest available General Council Memorandum available is from 1962.

c. The exact date is January 8, 1962.
d. The Date Range Search only applies to Federal cases. The oldest cases available are:
AFTR – 1860; TC & BTA – 1924; and TC & BTA Memos – 1928.
e. The 2 Revenue Rulings discussing §1250 are the following: 77-21 and 72-550.
6-30. a. Estimate your income tax for the upcoming year.

b. Using the Don’t Delay Your savings Tool with the following inputs: Years to wait = 5, Starting
amount =$0, Years = 30, Rate = 6% and constributions = $200, the difference is $59,935.
c. The 15 year term saves $23,529 in interest but will cost $304 extra per month.
d. Student responses will vary depending on the tax year that the research was performed. In 2013,
the marginal rate = 25%, the average rate = 10.76%.
6-31. a. The title of §178 is: Amortization of cost of acquiring a lease.

b. The Regulations issued on § §178are as follows:
Reg §1.178-1. Depreciation or amortization of improvements on leased property and cost of acquiring a
lease
Prop Reg §1.178-1. Depreciation or amortization of improvements on leased property and cost of acquiring
a lease
Reg §1.178-2. Related lessee and lessor
Reg §1.178-3. Reasonable certainty test.
c. §168
d. The FTC paragraph that furnishes an analysis of §178(a) is: L-6504
The Explanations paragraphs linked to all of §178 are: L-6504, L-7971, L-12501, and L-17028
e. The case can be found in annotations (e.g., Related Information btton for annotations) and is Kermit Eucker
et al. (1983) 81 TC 983.
6-32. a. The Checkpoint primary databases with indexes are: The Current Code, Final & Temporary
Regulations and Proposed Regulations. The Federal Tax Coordinator, USTR and Federal tax
handbook also have indexes but they are not primary materials
b. The FTC paragraphs discussing the excise tax for racing tires are W-2605 and W-2606.
c. Rev Rul 57-218, 1957-1 CB 369.
d. §4131
e. August 5, 1997
f. According to the house report (COMREP ¶41,311.03): Amounts equal to net revenues from this
excise tax are deposited in the Vaccine Injury Compensation Trust Fund to finance compensation
awards under the Federal Vaccine Injury Compensation Program for individuals who suffer
certain injuries following administration of the taxable vaccines. This program provides a substitute
Federal, “no fault” insurance system for the State-law tort and private liability insurance systems otherwise
applicable to vaccine manufacturers. All persons immunized after September 30, 1998, with covered
vaccines must pursue compensation under this Federal program before bringing civil tort actions under
State law.
6-33. a. The FTC paragraph introducing expensing advanced mine safety equipment is ¶L-9940.
b. The FTC paragraph that defines advanced mine safety equipment is ¶L-9943.
c. The USTR paragraph that discusses this topic is ¶EXP179E4
d. The primary source is cited by both the FTR and USTR as the source is §179E
e. Not very detailed. It simply states “Taxpayers can elect to expense 50% of the cost of qualified
advanced mine safety equipment property placed in service after Dec. 20, 2006 and before 2014.”
6-34. a. The directions for line 36 on 2012 Form 1040 are found in paragraph number ¶142; Total
Adjustments
b. EXP ¶1794.02 discusses what qualified real property is for purposes of §179.
c. Committee Reports, Regulations, Explanations, Annotations and Advanced Annotations are all
presented.
d. The Supreme Court cases issued in 2012 with Scalia as the judge are:
U.S. v. Home Concrete & Supply, LLC et al. 132 S. Ct. 1836 4/25/2012.
Nat’l Fed. Of Independent Business, et al. v Sebelius 132 S. Ct. 2566 6/28/2012
6-35. a. The practice areas will vary depending on the library’s subscriptions. Possible responses are:
Federal, State & Local, Estate Planning, Pension & Benefits, International, Payroll, Accounting,
Audit & Corporate Finance, All Practice Areas.
b. The materials offered in the Archive Materials for 2011 are: Annotations, Explanations, Federal
Tax Handbook, and Internal Revenue Code History.
c. It would be useful to use the archive materials if the practitioner had a client with a return audited
for a prior year or a client that had not filed returns for a particular previous year.
d. The repealed §341 covered collapsible corporations and was repealed by §302(e)(4)(A) of P.L.
108-27, effective for tax years beginning after 12/31/2002.
6-36. a. Student responses will vary. Possible responses include: Accelerated Debt Payoff, Consolidation
Loan Investment, Credit Card Optimizer, Credit Card Pay Off, How Much Do You Owe?,
Personal Debt Consolidation, Rolldown Your Credit Card Debt!
b. From the Training and Support area on the Home tab or from the Help button at the top of the
screen.
c. a nickname for a transaction in which a partner contributes an asset which is combined and
managed with the other assets of the partnership, followed by a distribution of another asset out of
the partnership to the partner.
6-37. a. McCarthy et al v. US with parallel citations of 807 F.2d 1306 and 87-1 USTC ¶9101.
b. US Court of Appeals, 6th Circuit
c. The court examined the amortization of broadcast rights and the amortization of certain
fees incurred in acquiring a business
d. The two types of fees are the legal fees associated with the loan to purchase the Yankees
and the fees incurred to organize the partnership that owned the Yankees. The loan fees
were permitted as amortizable over the life of the loan. The partnership organization
costs are considered part of the basis of the Yankees and must be capitalized.
e. McCarthy has not been cited in the RIA Citator. It modifies its previous judicial history
– the District Court case on the same issues (56 AFTR 2d 85-5612).
f. In 2004, Sec. 886(a) of PL 108-357 amended §197(e)(6) thus opening the door for the
amortization of broadcast rights for sports franchises.
6-38. a. The citation for the case is 106 AFTR 2d 2010-7370.
b. There are four cases listed by the RIA Citator (as of 2013 – this may change if the case
continues through the system). Of these, only 1 (107 AFTR 2d 2011-402) deals with the
self-incrimination issued discussed in the 2010 case.
6-39. a. Parker v. Comm. Is 79 AFTR 2d 97-2889 or 117 F3d 785 or 97-1 USTC ¶50480.
b. Only once, in Marino 93 AFTR 2d 2004-906.
c. The RIA Citator lists only one case: Stuart M Smith Jr. TC Memo 2000-244. Strangely, there is
no link for that case.
6-40. a. The citator covers Revenue Procedures, Tax Court Memoranda, Announcements and Notices , all
of which may have 2009-47.
b. The title of Rev. Proc. 2009-47 is High-low per diem method for lodging meal and incidental
expenses
c. This Procedure superseded Notice 2008-59.
d. This Procedure was modified by Rev. Proc. 2010-39.
e. Rev. Proc. 2010-39 is not longer in effect and was superseded by Rev. Proc 2011-47. This this
Revenue Procedure relates to a changing per diem amount, it is likely to be superseded each year.
6-41. a. The citation for the Gwendolyn A. Ewing case is 118 TC 494 and it addresses §6015, innocent
spouse relief, jurisdiction of the Tax Court for equity relief.
b. The original Gwendolyn A. Ewing, case (118 TC 494) is the same case as Gwendolyn A. Ewing,
122 TC 32. Upon appeal, the Tax Court findings were reversed in Gwendolyn A. Ewing, 97 AFTR
2d 2006-1224 , 439 F3d 1009 (CA9, 2/28/2006). Lastly, the original Tax Court decision was
overruled by legislation as discussed in David Bruce Billings (127 TC 7).
c. The Gwendolyn A. Ewing case is annotated in the United States Tax Reporter at: ¶60,155.01(5),
¶60,155.04(5), and ¶60,155.04(10). To find this information, use the related information links for
Annotations from the case.
d. The Haag case favorably discusses the Ewing case at 94 AFTR 2d 2004-6667.
6-42. a. Corn Products can be cited as 47 AFTR 1789, 350 US 46, 76 S.Ct. 20, and 55-2 USTC ¶9746.
b. Using the Filter by US option, 9 Supreme Court cases have cited Corn Products.
c. The court cites Bittker, Federal Taxation of Income, Estates and Gifts
d. Excepting Alderson, virtually all the cases citing Arkansas Best follow or cite favorably the
decision. As a result, the ruling would appear to remain valid.
e. The tax law was changed first through the regulations and then through the Code itself rendering
application of Arkansas Best and Corn Products to a reduced number of situations.
6-43. a. The tax years considered in Deluxe Check Printers, Inc. (15 Cl Ct 175) are 1976, 1977, and 1978.
Upon appeal, the Federal Circuit Court of Appeals (64 AFTR 2d 89-5327; 885 F2d 848) reversed
the liability and affirmed as to the interest payment.
b. The doctrine that is the basis for part B. of the Court of Federal Claims case is the Doctrine of
Variance and is discussed at T-6802 & T-6802.1in the FTC.
c. The cases and rulings distinguish themselves from the Deluxe Check Printers Court of Federal
Claims decision are as follows: BCS Financial Corp v. U.S., 78 AFTR 2d 96-5766, 930 F Supp
1279; and Sierra Pacific Resources and Subs. v. U.S., 90 AFTR 2d 2002-7511 , 56 Fed Cl 376;
PLR 9643001 & 9702002 (Listed as PLRs in the citator but are actually TAMs).
d. The number of cases cited by the Deluxe Check Printers decision could be from 21 to 23
depending if the students count every case or leave out cases with the same name (Rockefeller,
Winthrop) and the Deluxe Check Printers. This seems like a reasonable number for a case to cite.
6-44. a. The complete citation is Rev Rul 2001-60, 2001-2 CB 587.

b. Rev Rul 2001-60 modified and amplified Rev Proc 99-49 (199-2 CB 725) and Modified and
superseded Rev Rul 55-290 (1955-1 CB 320).
c. The documents that favorably cite Rev Rul 2001-60 are: Rev Proc 2002-1 (2002-1 CB 41), Rev
Proc 2002-3 (2002-1 CB 125), Rev Proc 2002-9 (2002-1 CB 353), and 2011-14 (2011-4 IRB
330).
d. Rev Rul 2001-60 discusses capital expenditures – improvements to business or property – golf
course greens.
RESEARCH CASES
The solutions to the research cases are valid as of December 2013. It is likely that there will be changes in the Code,
Regulations, Administrative Pronouncements, and Case law after this manual is published. Further, it is likely that
the services available to the students will not be identical to those available to the authors of this manual. All
possible citations are not included; only a sample of the citations most likely to be reported by students is presented.
Consequently, the students’ responses may vary from those listed for each question.
The information provided in the parentheses at the end of each solution is a search path that could be utilized to find
the answer to the research case. This is not the only research path; it is merely one of many possible methods.
6-45. The IRS can collect from Frances the $150,000 towards Beatrice’s unpaid taxes. Since the transfer of the
home was for a token value ($1,000), the transfer was constructively fraudulent because the IRS claim for
unpaid taxes arose before the transfer and Beatrice was insolvent at the time of the transfer. (FTC ¶9105
and 9106 – Keywords: family transfer, IRS, lien, unpaid, taxes, insolvent).
Code §6901
Case Rubenstein, 134 TC No. 13 (2010)
6-46. In determining whether the 6-year period for auditing applies there must be an omission from gross income
that is greater than 25 percent. In determining gross income no deductions are made. Thus, the product
returns does not reduce the sales. Since the actual gross sales were $100,000 and they reported $80,000, the
omission was only 20 percent and the IRS cannot audit five years ago. (USTR Indexes: Omission from
gross income, gross income defined)
Code §6501(a) & (e)
Ruling CCA 201023053
6-47. Expenses for in vitro fertilization and amounts paid to carries of the fertilized eggs are not deductible as
medical expenses for males who are capable of reproducing without this procedure. If there is a medical
reason for the procedure it may be deductible. (§213 Medical and Dental Expenses, FTC Index Medical
Expenses, egg donor fees and expenses (¶K-2110. Keywords: medical expense fertility treatment).
Code §213
Cases Magdain, 105 AFTR 2d 2010-442 (Note: Some RIA links for this citation go to Morgan)
Denied certiorari by US Supreme Court 2010 and cited favorably by Longino TC Memo
2013-723
Ruling PLR 200318017
6-48 To: Files
From: Student
Date: Today’s date
Subject Deduction for Tuition and Travel for Special Boarding School
Facts:
Ozzie and Sherrie Johnson enrolled their son Jack in Lonely Bridge, a special school for troubled teens
where therapy is provided. In 2012, the Johnson’s paid tuition of $48,000. In addition, in order to attend
mandatory parent therapy sessions at the school, the Johnson’s incurred travel costs associated with airfare,
rental cars and lodging of $12,000 in 2013. Lastly, the Johnson’s were required to keep a personal account
at the school to cover expenses associated with therapy. During Jack’s tenure at Lonely Bridge, the
Johnson’s were under the impression that the program at Lonely Bridge was an accredited program for
education and drug-addiction related therapy.
Issue:
Can the Johnson’s deduct the cost of tuition, travel and the personal account as medical expenses?
Analysis:
The deduction for medical expenses is covered under §213 which permits a deduction for expenses paid for
medical care for the taxpayer, spouse or dependents. Under §213(d)(1), medical care is defined as amounts
paid for “the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting
any structure or function of the body [and] for transportation primarily for and essential to medical care.”
Under §213(d)(2), “amounts paid for lodging while away from home primarily for and essential to medical
care” if “the medical care referred to…is provided by a physician in a licensed hospital (or in a medical
care facility which is related to, or the equivalent of, a licensed hospital) shall be deductible as medical
costs,” but limited to $50 per person per night.
Reg. §1.213-1(e)(1)(ii) states that “an expenditure which is merely beneficial to the general health of an
individual, such as an expenditure for a vacation, is not an expenditure for medical care.” Furthermore, in
Reg. §1,213-1(e)(1)(v), the issue of a deduction for the costs of having an individual in an institution
because of his condition are considered by the Treasury. The regulations states that the expenses for care in
an institution which is regularly engaged in providing medical care or services are deductible; however, the
regulations also state that “where an individual is in an institution, and his conditions is such that the
availability of medical care in such institution is not a principal reason for his presence there, only the part
of the cost of care in the institution as is attributable to medical care.”
Reg. §1.213-1(e)(1)(v)(a)) further states:
While ordinary education is not medical care, the cost of medical care includes the cost of
attending a special school for a mentally or physically handicapped individual, if his condition is
such that the resources of the institution for alleviating such mental or physical handicap are a
principal reason for his presence there.
and
In such a case, the cost of attending such a special school will include the cost of meals and
lodging, if supplied, and the cost of ordinary education furnished which is incidental to the special
services furnished by the school. Thus, the cost of medical care includes the cost of attending a
special school designed to compensate for or overcome a physical handicap, in order to qualify the
individual for future normal education or for normal living, such as a school for the teaching of
braille or lip reading. Similarly, the cost of care and supervision, or of treatment and training, of a
mentally retarded or physically handicapped individual at an institution is within the meaning of
the term "medical care."
Two related Revenue Rulings have been issued on the topic of institutional care for drugs and alcohol.
Rev. Rul. 72-226 states that “amounts actually paid by the taxpayer to maintain his dependent in a
therapeutic center for drug addicts including the cost of the dependent’s meals and lodging at the center
which were furnished as a necessary incident to his treatment, are expenses for medical care.” Rev. Rul.
73-325 holds that “amounts paid by the taxpayer to the therapeutic center for alcoholism, including the cost
of the taxpayer’s meals and lodging at the center which are furnished as a necessary incident to his
treatment, are expenses for medical care.”
Rev. Rul. 63-91 states that,
amounts paid for medical services rendered by practitioners, such as chiropractors,

psychotherapists, and others rendering similar type services, constitute expenses for “medical
care”…even though the practitioners who perform the services are not required by law to be, or
are not (even though required by law) licensed, certified, or otherwise qualified to perform such
services.
The ruling also cites Wendell (12 TC 161, 1949) in stating that “the determination of what is medical care
depends on the nature of the services rendered, not on the experience, qualifications, or title of the person
rendering them.” Rev. Rul. 63-91 also states
The Code and the regulations do not require a taxpayer to ascertain whether a practitioner is
qualified, is authorized under state law, or is licensed to practice, before obtaining his services or
claiming a medical expense deduction. Where it can be shown that an individual paid an amount
for a purpose defined in the Code as “medical care,” such amount qualifies as a medical expense.
A 1992 Tax Court case, Urbauer (63 TCM 2492, 1992), the court held that the taxpayers could “deduct
amounts spent in connection with the treatment of their son for behavioral and drug problems at a college-
preparatory school that addressed the educational and emotional needs of its students. Since the son
attended the school principally to benefit from its medical program and the costs of his education were
incidental to the special services provided by the school, his enrollment costs were deductible as medical
expenses.” In addition, the court held that since his personal account was tantamount to his continued
attendance at the institution, those expenses were also deductible. However, the court also held in Urbauer
that the cost of lodging was not deductible since the travel was for care that was not provided by a
physician in a licensed hospital as required under §213(d)(2).
Conclusion:
In the Johnson’s case, the tuition for John at Lonely Bridge meets the standard to be treated as “medical
care” under §213. The definition of medical care under Reg. 1.213-1 as including John’s therapy at Lonely
Bridge is also supported by Rev. Rul. 72-226 and Rev. Rul. 73-325. Lastly, the facts in Urbauer closely
resemble the facts in the instant case, making it difficult to distinguish between the two. Under Rev. Rul.
63-91, it does not appear relevant that Lonely Bridge was not acting in good faith with respect to
qualifications or credentials. The Johnson’s travel costs are deductible under §213, however, any part of
the travel costs related to lodging are not deductible by the Johnson’s as Reg. 1.213-1 and Urbauer make it
clear that such costs are not associated with services provided by a physician in a licensed hospital. Lastly,
the court in Urbauer held that the personal account expenses are deductible due to the close association
those costs have with the rendering of medical services at the school.
6-49. For tax purposes, the term “home” has a specific meaning – the taxpayer's principal place of employment;
not the home that the taxpayers considers their personal residence. When taxpayers choose not to live some
place other than where their employment is, this is a personal choice, thus, those expenditures are not
ordinary and necessary business expenses. There is an exception when the taxpayer is away from the
personal residence for business on a temporary basis. (USTR EXP ¶1624.125 – Keywords: “away from
home” residence)
Code §162(a)(2)
Cases Many to choose from but most refer back to:

Kroll 49 TC 557
Six 71-2 USTC ¶9694, 450 F2d 66
Cerny, 62 TC Memo 1991-526
Minick TC Memo 2010-12
Ruling Rev Rul 73-529, 1973-2 CB 37
6-50. Generally, emotional distress is not a physical injury or illness for the damages exclusion under the Code
even when there are physical symptoms such as headaches high blood pressure or sleeping disorders.
However, damages are excluded when there is a physical injury or illness exacerbated a physical illness.
Fibromyalgia is a disorder meeting the definition of a physical injury. Depression; however, was found to
be too similar to the characteristics of emotional distress that is specifically excluded from physical injury.
(USTR - ¶1045.02(30) Settlements )
Code §104 (a)(2)
Regulations Reg. §1.104-1(c)
Cases Domeny, TC Memo 2010-9

Blackwood, TC Memo 2012-190
Reports H Rept No. 104-586 (PL 104-188) p. 144
6-51. Amounts diverted from political campaigns for personal use are gross income to the candidate in the year
diverted. (FTC Index Gross Income, political contributions - keywords: funds personal use political
campaign)
Code §§61, 527
Regulations Reg. §1.527-5(a)(1)
Rulings FSA 0887

Rev. Rul. 71-449
Rev. Rul. 74-22
6-52. Alimony payments are deductible by the payor and taxable to the recipient. Alimony is defined simply as
amounts paid to a spouse or former spouse under a divorce or separation agreement. Child support is not
deductible to the payor and not taxable to the recipient. If payment is less than the full amount required by
the divorce decree, the payments are first treated as child support and the remainder as alimony. Therefore,
$1,000 of each payment is considered alimony. (USTR Index Minors, Support Payments, Less than
periodic - Keywords: “child support” alimony, ¶715.16(5)
Code §71(c)(3)
Regulations Reg. §1.71-1(e)
Cases Blyth 21 TC 275 (1953) acq
6-53. To: Files
From: Student
Date: Today’s date
Subject Allocation between Alimony and Child Support
Facts:
Tom and Katie were divorced in 2011. The divorce decree stipulates that Tom will pay child support (they
had a daughter Suri) of $2,000 per month and alimony of $3,000 per month. In 2013, Suri came into a
large amount of wealth through her marriage and the child support payments were no longer necessary.
There is written documentation (e-mails) between Suri and Tom to that effect; however, Katie’s assent to
the reduction in child support is oral. Tom continued to pay only the alimony as required under the decree.
Issue:
How much alimony can Tom deduct?
Analysis:
Under §71, gross income includes amounts received as alimony. In a symmetric fashion, §215 allows a
deduction for amounts paid for alimony. The term “alimony” is defined in §71(b) as a payment in cash
received by a spouse under a divorce or separation agreement. A divorce or separation instrument is
defined in §71(b)(2) as “a decree of divorce or separation maintenance or a written instrument incident to
such a decree, a written separation agreement, or a decree…requiring a spouse to make payments for the
support or maintenance of the other spouse.
Frequently, in addition to alimony, divorce decrees also call for payments made to the custodial parent to
support children. Under §71(c), a taxpayer may not treat a payment or any part of a payment for child
support as alimony. Under §71(c)(2) if the divorce or separation instrument calls for any reductions in
child support due to the occurrence of an event relating to the child (e.g., attaining a certain age, marriage,
leaving school, etc.), then the amount of that reduction for any payment prior to the contingent event
occurring, shall also be treated as child support. Lastly, with regards to child support payments, §71(c)(3)
states that “if any payment is less than the amount specified in the instrument, then so much of such
payment as does not exceed the sum payable for support shall be considered a payment for such support.”
Reg. §1.71-1(e) provides an example of the intent of §71(c)(3).
For example, if the husband is by terms of the decree, instrument, or agreement required to pay
$200 a month to his divorced wife, $100 of which is designated by the decree, instrument, or
agreement to be for the support of their minor children, and the husband pays only $150 to his
wife, $100 is nevertheless considered to be a payment by the husband for the support of his
children.
The Tax Court in Blyth (21 TC 31 (1953)) examined the ordering rules in §71(c)(3) which dictate that
anytime the combined alimony and child support payments are less than the amounts per the divorce
instrument, payments are first characterized as child support (note that Blyth deals with the IRC of 1954
and §71’s predecessor, §22). In Blyth, the divorce agreement called for $100 in alimony and $50 in child
support per month. Due to a change in circumstances, the husband reduced the child support to $0 per
month but maintained the $100 alimony. The court held that $50 of his “alimony” payment represents the
child support and that alimony was therefore reduced to only $50 per month also. In Blyth, the divorce
decree was not modified in writing and the child support adjustment appears to have been unilaterally
decided by the husband. This lack of agreement on the wife’s part is made evident by the financial
settlement between husband and wife for unpaid child support during the period in question.
In Hazam (79 TCM 1597; TC Memo 2000-71, (2000)), an ex-husband altered the terms of child support
alimony payments to his ex-wife through an oral agreement. In Hazam, the ex-wife reduced the income
from alimony she reported each year by the amount of the child support prescribed in the divorce
instrument (i.e., she made the §71(c)(3) adjustment herself) while the husband deducted the alimony in full.
The divorce instrument in Hazam stated that the child support amounts were, in fact, subject to change
based on a change in circumstances; however, the instrument also stated that the agreement was subject to
modification only if both parties agreed to such change in writing.
In Blair (56 TCM 923; TC Memo 1988-581 (1988)), the Tax Court examined another allocation of
payments between alimony and child support in which the wife orally agreed to the adjustment in child
support but again, such modification of the original decree was not made in writing. In Blair the court is
not ambiguous in its interpretation of §71 and finds that even in cases where the former spouse agrees to
the reduction in child support, without a commensurate written modification of the divorce agreement, the
oral modification will not be sustained for tax treatment.
Conclusion:
Tom and Katie modified the original terms of the divorce decree but did so only orally. The rules under
§71(c)(3) and the regulations thereunder are clear that in situations where the combined alimony and child
support payments are less than the amount stipulated by the divorce instrument, payments are first
characterized as child support. The Tax Court has repeatedly (Blyth, Hazam and Blair) held that in such
situations, irrespective of the intent of both parties to agree or disagree with the modification of the divorce
instrument, if such modification is not reduced to writing, no such modification will be recognized under
tax law. Tom’s documentation with Suri would not appear to qualify as a written modification to the
divorce agreement as it is clear that Katie (the counterparty in the original divorce agreement) was not part
of these written documents and in no way agreed to the changes in writing, in spite of seemingly agreeing
with the changes.
In addition, although the adjustment to child support occurred as a result of a contingent event relating to
the child (Suri’s marriage and accretion of vast wealth), such contingency was not part of the divorce
agreement and thus does not affect the amount of alimony under §71(c)(2). Tom’s payment of $3,000 per
month subsequent to the modification of child support must be recharacterized to the extent of $2,000 as
child support. As stated in Blair, “had [the husband] gone back to the divorce court for a modification of
the decree, the result in this case may well have been different.”
6-54 Child care costs include all expenses for household services while care is provided for qualifying
individuals. The care needn't be provided in the least expensive available way. Therefore, all items paid by
Rodriguez qualify for the credit, including the employee-FICA-share and the vacation, if the vacation is
part of the nanny’s compensation package. (FTC ¶4322 – Keywords: household services employment
related expense child care credit)
Code §§21(b);
Regulations Reg. §1.21-1(d)
Cases Perry, 92 TC 470 (1989)
Rulings Rev Rul 74-176, 1974-1 CB 68
6-55. A meal provided to an employee can be excluded from gross income in at least 3 ways: (1) as a no
additional cost service, (2) as a qualified employee discount, (3) as a de minimis fringe or (4) as a meal
provided for the convenience of the employer. The first 3 are derived from §132 and the last from §119.
Since Kenny is receiving food, unless the Burger Pitt product cost is insignificant as compared to the labor
cost (which seems unlikely), this is not a no-cost service. A qualified employee discount can be excluded
from income if (for the sale of property), the discount does not exceed the gross profit when sold to
customers. Basically, if the Burget Pitt charges Kenny less than cost, the portion of the discount below cost
is includable in income. A de minimis fringe is one that the value of which is so small as to make
accounting for it unreasonable. In this case, for example, perhaps a serving of French fries provided
occasionally to Kenny seems to fit de minimis; however since The Pitt charges Kenny for 40% of the cost,
the business can obviously track the amount of the discount and thus it is not likely to qualify as de
minimis. Under §119, meals provided to wait staff can be excluded from income if (1) the meals are
furnished on the business premises and (2) the meals are for the convenience of the employer. When the
employee is required to pay for the meal (as in Kenny’s case) and the employee may or may not purchase
the meal, the meal will not be considered for the convenience of the employer under Reg. §1.119-1(a)(3).
Unless Kenny can establish that the meals provided on his working days are for the convenience of the
Burger Pitt (e.g., there are no other nearby lunch facilities, the manager prefers the staff to limit lunch to a
fairly short period since lunch is also busy), the discount is not excludable under §119. Unless the
employee discount exemption can apply, the discount provided to Kenny on days he is not working is
almost certainly taxable. (FTC and USTR – Keywords: employee discount meal)
Code §§61, 119, 132
Regulations Reg §1.61-21(a)

Reg §1.119-1
Reg §1.132-2
Reg §1.132-3(e)
Reg §1.132-7
6-56. a & b. The executor or administrator of the decedent's estate signs and files the final income tax
return for the decedent. If no executor or administrator has been appointed, the final
return must be signed and filed by the person charged with the decedent's property. If the
decedent was married at the time of death, the surviving spouse may file the last return.
The last return in this situation can be filed as married filing jointly.
c. After the death of a taxpayer, the executor or administrator of the taxpayer's estate may
recover a refund. Form 1310 is used to claim the refund. The signature on the claim by
one of two or more co-executors is acceptable. If the last return is filed married filing
jointly with the surviving spouse, the spouse will collect the refund.
Code §§451, 6012(b)
Regulations Reg. §1.451-1(b)(1)

Reg. §1.6012-3(b)(1)
Cases Fairbanks, 128 F2d 537 (1942)

Wells Fargo Bank & Union Trust Co, 225 F2d 298 (1955)
Ruling Chief Counsel Advice 201012033; 200010046
6-57. Sick pay is taxable as salary whereas worker’s compensation is excludable from income. Therefore, Fifi
should choose the $850 in worker’s compensation as the taxes on the sick leave are likely to reduce its after
tax amount below $850. Fifi must follow the labels placed on the payments and cannot select the $1,000
and then treat $850 of it as workers compensation. ( FTC ¶H-1360 et seq. Keywords workers compensation
sickness)
Code §104
Regulations Reg. §1.104-1(b)
Cases Wham, TC Memo 1985-625

Fotis, TC Memo 1989-287
Wallace, 81 AFTR 2d 98-1470
Barlett, TC Memo 1998-15
Rulings Rev. Rul. 83-77, 1983-1 CB 37

PLR 8336005
6-58. The couple can likely claim a casualty loss for the accidental loss of the ring because the loss resulted from
an identifiable event that was sudden, unexpected, and unusual. The Keenan case, which is exactly like this
situation indicates there is no casualty. However, the case is old (1950) and it is a District Court case. The
Tax Court allowed a similar casualty in Carpenter and White. IRS has indicated that it will follow White.
Code §165(c)(3)
Cases Keenan v Bowers, 91 F Supp 771 (1950 DC SC) (not allowed)

Carpenter, TC Memo 1966-228 (allowed)
White, 48 TC 430 (1967), acq (allowed)
Kielts, TC Memo 1981-329 (allowed)
Rulings Rev. Rul. 72-592, 1972-2 CB 101 (IRS will follow White)
IRS Pub Publication # 547 (2012) p. 3
6-59. Under Donnelly, the clothes are not likely to be deductible. The second circuit court created a three part test
for the deduction of clothing as a business expense: (1) the clothing is of a type specifically required as a
condition of employment, (2) it is not adaptable to general usage as ordinary clothing and (3) it is not so
worn. That said, Louella’s clothing requirements are somewhat unique from, for example, those examined
in Pevsner (the appellate case). Louella was not just required to wear a type of clothing but also the most
current fashions “whether they have met with commercial success or not.” Thus, it is possible that
Louella’s clothing choices were not ultimately accepted into mainstream fashion and thus would not be
“adaptable to general use.” Also, Louella was restricted to a certain color (or shade thereof) and may
therefore claim that this also lessen the likelihood that these clothes are adaptable for general use.
Code §162
Regulation §1.162-1
Cases Auerbacher, TC Memo 1956-218 Donnelly, 262 F2d 411

Pevsner, 80-2 USTC ¶9732 Gerres, TC Memo 1986-573

Popov, TC Memo 1998-374 Bernardo, TC Memo 2004-199

Rev. Rul. 70-474, 1970-2 CB 34
6-60. The Service has ruled that expenses incurred for local transportation between the taxpayer’s residence and
the place where the charitable services are rendered are deductible, provided they are “directly connected
with and solely attributable to the rendition of such services.” The deductible amount for a taxpayer
performing volunteer services is determined on the basis of actual expenses, or the taxpayer may use a
standard rate per mile for automobile transportation. However, the traveling expenses between a taxpayer's
home and a place of worship, and the travel expenses related to attending religious functions, are personal,
and aren't deductible as charitable contributions. (RIA, FTC – Index: Charitable Contribution, Ctrl F:
transportation; K-3614;)
Code §170
Regulations Reg. §1.170A-1(g)
Cases Tokh, TC Memo 2001-45
6-61. Phil’s educational expenses may be deductible, assuming he is sufficiently established in his trade or
business and the education is to maintain or improve skills required by Phil in his present employment or
the education is required by his employer or profession. The miscellaneous itemized deductible costs would
include tuition, books, transportation from work directly to SU, and other out-of-pocket items, subject to
the AGI 2% floor. However, to the extent that the courses taken are not related to his present employment,
the costs associated with those courses would not be deductible as itemized miscellaneous.
Phil would qualify for the Lifetime Learning credit with respect to the tuition and fees (subject to AGI
phaseout limitations). The Lifetime Learning credit is available for any courses at an eligible higher
educational institution. The FOR AGI deduction under §222 is to expire for years beginning after
12/31/2013. Since this is a graduate program (MBA), Phil would not qualify for the Hope (AOTC) Credit.
(RIA ,USTR – Table of Contents, Determination of tax Liability, Nonrefundable personal Credits, §25A;
Computation of Taxable Income, Additional itemized deductions, §222; Deductions for Individuals;
Annotations for §162, Keywords: education maintaining skills)
Code §§25A, 162, 222(e)
Regulations Regs. §§1.162-5(a), 1.25A-2(d)
Cases Sherman, TC Memo 1977-301

Smith, Ronald T, TC Memo 1981-149
Rulings Notice 97-60, 1997-2 CB 310
6-62. Frank can obtain “innocent spouse” relief if he can establish that he had no knowledge of the under-
statement from the illegal activities and did not benefit from the activities by living beyond the income that
he believed he and Sharon made. Assuming Frank is able to meet the elements for “innocent spouse” relief,
he should be able to fend off the IRS charge and escape liability to pay tax on the $50,000. There are so
many cases on this topic that students may find applicable cases that are not listed below (RIA, FTC –
Keywords: “innocent spouse” illegal; V-8523)
Code §§6015(b)(1)
Regulations Reg §1.6015-2
Cases Krafsky, TC Memo 1991-256

Schmitz, TC Memo 1988-168
Alvarez, TC Memo 1986-581
Whitten, TC Memo 1980-245
Grosso, TC Memo 1980-186
6-63. The income from the sale of blood is taxable. Professional blood donation (donating on a regular basis) is
business; it is considered the sale of tangible product. Therefore, Maria has ordinary income from the sale
of her blood and can deduct the costs of transportation to the hospital (transporting her product) and the
vitamins and other pills she takes to produce her quality product. No depreciation of the human body is
allowed. (RIA, FTC – Keywords: blood expenses, J-1420; Keywords: Blood expenses, L- 4237)
Code §§61, 162
Cases Lary,787 F2d 1538 (1986)

Green, 74 TC 1229 (1980)
Garber, 589 F.2d 843 (1979)
Rulings PLR 8814010
6-64. Chang may take a deduction for the professional journal as it is related to his employment. The $3,000
subscription cost is currently deductible as a cash basis taxpayer unless it will cause a distortion of income.
If distortion occurs, it must pro-rated. (RIA, USTR – Table of Contents, §162, Keywords: subscription
¶1624.081, 1624.195)
Code §§162, 461
Regulations Reg. §1.162-6

PLR 8124101
IR 86-169 (12/12/1986)
6-65. This solution assumes that other Code requirements are met such as having receipts for the expenses. For
years before 2014, private and public elementary and secondary educators (K through 12) are allowed a
FOR AGI deduction for up to $250 of school supplies. Any excess would be treated as an unreimbursed
employee expense. In this case, Jamie would deduct the amount in excess of $250 as an itemized deduction
subject to the 2% limitation. Jamie would also be able to deduct the mileage allowance for the trip to the
educational store. (RIA, FTC – Keywords: “Educator Expense”; A-2611.2 and .3)
Code §§62(a)(2)(D); 62(d); 162
Rulings IR 2005-82, 8/16/2005

IR 2006-195, 12/22/2006
IR 2007-158, 9/11/2007
6-66. Ted is allowed the workers compensation exclusion on the amount he receives from the city. (RIA, FRC –
Indexes: worker’s compensation; Ctrl F: survivor benefits; H-1359)
Code §104
Regulation Reg. §1.104-1(b)


Rev. Rul. 72-291, 1972-1 CB 36
6-67. Amounts paid by Peggy for the smoking cessation program and for prescription drugs to alleviate nicotine
withdrawal are deductible as medical expenses. Scientific evidence has established that nicotine is
addictive and that smoking is detrimental to one's health. However, over-the-counter treatments such as
nicotine patches and chewing gum are not deductible because they do not require a prescription, which is
necessary to qualify for deductibility. (FTC – Table of Contents: Deductions: Taxes, Interest, Charitable,
Medical, Others, Keyword: smoking; ¶K-2117, K-2137)
Code §§213, 213(b)

Rev. Rul. 2003-58, 2003-1 CB 959
IR 1999-55, 6/11/1999
6-68. The seller cannot deduct the points in the current year as interest, as there is no debt to which the points
relate. However, buyers may claim a tax deduction for points paid in connection with the purchase of a
principal residence even if the seller of the property pays the points. Under this rule, the seller is treated as
having paid the amount of the points to the buyer who, in turn, is treated as having used that cash to pay the
points charged by the lender. The amount of the seller-paid points is subtracted from the purchase price in
computing the basis of the residence. (RIA, FTC – Table of Contents: Chapter K, Keyword: points paid
seller K-5026, K-5027 K-5179, K-5178)
Code §§163, 461(g)(2)
Ruling Rev. Proc. 94-27, 94-1 CB 613

Rev. Rul. 69-188, 69-1 CB 54
Case Williams, TC Memo 1966-143
6-69. The Bed and Breakfast activities qualify as a rental activity. Therefore, they are subject to the vacation
home and passive activity rules. (RIA, FTC – Keywords: “bed and breakfast” allowable deductions; M-
6048)
Code §§162, 280A
Rulings PLR 8732002 and 8009013,
Cases Buchholz, TC Memo 1983-378

Anderson TC Memo 2006-33
Razavi, 74 F3d 125 (1996)
6-70. The income shift will be recognized if the Carline improved Leon’s skills or her promotional activities
benefited Leon’s career. Carline must substantiate that the arrangement for payment existed prior to signing
the contract. If the funds are received by Leon and then are transferred to Carline for services rendered,
Leon receives a business deduction, which could be considered salary payment to Carline. (USTR –
¶735.01, Keywords: parent child contract)
Code §§73 and 162
Cases Hundley, 48 TC 339 (1967)

Allen, 410 F2d 398 (1969)
6-71. Divorce costs are personal in nature and are non-deductible expenses based on the origin of claim doctrine.
Divorce arises entirely out of a marital relationship. There are numerous cases and only a few are listed.
(RIA, FTC – Table of Contents: Chapter L Deductions, L-2900 Legal and Accounting Expenses, Keyword:
divorce, L-2901, L-2962)
Code §262
Regulation Reg. §1.262-1(b)(7)
Cases Gilmore, 372 US 39

Middleman, TC Memo 1970-118
Kozak, TC Memo 1971-167
Robbins, 8 BTA 523 (1927)
6-72. The commission reduces sales, as a cost of doing business. They are not a non-deductible fine or bribe,
because state laws against such payments (if they exist) are not enforced, and the payments are commonly
made in the industry. (Federal Tax Coordinator, Topical Indexes – K, drill down to kickbacks; L-2609)
Regulation Reg. §1.162-18(b)(3)
Cases Fiambolis, 57-2 USTC ¶9805

Valetti, 58-2 USTC ¶9869
Richardson, 16 TCM 518 (1957)
Brizell, 93 TC 151
Bilzerian, 81 AFTR 2d 98-2329
6-73. Clara will qualify for the lifetime learning credit to the extent of the tuition and related fees limitation for
the courses she has taken during the year. The travel costs do not qualify for the lifetime learning credit.
Clara might rather try to deduct the expenses as employee educational costs. Whether Clara can deduct the
expenses she incurred depends on whether they were undertaken to maintain or improve existing skills
required by her employment or to meets the express requirements of her employer. Since Clara has no
formal training in any of the areas in which she works, it is questionable whether she has existing skills to
maintain. It is clear that her employer is not requiring her to attend the seminars or college classes. If Clara
can prove the expenses meet the requirements, the seminar costs along with the travel may be deductible as
miscellaneous expenses. (RIA, FTC – Table of Contents: Chapter A, Credit for higher education expenses,
A 4500; Chapter L, Education expenses of individuals, L-3700; L-3704)
Code §§25A, 67, 162
Regulations Regs. §§1.25A-4, 1.67-1T, 1.162-5(a)
Rulings Notice 97-60, 1997-2 C 310
Cases: Fleischer, 22 AFTR 2d 5765 (1968)

Boser, 77 TC 1124 (1981
Rossum, TC Memo 1985-593
Raines, TC Memo 1983-125
ADVANCED CASES
6-74. The following is a list of tax issues for Helen Hanks and Tom Hunt and primary sources substantiating the
appropriate tax treatment. The issue list and primary sources should not be considered a finite solution.
Students or the professor may identify different issues when reading this case and thus provide additional
sources.
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interrupt them, to ask whether they would prefer walking to the hotel
or taking a stage.
“Oh, a stage, please—that is, if you don’t mind,” pleaded Molly. “We
just love riding in the stages. We hardly ever get a ride now, since
Papa and Lizzie went away, because Grandma won’t let us go by
ourselves.”
“Who is Lizzie?” Mr. Maitland asked, as they paused on the corner,
to await an approaching stage.
“She was our nurse,” Dulcie explained, “but she went away last
summer. We really don’t need a nurse any more, we’re getting so
big.”
Mr. Maitland glanced down at the four little figures, as if he did not
consider them “so very big,” after all, but just then the stage came
within hailing distance, and he made no remarks on the subject.
It was only a short distance to the hotel, but the children thoroughly
enjoyed the little ride, especially Maud, who, somewhat to Dulcie’s
disapproval, requested to be permitted to pay the fares. Because, as
she explained, “it made one feel so grand to spend money.” Uncle
Stephen laughed so much, and was so kind and genial, that even
Dulcie forgot to be dignified, and by the time they reached their
destination, they were all the best of friends.
“I am going to leave you in the reception-room for a few moments,”
Mr. Maitland said, leading the way across the marble hall of the big
hotel, “while I look up two ladies who are to lunch with us. They are
friends of mine from San Francisco, who have met your father, and
are anxious to see you all.”
Nobody said anything, but all were conscious of a sensation of
disappointment, which Molly was the first to put into words, the
moment they found themselves alone in the reception-room.
“If there are going to be ladies,” she said, ruefully, “Uncle Stephen
will talk to them all the time, and we won’t have half so much fun.”
“Perhaps they are very nice ladies,” suggested Daisy. “He said they
knew Papa, and wanted to know us. Anyhow, we’re going to a real
theatre, and nothing can spoil that.”
“I’m afraid ladies notice other people’s clothes more than gentlemen
do,” said Dulcie, with a sigh, and a glance in the long mirror. “Do you
think those spots show very much, Daisy?”
“No, not so very much,” answered Daisy, divided between her desire
to speak the truth, and fear of making her sister still more
uncomfortable. “Perhaps the ladies won’t notice the spots at all, if the
light isn’t too bright.”
Dulcie sighed again, but was forced to make the best of the situation,
and in another moment Uncle Stephen returned, accompanied by
such a very pretty young lady that, in their surprise and admiration,
the children quite forgot to worry about their own shortcomings.
“This is Miss Florence Leslie, children,” said Mr. Maitland. “Her
mother, Mrs. Leslie, will be down in a few moments.”
“You see, I couldn’t wait for Mother,” the young lady explained,
smiling, and showing such fascinating dimples, that Daisy and Molly
both longed to kiss her. “I was so anxious to see you all. Now let me
see if I can guess which is which, from your father’s description. This
tall one must be Dulcie, I am sure, and the little curly-haired one is
Maud. These others are Daisy and Molly.”
“Why, you know all our names,” exclaimed Molly, in astonishment.
“Did you ever see us before?”
“No, but I have heard a great deal about you from your father. We
saw a good deal of him in San Francisco, before he sailed for Hong
Kong, and he and my brother are in business together now. I wonder
if you would each be willing to give me a kiss.”
“Of course we would,” said Dulcie, heartily, and four little faces were
eagerly raised. Miss Leslie kissed them all, “not just duty kisses,”
Molly said afterwards, but as if she really liked doing it, and in less
than five minutes they were chattering away to this new
acquaintance as if they had known her all their lives.
Then Mrs. Leslie appeared, and they all went into the dining-room.
Mrs. Leslie was not as pretty as her daughter, but she had a very
sweet face, and was so kind and motherly that the little girls soon felt
almost as much at home with her as with Miss Florence.
“And now who is going to order the luncheon?” Uncle Stephen
asked, when they had taken their places at one of the round tables in
the big, crowded dining-room. “Will you do it, Mrs. Leslie?”
“Suppose we let Dulcie order,” suggested Miss Florence. “When I
was a little girl, and we went to a hotel, I remember half the fun was
in ordering things to eat.”
Dulcie gasped, as the waiter handed her the long bill of fare.
“I—I don’t think I could,” she faltered; “there are so many things, I
shouldn’t know where to begin. What’s the matter, Maud?”
“It’s about the ice-cream,” whispered Maud. “It doesn’t matter what
else we have.” Maud’s whisper was sufficiently audible to be heard
by the whole party, and all the grown-ups laughed, somewhat to the
little girl’s embarrassment. Then Miss Leslie said, kindly:
“I will help you, if you would like to have me,” and on Dulcie’s grateful
request, she gave the waiter an order, which seemed to the children
almost appallingly large.
What a delicious meal it was, and how they all enjoyed it! Even
Dulcie forgot her intention of taking a light lunch, for fear Uncle
Stephen might think she was hungry, which would reflect unfavorably
on Grandma’s providing. Miss Leslie certainly did not forget to order
ice-cream, and, better still, she took two helpings of it herself, and
advised them all to do likewise. Mr. Maitland and Mrs. Leslie seemed
to have a good deal to say to each other, but Miss Florence devoted
herself almost exclusively to the children, and before luncheon was
over, had succeeded in winning all their hearts.
“I wish you were going to the theatre with us,” Molly remarked,
regretfully, as they were leaving the dining-room, and she gave her
new friend’s hand an affectionate squeeze.
“I am going,” said Miss Leslie, smiling; “your uncle invited me. He
asked Mother, too, but she declined on account of a headache.”
Molly gave vent to her satisfaction by a little squeal of delight, and
Maud—who was nothing if not truthful—remarked in a sudden burst
of confidence:
“We didn’t think we were going to like it when Uncle Stephen said
ladies were coming to lunch, but you’re not a bit like an ordinary
lady.”
“Maud!” cried Dulcie, reprovingly, but Miss Leslie laughed merrily,
and did not seem in the least offended.
That was a wonderful, never-to-be-forgotten afternoon. Long after
their elders had ceased to think of it, the four little girls loved to recall
its delights. The bright little opera, with its charming music, and
amusing dialogue. The funny pirate chief, who frightened Maud at
first, and then fascinated her for the rest of the afternoon. The
pompous major-general, with his numerous family of daughters. And,
last but not least, the gallant policemen, who were as much afraid of
the pirate band as the pirates were afraid of them. It was all one
continuous delight. But even better than the play was the pleasant
companionship. Long before the afternoon was over, they had all
come to the conclusion that, with the exception of Papa, and
possibly the faithful Lizzie, Uncle Stephen and Miss Leslie were “the
two nicest grown-ups” they had ever met.
But everything, even “The Pirates of Penzance,” must come to an
end at last, and all too soon the curtain had fallen on the last
rollicking chorus, and they were making their way out through the
crowd, into the dusk of the winter afternoon.
“Wouldn’t it be lovely if nice things never came to an end?” remarked
Dulcie, as they stood on the cold corner, while Uncle Stephen went
in quest of a cab.
Miss Leslie smiled.
“There wouldn’t be any next time to look forward to, then,” she said.
“But we don’t have any next times,” began Molly, and checked
herself, warned by a reproving glance from Dulcie.
Miss Leslie looked rather surprised, but before she could ask any
questions, Uncle Stephen returned, and they were all packed into a
cab, Mr. Maitland explaining that he and Miss Florence were in a
hurry, and must get home as soon as possible.
“It’s been the loveliest afternoon we ever had in our lives,” declared
Daisy, as the cab drew up before their own door. “Oh, Uncle
Stephen, won’t we see you again—have you really got to go back to
California to-night?”
“I am afraid so,” Uncle Stephen answered, with a kind glance at the
row of sober little faces, “but perhaps I shall come back again before
such a very long time.”
“Don’t forget there’s always a next time to look forward to,” said Miss
Leslie, with her bright smile. “We’ve all had a delightful afternoon to
look back upon. I hope you won’t forget me.”
“Indeed we won’t!” cried Dulcie and Daisy both together, and Molly
added, plaintively:
“Oh, have you got to go back to California, too?”
“Yes, dear, Mother and I are leaving to-night, on the same train with
Mr. Maitland. But I want you to remember me, for I have an idea that
we shall meet again some day, and in the meantime I wonder if you
would write to me occasionally. I love to get letters from little girls.”
“We’d love to,” said Daisy, blushing with pleasure. “We none of us
write very well except Dulcie, but if you wouldn’t mind a few mistakes
in spelling——”
Miss Leslie said she wouldn’t mind in the least, and by that time
Mary had opened the front door, in answer to Uncle Stephen’s ring,
and the good-byes had to be said.
“I feel just the way I’m sure Cinderella must have felt when she got
back from the ball,” remarked Dulcie, throwing herself wearily on the
nursery sofa. “That’s the only trouble about having good times;
everything seems so dull when they’re over.”
“I don’t mind,” said cheerful Daisy. “Just think what fun we’re going to
have talking it all over. I don’t think we shall ever feel quite so lonely
again, now that we know Uncle Stephen and Miss Leslie.”
“I don’t see what good they can be to us away off in California,”
objected Molly, who was sharing some of Dulcie’s depression.
“But we’ve promised to write to them both,” argued Daisy, “and that
will be very interesting. I wonder how soon it will do to write our first
letter.”
“I think we might write just a short one to Uncle Stephen to-morrow,”
said Molly. “It would be polite to tell him again what a beautiful time
we had, don’t you think so?”
Nobody answered, and there was a short silence, which Maud
broke.
“I don’t think I want any dinner,” she remarked, with a long sigh.
“There’s going to be corned beef, there always is on Saturday, and I
hate corned beef. I’d like some more ice-cream, but I don’t want
anything else to eat. My head aches, and I think I’m going to have
another sore throat.”
CHAPTER IV
THE SINGING LADY
MAUD’S sore throats were one of the greatest trials to her sisters.
Not only were they of frequent occurrence, but they were always
regarded by Grandma in the light of an especial grievance to herself,
for which somebody must be held responsible. If Maud had lived in
the present day, some doctor would probably have decided that her
tonsils needed to be removed, but in 1880 people did not think so
much about operations, and the family physician contented himself
with prescribing simple remedies, and the advice that the child
should be kept out of draughts, and not allowed to get her feet wet.
Maud’s prediction on the present occasion proved only too true. In
the middle of the night Daisy was aroused by a feverish demand
from her little sister, for a drink of water, and by morning Maud could
not swallow without considerable difficulty, and the too familiar white
spots had appeared on her throat. Of course Grandma had to be
told, and the consequence was a severe lecture to the other three,
which lasted all through breakfast.
“I might have known what would happen when I let you all go off
yesterday,” grumbled Mrs. Winslow, as she prepared Maud’s gargle
in the nursery after breakfast. “I don’t suppose it ever occurred to
one of you to see that the child did not sit in her warm coat all the
afternoon.”
“Miss Leslie made her take off her coat,” protested Daisy, “and I don’t
really think she got over-heated or anything.”
“Well, she evidently caught cold in some way. At any rate, this has
taught me a lesson. Now remember, Maud, you are to gargle your
throat regularly every two hours, and take one of these powders
every hour. If I hear of your getting out of bed I shall punish you
severely.”
“Who is going to stay with Maud this morning, Grandma?” Daisy
asked, following Mrs. Winslow out into the hall. “I suppose one of us
will have to stay home from church.”
Grandma reflected for a moment. She was very particular about
church-going, but under the present circumstances it was evident
that Maud could not be left alone.
“I think you and Daisy had better come to church with me,” she said.
“Maud doesn’t need anything except her gargle and the powders,
and Molly can attend to them.”
So it was settled, much to Molly’s satisfaction, and at half-past ten
Dulcie and Daisy departed for church, with Grandma and Aunt Kate,
and the two younger children were left to themselves. Maud, who
was feverish and rather cross, was inclined to resent this
arrangement, which deprived her of the society of her two older
sisters.
“I want Dulcie to stay and tell me stories,” she pleaded. “Nobody can
tell stories but Dulcie.”
“I’ll tell you stories this afternoon,” said Dulcie. “I don’t believe
Grandma will make me go to church twice to-day, on account of your
being sick.”
“But I want stories this morning,” fretted Maud; “I want to hear about
Mamma. Ask Grandma to let you stay at home instead of Molly.”
“It wouldn’t be any use; it would only make her crosser than she is
already. Molly will read to you. There’s a very nice book I got from
the library. It’s called ‘Ministering Children,’ and it’s a regular Sunday
story.”
“I don’t like the way Molly reads,” complained the invalid. “She can’t
pronounce the long words, and she keeps stopping to spell things. I
can read ’most as well as she can myself.”
But whether Maud liked it or not, there was nothing to be done, as
they all knew well. Grandma never changed her mind about things,
and when she had once given an order she expected implicit
obedience.
“I’ll do anything you want me to,” said Molly, good-naturedly, as the
retreating footsteps of the church-goers died away in the distance.
“We can’t play lotto, because it’s Sunday, but perhaps it wouldn’t be
wicked to cut out some paper dolls.”
Maud brightened a little at this suggestion, and for the next half-hour
all went well. Then it was time for Maud’s medicine, and she began
to rebel.
“I don’t like those nasty powders, and I’m not going to take any more
till Grandma comes home.”
“Then we shall both get an awful scolding,” said Molly, desperately.
“Grandma knows just how many powders there are, and she’ll count
to see if you’ve taken them all right. Do swallow this one, like a good
girl, and I’ll give you a drink of water to take away the taste.”
Perhaps Maud realized the force of her sister’s argument. At any
rate, she made no further objection to swallowing the medicine, over
which she made a wry face.
“When I grow up, I’m never going to take medicine,” she announced,
decidedly. “I’m not going to do a single thing I don’t want to.”
“Maybe you’ll have to,” said Molly. “Grown-up people can’t always do
just as they like. Papa didn’t want to go to China and leave us all, but
he had to, and Lizzie didn’t want to go away. Listen, the lady next
door is beginning to sing.”
Maud’s face brightened.
“I’m glad,” she said. “She always sings hymns on Sunday. I wonder
why she doesn’t go to church. Maybe she’s sick, too.”
For ten minutes the room was very still, while the two children
listened to the music, which reached them distinctly through the
party wall. Then Maud began to show signs of restlessness again.
“I wish she’d sing ‘Only an Armor-Bearer,’” she complained, fretfully.
“‘Only an Armor-Bearer’ is my favorite hymn; it’s got such a nice,
lively tune. She ’most always sings it on Sunday.”
“Perhaps she will in a little while,” said Molly, and again there was
silence. But, contrary to their expectations, the lady next door did not
sing “Only an Armor-Bearer,” and after a few minutes the music
ceased.
“O dear!” cried Maud, “now she’s stopped, and I did want ‘Only an
Armor-Bearer’ so much. Can’t we ask her to sing some more?”
“Why, Maud, how could we? We don’t know her. Oh, Maud, don’t
begin to cry. You’ll be worse if you do.”
“I am worse now,” declared Maud, seizing eagerly upon this new
idea. “I’m much worse. Maybe I’m going to die and go to heaven, like
Mamma. If I do you’ll be sorry you wouldn’t ask the lady to sing ‘Only
an Armor-Bearer.’”
“But how can I ask her, Maudie? It would be dreadfully rude to call
through the wall, and I don’t believe she’d understand, anyway. If I
went in next door I should have to ring the bell to get back, and then
Mary would see me, and she’d be sure to tell Grandma. Besides, I
wouldn’t know whom to ask for. We don’t even know the lady’s
name.”
Maud stopped crying, and raised herself on one elbow.
“If you’ll promise never to tell Grandma,” she said, “I’ll tell you
something. It’s my secret; I’ve had it for ever so many days.”
“A secret! What kind of a secret?” Molly was beginning to be
interested.
“It’s a very lovely secret,” said Maud, proudly. “You big ones are
always having secrets, so I got one, too. I won’t tell it, though, unless
you promise not to tell Grandma.”
“Of course I’ll promise. You know I never tell Grandma things, or
Aunt Kate either.”
“I don’t know that we ought to tell Dulcie and Daisy,” said Maud,
doubtfully; “they might think Grandma ought to know. That’s why I
didn’t talk about it. It was so exciting. I peeked in, but I was scared to
go any farther.”
“Peeked in?” repeated Molly; “where did you peek in?”
“Next door. Through the door in the trunk-room, you know.”
“Do you mean the door Grandpa had cut between the houses when
Uncle George lived next door? I thought it was locked up after Uncle
George died, and the boarding-house people came there.”
“It isn’t locked up,” said Maud, triumphantly. “I found out, and that’s
my secret.”
“Maud!” gasped Molly, her eyes round with astonishment. “You mean
you knew such an exciting thing, and never told any one.”
Maud nodded.
“I wanted to have a secret,” she said, “and I was afraid Dulcie or
Daisy would tell Grandma. It was the last time I had a cold, and
Grandma wouldn’t let me go out. I was up here playing all by myself.
I was looking for my littlest china doll. I couldn’t find her, and I
thought perhaps I’d left her in the trunk-room the day we played
Libby Prison in there, so I went to look. I did find her behind one of
the biggest trunks, and then I saw the door. I thought it was locked,
of course, but I shook the handle just for fun, and all of a sudden it
came open, and I looked right in next door.”
“What did you see?” demanded Molly, in a tone of breathless
interest.
“I didn’t see very much,” confessed Maud, reluctantly. “It was just a
big closet, and there were brooms and dust-pans in it, but it really
was next door. First I was going to tell, but then I was afraid if
Grandma knew she’d have the door locked up right away, and then
we could never go to see the singing lady.”
“I’m sure Grandma would have it locked right up,” said Molly, “and
perhaps the lady who keeps the boarding-house would, too, but it’s
very interesting to know it isn’t locked now. Why, it must have been
unlocked all the time since Uncle George died, and nobody ever
found it out before. I don’t believe the people next door know it any
more than we did.”
“Of course they don’t,” said Maud, “that’s what makes it so
interesting. Now you see you can go to see the singing lady just as
easy as anything, and ask her to sing ‘Only an Armor-Bearer.’”
“Oh, Maud, I couldn’t,” protested Molly; “it would be such a very
queer thing to do. The lady might not like it a bit, and Grandma
would make such a fuss. She never lets us talk to people she
doesn’t know.”
“You promised you wouldn’t tell Grandma, and I know the singing
lady wouldn’t be angry. You’ve got to do it, Molly, or else maybe I’ll
die and go to heaven.”
Molly hesitated. It would certainly be a thrilling experience to go
uninvited, and without even ringing the door-bell, into the house next
door, that mysterious boarding-house, upon whose occupants
Grandma and Aunt Kate looked down from their height of social
superiority. Molly loved adventure, and yet—what would Grandma
say? Would even Dulcie and Daisy altogether approve? Maud
noticed the hesitation in her sister’s manner, and was quick to take
advantage of it.
“If you won’t go,” she announced, sitting up in bed, “I’ll get right
straight up and go myself.”
Molly rose irresolutely.
“If I go, will you promise faithfully not to get out of bed for a single
minute till I come back?”
Maud nodded emphatically.
“I’ll promise, cross my heart, and that’s the solemnest promise
anybody can make, and if you break it something awful will happen
to you. Mary told me it would. I’ll lie just as still, as still, and when you
come back you can tell me all about the singing lady.”
“And will you gargle and take your powders all day without making
any more fuss?”
“Yes, and I’ll give you my best paper doll, and all her dresses. Don’t
you think I’m kind?”
Molly moved slowly towards the door.
“It seems an awful thing to do,” she said, “but I’ll only stay a minute,
and I can’t let you get out of bed.”
The door swung open so quietly and easily that she
nearly fell over backward.—Page 63.
Molly’s heart was beating very fast as she crossed the hall to the
dark room, which Grandma used for storing trunks and boxes. There
was no one to see her, for both the servants were in the kitchen, and
she and Maud had the upper part of the house quite to themselves.
The trunk-room was not locked, and she made her way amid various
impediments, to the heavy door, which she had always known
communicated with the adjoining house. Old Dr. Winslow had had it
made in days gone by, when the house next door had belonged to
his only brother, of whom he was very fond. This brother had died
before the children came to New York, and although the house still
belonged to the Winslow family, it had been rented to a lady, who
took boarders, much to the disgust of Grandma and Aunt Kate, who
looked upon a boarding-house as a blot on the neighborhood. Molly
was telling herself that her little sister must have made a mistake. It
did not seem possible that the communicating door could have been
left unfastened all these years, without the fact having been
discovered. With a trembling hand she turned the knob. The door
stuck a little, and she was just about to turn away, convinced that
Maud had dreamed the whole thing, when suddenly the door swung
open, so quietly and easily, that, in her astonishment, she nearly fell
over backward.
There, sure enough, was the closet, just as Maud had described it.
Molly fairly gasped, and in that one moment everything else was
forgotten in the excitement of the wonderful discovery she had
made. She did not shrink back, as Maud had done, but pushing her
way through brooms and brushes, and stumbling over various
articles on the floor, reached another door, which she opened, and
the next moment she had stepped out into a hall, which was exactly
like the hall of their own top floor.
It was very quiet, and there was no one to be seen. Molly closed the
closet door softly, and stood looking about her. There were four
rooms on the floor, and all the doors were closed. The singing lady’s
room was in the front, she knew, and after one moment’s hesitation,
she stepped boldly forward, and knocked.
“Come in,” called a pleasant voice, and there was a sound as of
some piece of furniture being moved rapidly along the floor. Before
Molly could quite make up her mind to turn the handle, the door was
opened from the inside, and a little lady in a wheel-chair suddenly
confronted her.
She was such a tiny lady that for the first moment Molly thought she
must be a child, but when the pleasant voice spoke again, it sounded
oddly familiar.
“Won’t you come in?” she said, and the face that looked at Molly
from the wheel-chair was so very sweet and winning, that half her
embarrassment melted away at once.
“I hope you’ll excuse me for coming,” she faltered, “but—but, you
see, we live next door, and my little sister is sick. We can hear you
sing through the wall, and we all love it. My sister wants me to ask if
you won’t please sing ‘Only an Armor-Bearer,’ because it’s her
favorite hymn.”
“Come right in,” said the lady, hospitably, “and would you mind
closing the door? The halls are rather chilly.”
Molly complied, and found herself in a room exactly like their own
nursery on the other side of the wall. Indeed, the two houses had
been built at the same time, and were alike in every particular. It was
evidently used as both bed and sitting-room, for a piano stood
between the windows, and by the empty fireplace stood a small
mahogany bookcase well filled with rather shabby-looking books.
The room might have been more tidy, for the bed was still unmade,
and on the table was a tray containing the remains of a breakfast,
but the lady herself was as neat as possible, although her blue
wrapper was somewhat faded, and the slippers on the little feet that
hung helplessly over the edge of the wheel-chair had long ago lost
their first freshness.
“You must excuse things being a little upset,” the lady said,
apologetically. “It’s Sunday morning, you know, and the
chambermaid has gone to church. She’s a nice girl, and very kind
and obliging, but I am afraid I give her a good deal of trouble. Take
those bedclothes off that comfortable chair, and sit down. It’s a great
pleasure to have a little girl come to see me. And so your sister likes
my singing. I am very glad. I had no idea any one cared about it.”
“We all like it,” said Molly, who had obeyed her hostess’ instructions,
and seated herself. “You see, our room is just on the other side of
the wall, and we can hear very well indeed. Maud is in bed to-day,
with a sore throat, and she loved the music.”
“Bless her heart!” cried the little lady, fairly beaming with pleasure,
“she shall have all the music I can give her. I love to sing, though I
know I haven’t much of a voice. Would you mind telling me your
name?”
“My name is Molly Winslow,” said Molly, “and my sisters’ names are
Dulcie, Daisy and Maud. It’s Maud who is sick. She’s only seven. I’m
nine, and Dulcie and Daisy are eleven and ten. Our mamma is dead,
and our papa has gone to China. We live next door with Grandma
Winslow.”
“I know who you are now,” said the lady, smiling; “you are old Dr.
Winslow’s grandchildren. I have always admired your grandfather’s
writing so much. I have read a number of his books, and I was so
much interested when I heard his house was next door.”
“Were you?” said Molly. “I’m glad you like Grandpa’s books. I didn’t
know anybody did. Dulcie began one once, but she said it wasn’t
very interesting. I suppose people ought to like their relations’
books.”
The lady laughed such a merry laugh that Molly found herself
laughing, too, though she did not know why.
“I think Dr. Winslow’s books might seem rather dull to a little girl,” she
said. “Perhaps I might have found them dull myself, if I were able to
get about like other people, but when one has to live in a wheel-chair
one is glad of almost anything to read.”
“Do you always have to stay in the chair?” asked Molly,
sympathetically. “I thought perhaps you had just sprained your ankle
or something like that. Papa sprained his ankle once and he had to
keep his foot up for three whole weeks.”
“I haven’t walked a step for nearly three years,” said the lady, quietly.
“Can’t you even go up and down stairs?”
The lady shook her head.
“I was carried up here the day I left the hospital,” she said, sadly,
“and I have lived in this room ever since. I shall never walk again, the
doctors tell me. But I manage to get on very well,” she added,
brightening at sight of Molly’s distressed face. “You would really be
surprised to know all the things I can do without getting out of my
chair. Then people are very kind to me. Miss Collins, the lady who
keeps this house, was an old friend of my mother’s, and she often
comes to sit with me in the evening. The chambermaid helps me in
many little ways, and with my books, and my dear piano, I really get
on very comfortably indeed.”
Molly was deeply impressed.
“Could you walk when you were a little girl?” she inquired, anxiously.
A shadow crossed the lady’s sweet face.
“Oh yes, indeed,” she said. “I walked just like any one else till three
years ago, when I met with my accident.”
“What sort of an accident was it?” Molly was so much interested that
she quite forgot that some people might have considered her
questions rather impertinent.
“I was run over, crossing Broadway one very slippery day. The
ground was covered with ice, and I fell in the middle of the street.
Before I could get on my feet again, a horse-car came around the
corner, and the driver could not stop his horses in time. It really
wasn’t anybody’s fault.”
Molly rose. She was beginning to feel embarrassed again. There
was something in the sight of the helpless little figure in the wheel-
chair that made her feel all at once as if she wanted to cry.
“I’m afraid I must go,” she said a trifle unsteadily. “I can’t leave Maud
any longer. I’m awfully glad I know you, and the others will be so
interested when I tell them about you.”
“And I am delighted to know you, too,” her new acquaintance said,
heartily. “I have been more interested in my little neighbors than you
might suppose. You see, I can hear your voices through the wall, just
as you hear my singing, and when one spends a good deal of time
alone, one gets interested in all sorts of little things. I hope you will
come to see me again, and bring all your little sisters.”
“We’d love to come,” declared Molly. “Will you please tell me your
name in case we should want to ask for you at the front door?”
“My name is Oliver, Mary Oliver, but everybody calls me Miss Polly,
and I like it much better. My brother Tom always called me Polly. I
am sorry you must go so soon, for it is a great treat to have a visitor,
but I suppose you mustn’t leave your little sister any longer. I hope
you will find things in better order the next time you come. Maggie is
really very good about keeping the room neat, but Sunday morning
——” And Miss Polly glanced regretfully at the unmade bed and the
tray of breakfast dishes.
“Good-bye,” said Molly, holding out her hand.
Miss Polly shook the little hand—her own hand was not much bigger
—and then she looked at her visitor rather anxiously.
“Aren’t you afraid of taking cold without any wrap?” she questioned.
“To be sure it is only next door.”
“Oh, I don’t have to go out in the street at all,” said Molly,
unthinkingly. “I came through the door in the wall.”
“The door in the wall?” repeated Miss Polly, looking puzzled. “What
door do you mean, dear?”
Molly blushed.
“I didn’t mean to tell,” she said, “because it’s a secret. It’s a door that
was cut between the two houses when Grandpa’s brother lived here.
Everybody thinks it’s locked, but it isn’t. It’s such fun coming that way
—like doing a thing in a book, you know.”
Miss Polly laughed merrily.
“What a delightful way to come,” she said. “I won’t mention your
secret to a soul, and you must often come to see me through the
wall.” She looked so young and pretty, with her face all dancing with
merriment, that Molly felt suddenly as if she were sharing a secret
with a little girl of her own age.
“I’ll tell Dulcie and Daisy as soon as they come home from church,”
she promised, “and I know they’ll want to come and see you right
away.” And then she hurried off.
As she entered the nursery, a few minutes later, the strains of “Only
an Armor-Bearer” could be distinctly heard through the wall, and
Miss Polly’s piano was playing a lively accompaniment to the familiar
tune.

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Marketing Research Methodological Foundations 10th

Page 192, 196, 205, 206, 207, 210, and 215

Federal Tax A number of databases covering issues related to

federal taxation, including explanations, tools and

Page 196, 199

Pages 206, 208

6-14. The Boolean connectors are:

Page 205, 219

6-28. a. Student responses will vary date of search.

b. The oldest available General Council Memorandum available is from 1962.

6-30. a. Estimate your income tax for the upcoming year.

6-31. a. The title of §178 is: Amortization of cost of acquiring a lease.

6-38. a. The citation for the case is 106 AFTR 2d 2010-7370.

b. Only once, in Marino 93 AFTR 2d 2004-906.

6-44. a. The complete citation is Rev Rul 2001-60, 2001-2 CB 587.

Case Rubenstein, 134 TC No. 13 (2010)

Code §6501(a) & (e)

Ruling CCA 201023053

Ruling PLR 200318017

6-48 To: Files

Date: Today’s date

Rev. Rul. 63-91 states that,

amounts paid for medical services rendered by practitioners, such as chiropractors,

Cases Many to choose from but most refer back to:

Ruling Rev Rul 73-529, 1973-2 CB 37

Code §104 (a)(2)

Regulations Reg. §1.104-1(c)

Cases Domeny, TC Memo 2010-9

Reports H Rept No. 104-586 (PL 104-188) p. 144

Code §§61, 527

Regulations Reg. §1.527-5(a)(1)

Rulings FSA 0887

Regulations Reg. §1.71-1(e)

Cases Blyth 21 TC 275 (1953) acq

6-53. To: Files

Date: Today’s date

Subject Allocation between Alimony and Child Support

How much alimony can Tom deduct?

Reg. §1.71-1(e) provides an example of the intent of §71(c)(3).

related expense child care credit)

Regulations Reg. §1.21-1(d)

Cases Perry, 92 TC 470 (1989)

Rulings Rev Rul 74-176, 1974-1 CB 68

Code §§61, 119, 132

Regulations Reg §1.61-21(a)

Code §§451, 6012(b)

Regulations Reg. §1.451-1(b)(1)

Cases Fairbanks, 128 F2d 537 (1942)

Ruling Chief Counsel Advice 201012033; 200010046

Regulations Reg. §1.104-1(b)

Cases Wham, TC Memo 1985-625

Rulings Rev. Rul. 83-77, 1983-1 CB 37

Cases Keenan v Bowers, 91 F Supp 771 (1950 DC SC) (not allowed)

IRS Pub Publication # 547 (2012) p. 3

Cases Auerbacher, TC Memo 1956-218 Donnelly, 262 F2d 411