Starrett v. Commissioner

David E. Starrett and Grace I. Starrett, Petitioners, v. Commissioner of Internal Revenue, Respondent Starrett v. Commissioner Docket No. 2957-62 United States Tax Court 41 T.C. 877; 1964 U.S. Tax Ct. LEXIS 129; March 26, 1964, Filed *129 Decision will be entered for the petitioners. Held, where psychoanalysis is obtained for the purpose of diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any function of the body, the amount spent therefor is for medical care even though a further and additional benefit is obtained thereby such as qualification for admission to a school of psychoanalytic training. Arnold Namrow, 33 T.C. 419 (1959), distinguished. Howard W. Rea, for the petitioners. Arthur B. Bleecher, for the respondent. Withey, Judge. Hoyt, J., concurs in the*130 result. Tietjens, J., concurring. Mulroney, Train, Drennen, Scott, and Dawson, JJ., agree with this concurring opinion. WITHEY *877 Deficiencies in the income tax of petitioners for the taxable years 1958 and 1959 have been determined by the Commissioner in the respective amounts of $ 737.85 and $ 1,064.95. The sole issue presented is whether amounts paid for the professional services of a psychoanalyst are deductible medical expense. FINDINGS OF FACT Facts which have been stipulated are found accordingly. Petitioners' income tax returns for the taxable years 1958 and 1959 were timely filed with the district director of internal revenue, Denver, Colo. David E. Starrett, hereinafter referred to as petitioner, has engaged in professional training and practice as follows: a. 1948-1952 -- Medical School, Washington University School of Medicine, St. Louis, Mo., M.D., 1952. b. 1951 -- Special work in Comprehensive Medicine Clinic, 1 year. c. 1951 -- Acting Assistant Resident Psychiatry, McMillan Hospital, St. Louis, 3 months. d. 1952-1953 -- Rotating Intern, Highland-Alameda County Hospital, Oakland, Calif. e. 1953-1954 -- Assistant Resident Internal Medicine, Highland-Alameda*131 County Hospital, Oakland, Calif. f. 1954 -- Resident in Medicine, Samuel Merritt Hospital, Oakland, Calif. *878 g. 1954-1955 -- Junior Resident in Psychiatry, University of Colorado Medical Center, Colorado Psychopathic Hospital, Denver. h. 1955-1956 -- Intermediate Resident in Psychiatry, University of Colorado Medical Center. i. 1956-1957 -- Senior Resident in Psychiatry, University of Colorado Medical Center. j. 1957-1960 -- Instructor in Psychiatry, Staff Psychiatrist, Adult Psychiatric Clinic, University of Colorado Medical Center. k. 1957-1960 -- Lecturer in Psychiatry, VA Hospital, Denver, Fort Lyon, Colo and Sheridan, Wyo. l. 1957-1961 -- Attending Staff, Denver VA Hospital and Denver General Hospital. m. 1957-1963 -- Attending Staff, Colorado General Hospital and Colorado Psychopathic Hospital, Denver. n. 1957-1963 -- Consultant in Psychiatry, Colorado State Hospital, Pueblo, Colo., and Craig Rehabilitation Center, 1599 Ingalls, Lakewood, Colo. o. 1959 -- Certified by American Board of Psychiatry and Neurology in Psychiatry. p. 1960-1963 -- Assistant Professor of Psychiatry, University of Colorado Medical Center, Department of Psychiatry. q. 1960-1961 -- Director, Division*132 of Psychiatric Services, Denver Department of Health and Hospitals. r. 1960-1963 -- Psychiatric Consultant to Denver Department of Welfare. s. 1961-1963 -- Associate Chief of Staff for Psychiatry, Denver VA Hospital. t. 1961-1963 -- Chief of Psychiatric Training, Denver VA Hospital. u. 1962-1963 -- Member of Governor's Advisory Board on Commitment and Transfer Laws. v. 1962-1963 -- Vice President, Board of Directors, Denver Mental Health Center. w. 1963 -- Member, board of directors, Metropolitan Mental Health Association. x. 1963 -- Secretary-Treasurer, Colorado District Branch, American Psychiatric Association. y. 1952 -- Licensed to practice medicine in Missouri. z. 1953 -- Licensed to practice medicine in California. aa. 1958 -- Licensed to practice medicine in Colorado. From 1957 to 1963, inclusive, petitioner was a candidate at the Chicago Institute for Psychoanalysis. During his entire adult life petitioner has suffered from a specific psychoneurosis known and classified by the American Medical Association1 as anxiety reaction. Anxiety reaction is a specific disease characterized by emotional imbalance, an indication of which is the lack of proportionate relevance between*133 the fears, anxieties, and sense of impending doom experienced with actual known factual situations. To the lay sufferer the disease is disabling. To petitioner, a practicing psychiatrist, the disease became increasingly disabling as he, through his practice, was brought into close contact with the emotional imbalance and the resulting symptomatic problems of his patients. This condition caused petitioner to believe that his professional abilities *879 were being or were in danger of being impaired to the detriment of his patients. In April of 1957 petitioner had determined to obtain training from the Chicago Institute for Psychoanalysis, hereinafter referred to as the institute, with the intention that, upon completion thereof, he would practice as a psychoanalyst. To that end, on April 22, 1957, he made written application to the institute to be admitted to its training courses. Prior to his acceptance as a student, petitioner was*134 required to and did submit to interview and examination by a committee of the institute charged with determining an applicant's scholastic and professional qualifications and also to determine whether or not the applicant was sufficiently mentally and emotionally healthy or stable to be able to absorb the institute's courses of instruction and to psychoanalyze patients without danger of harm either to the patient or himself. The committee refused to accept petitioner as a student and advised him to obtain a psychoanalysis. In January or February of 1957, petitioner had, by mail, requested Dr. Rene A. Spitz to accept him as a patient to undergo psychoanalysis. Dr. Spitz was then in Europe, but was expected to arrive in Denver in July of 1957 to take up his duties as a newly appointed professor of psychiatry. Dr. Spitz was a "training analyst" appointed by the institute. His duties, as such, included the psychoanalysis of student-applicants of the institute. All of the applicants for training at the institute were required to undergo psychoanalysis with a "training analyst." A psychoanalysis undergone prior to acceptance as a student was acceptable by the institute provided it *135 was conducted by one of its appointed "training analysts." During the years 1957 and 1958 the term "training analyst" was not descriptive of the function performed by one bearing that appellation in that it had become an accepted principle in the field of psychoanalytic education that no portion of the psychoanalysis of a student should be devoted to the education of the student, but that the entire process should be therapeutic. Petitioner's psychoanalysis was performed for the purpose of so altering his character and personality that he would become sufficiently stable emotionally to relieve him of his prior symptoms of anxiety reaction and for the purpose of compliance with the prerequirement of the institute for admission to its training courses in psychoanalysis. During the course of his treatment by Dr. Spitz, petitioner made some progress in the correction of his anxiety reaction, but not sufficient to satisfy Dr. Spitz. An accepted theory of psychoanalysis is that, where unsatisfactory progress is made by the patient being treated by a male psychoanalyst, further treatment by a female analyst is indicated. In pursuance of this theory Dr. Spitz, in September of 1958, advised*136 that petitioner retain the services of Dr. Eleanor Steele, *880 a female psychoanalyst, resident and practicing in Denver, who was also a "training analyst" appointed by the institute. Petitioner followed this advice and continued his psychoanalysis with Dr. Steele throughout the remainder of 1958 and the entire year 1959. Dr. Steele notified the institute of the fact that petitioner had begun treatment with her. Petitioner underwent psychoanalysis during 1958 and 1959 at the rate of 5 hours per week, with the exception of holidays or other occasions when for one reason or another he or his doctor could not be available. Petitioner paid for the services of Dr. Spitz and Dr. Steele $ 3,260 in 1958 and $ 4,390 in 1959. ULTIMATE FINDING Petitioner's purpose in obtaining psychoanalytic treatment was dual and of equal weight -- (1) to obtain so far as possible a cure of a specific disease from which he suffered and (2) to qualify for admission to the training curriculum of the institute. OPINION The law controlling deductibility of the expenses here sought to be deducted is section 213 (a) and (e) of the Internal Revenue Code of 1954. 2 The interpretation of the law by respondent*137 is found in section 1.213-1(e)(1)(i) and (ii), Income Tax Regs.3 *138 *881 Petitioner takes the position herein that because the reason why he underwent psychoanalysis was for the diagnosis of his emotional condition, cure of a specific emotional disease classified as anxiety reaction, mitigation of the effects upon him of such disease, treatment of the underlying causes of his anxiety reaction, and thereby the prevention of further suffering therefrom, his expenses in obtaining his psychoanalysis must be held to have been paid for "medical care" under the statute and therefore the deduction thereof must be permitted. He takes the further position that even though his psychoanalysis was undergone also for the reason that it was a necessary preliminary qualification for his acceptance as a student by the institute, this fact cannot detract from the statutory deductibility of the expense thereof as being for "medical care." Respondent, on the other hand, takes the position that petitioner's psychoanalysis was obtained by him primarily for the purpose of obtaining an education in psychoanalysis thus rendering the expense thereof nondeductible because of the portion of the above-cited regulation which provides that -- Deductions for expenditures*139 for medical care allowable under section 213 will be confined strictly to expenses incurred primarily for the prevention or alleviation of a physical or mental defect or illness. * * * We think petitioner must prevail here. The evidence is clear, believable, and uncontradicted that, whatever other reason petitioner had for undergoing psychoanalysis, he certainly had the intention, as soon as he could afford the treatment, to be thereby relieved of the physical and emotional suffering attendant upon the specific disease from which he had suffered throughout his adult life. In the words of section 213(e)(1)(A), the amounts paid Drs. Spitz and Steele for their services during the years at issue are clearly "amounts paid for the diagnosis, cure, mitigation, treatment," and "prevention" of a specific "disease" classified by the American Medical Association as anxiety reaction and which amounts were clearly also spent "for the purpose of affecting" the "function of the (petitioner's) body" which controlled the equilibrium of his emotions. Respondent's use of the word "primarily" in his regulation cannot be extended to the point where an expense, clearly for medical care, may nevertheless*140 become nondeductible merely because the end result thereby sought to be achieved might include an advantage or benefit to the taxpayer in addition to cure or mitigation of a disease, and we *882 think other language contained in the same paragraph of the regulation indicates no such result was intended. Immediately following that portion of the regulation appears the following language which we read to denote the purpose for which the word "primarily" is used -- Thus, payments for the following are payments for medical care: hospital services, nursing services (including nurses' board where paid by the taxpayer), medical, laboratory, surgical, dental and other diagnostic and healing services, X-rays, medicine and drugs (as defined in subparagraph (2) of this paragraph, subject to the 1-percent limitation in paragraph (b) of this section), artificial teeth or limbs, and ambulance hire. However, 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. Clearly the word "primarily" was used with reference to those types of expenditure which by their nature have no more than*141 a remote or general relationship to health or the maintenance thereof. A bill for physicians' services rendered for any of the enumerated statutory purposes is not such. Our decision in Arnold Namrow, 33 T.C. 419 (1959), affd. 288 F. 2d 648 (C.A. 4, 1961), certiorari denied 368 U.S. 914 (1961), is not controlling of the issue here presented. There, this issue was presented as an alternative and decision was for the respondent on the ground of the failure of taxpayer to establish that he was suffering from an illness or disease or that he underwent treatment for the cure, mitigation, etc., of such disease or illness. Here, all of the factual elements necessary under both the statute and the regulations to constitute "medical care" have been proven and found as fact. Decision will be entered for the petitioners. TIETJENS Tietjens, J., concurring: I would simply find that petitioner's payments to the doctors were for the alleviation or cure of a mental illness and accordingly are deductible as medical expenses, and let the case end there. Footnotes 1. Standard Nomenclature of Diseases and Operations (A.M.A., 5th ed., 1961).↩ 2. SEC. 213. MEDICAL, DENTAL, ETC., EXPENSES. (a) Allowance of Deduction. -- There shall be allowed as a deduction the expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, his spouse, or a dependent (as defined in section 152) -- * * * * (e) Definitions. -- For purposes of this section -- (1) The term "medical care" means amounts paid -- (A) for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body (including amounts paid for accident or health insurance) * * *↩ 3. Sec. 1.213-1 Medical, dental, etc., expenses. (e) Definitions -- (1) General. (i) The term "medical care" includes the diagnosis, cure, mitigation, treatment, or prevention of disease. Expenses paid for "medical care" shall include those paid for the purpose of affecting any structure or function of the body, for accident or health insurance, or for transportation primarily for and essential to medical care. Amounts paid for hospitalization insurance, for membership in an association furnishing cooperative or so-called free-choice medical service, or for group hospitalization and clinical care are expenses paid for medical care. However, premiums paid by a taxpayer under an insurance contract which provides reimbursement for loss of earnings due to accident or illness do not constitute amounts expended for medical care. In the case of a policy providing reimbursement for both loss of earnings and medical expenses, only the pro rata portion of such premium payments which is properly attributable to the coverage for medical expenses will constitute an expense paid for medical care. (ii) Amounts paid for operations or treatments affecting any portion of the body, including obstetrical expenses and expenses of therapy or X-ray treatments, are deemed to be for the purpose of affecting any structure or function of the body and are therefore paid for medical care. Amounts expended for illegal operations or treatments are not deductible. Deductions for expenditures for medical care allowable under section 213↩ will be confined strictly to expenses incurred primarily for the prevention or alleviation of a physical or mental defect or illness. Thus, payments for the following are payments for medical care: hospital services, nursing services (including nurses' board where paid by the taxpayer), medical, laboratory, surgical, dental and other diagnostic and healing services, X-rays, medicine and drugs (as defined in subparagraph (2) of this paragraph, subject to the 1-percent limitation in paragraph (b) of this section), artificial teeth or limbs, and ambulance hire. However, 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.