Fischer v. Comm'r of Internal Revenue, Docket No. 990-66.
| Decision Date | 29 April 1968 |
| Docket Number | Docket No. 990-66. |
| Citation | 50 T.C. 164 |
| Parties | C. FINK FISCHER AND JEAN FISCHER, PETITIONERS v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
C. Fink Fischer, pro se.
Owen A. Knopping, for the respondent.
1. Held, that petitioners are not entitled to deduct the cost of maintaining a private airplane. Fischer was not in the business of flying the plane for charter and did not use the plane as an engineering consultant during the taxable years in issue.
2. Held, further, that a portion of the amounts paid by petitioners for the attendance of their son at a private school constituted the cost of medical care and is deductible under sec. 213, I.R.C. 1954.
3. Held, further, that respondent's determination of additions to tax under sec. 6651(a), I.R.C. 1954, is sustained.
Respondent determined deficiencies in petitioners' joint Federal income tax returns for 1960-62, and additions to tax for those years under section 6651(a), I.R.C. of 1954,1 as follows:
+-------------------------------------+
¦ ¦ ¦Addition to tax ¦
+------+------------+-----------------¦
¦Year ¦Deficiency ¦sec. 6651 (a) ¦
+------+------------+-----------------¦
¦1960 ¦$534.59 ¦$55.67 ¦
+------+------------+-----------------¦
¦1961 ¦750.14 ¦23.15 ¦
+------+------------+-----------------¦
¦1962 ¦3,303.72 ¦145.48 ¦
+-------------------------------------+
The issues presented for decision are: (1) Whether petitioners, under Code section 162, are entitled to deduct in the years 1960 to 1962, inclusive, depreciation and other expenses related to the ownership of an airplane; (2) whether amounts paid by petitioners in 1961 and 1962 in connection with their son's attendance at Oxford Academy are deductible as medical expenses under section 213; and, (3) whether delinquency penalties under section 6651(a) for taxable years 1960 to 1962, inclusive, were properly imposed.
Some of the facts have been stipulated and are so found. The stipulation and exhibits thereto are incorporated herein by this reference.
C. Fink Fischer and Jean B. Fischer, husband and wife, were residents of Princeton, N.J., at the date of the filing of the petition in this case. They filed joint Federal income tax returns for the taxable years 1960, 1961, and 1962 with the district director of internal revenue, Camden, N.J. Jean B. Fischer is a petitioner herein solely by reason of having filed a joint return. C. Fink Fischer will hereinafter be referred to as petitioner.
Petitioner is a retired commander in the U.S. Navy, having been statutorily retired in June 1960. Immediately after his retirement, in July 1960, petitioner commenced earning fees as a business and engineering consultant. By August 22, 1960, these fees, which were reported on his 1960 income tax return, totaled $990. On August 22, 1960, petitioner, as president, and two other individuals founded Stony Brook Laboratories, Inc., a corporation through which his services as a business and engineering consultant continued.
After retirement from the U.S. Navy, the petitioner devoted his time exclusively during the taxable years 1960 to 1962, inclusive, as a business and engineering consultant.
In February 1960, while still on active duty, petitioner purchased a 1949-built Cessna 195 aircraft for the sum of $9,425.
Petitioner reported receipts from aircraft operation for the taxable year 1960 of a $225 charter fee and expenses in the operation of the aircraft in the amount of $2,224.15. The difference between these figures resulted in a loss claimed by petitioner as a deduction in his return for the taxable year 1960. In explanation thereof, petitioner stated that the Cessna was purchased in anticipation of his retirement as a U.S. Naval aviator to provide a tool for continuance of his trade as an aviator and aeronautical engineer; its use for these purposes and in support of prior-mentioned business activity during 1960 was minimal.
Petitioner reported on Schedule B of his 1961 Federal income tax return a loss from aircraft operation of $3,214.63. In explaining this loss petitioner stated that the aircraft was purchased in anticipation of his retirement as a U.S. Naval aviator to provide a tool for continuance of his trade as an aviator and aeronautical engineer and the aircraft had no use during the year except for minimum flight maintenance time.
In explaining a loss of $2,645.75 on Schedule C of his 1962 Federal income tax return, petitioner reported the following information:
Petitioner did not advertise nor did he hold himself out as being in the business of chartering aircraft.
Don Hadley Fischer (hereinafter referred to as Don) is petitioner's son by a former marriage. When Don was about 6 or 8 years old his parents were divorced. Don first lived with his mother, but after her remarriage and subsequent divorce he came to live with his father who had remarried. When Don was 6 he entered the Princeton Country Day School. At that time it was discovered that he suffered from hearing and vision troubles which seriously impaired his reading assimilation. At the same time, Don began to give evidence of emotional problems which further hindered his ability to accommodate himself to the school environment. At the age of 12 Don left the Princeton Country Day School and entered the Hun School of Princeton, N.J., as a day student.
Don's failure pattern became complete at the Hun School, and petitioner finally sought advice from the headmaster of that school as to the cause of the trouble and possible corrective measures. At that time Don was 17 years old and still in the ninth grade. It was recommended that Don be given a psychological examination. As a consequence of this recommendation, petitioner took Don to the psychological Service of the Pennsylvania Institute, Pennsylvania Hospital, Philadelphia (hereinafter referred to as the institute), where he was tested and examined by the staff for the purpose of determining the nature of his difficulties. E. Gillet Ketchum, supervisor of reeducation for the institute, reported to petitioner that intellectually Don tested in the high average to moderately superior classification in relation to his age, but that he suffered from a number of emotional problems:
The analysis indicates Donald to have a very weak ego. He has not evolved the usual ‘defense’ or integrating mechanisms necessary for dealing maturely, realistically and in an organized fashion, with the problems of his environment. It would be his tendency, because of those weaknesses, which Donald vaguely senses, to withdraw from facing and dealing with stress, with frustration. Initially, the boy would tend to withdraw into his own inner self, into fantasies and day dreams. Continuous difficulties in concentration and in organization would be present at such times. When the environment's pressures and demands become so insistent that this form of withdrawal is not effective, then Donald may ‘panic’ and attempt to remove himself from these pressures physically by running away. This is an ego organization which makes Donald extremely sensitive, intuitive as an individual. It is one which fosters his preference for intuitive rather than for logical reasoning. It is also one which inclines the boy towards pseudo self sufficiency. It makes him really hard to reach. It fosters difficulties in self expression and self insight. It is an immature status and its continuance could lead Donald towards serious and chronic maladjustment, a state of chronic inability to deal with reality, with consequent failure to realize his potentialities, to be always on the fringe of success in both practical and social relationships.
Ketchum concluded that Don was in need of psychological help, in the nature of ‘consistent, sensitive, slow paced psychotherapy,‘ and suggested Nathaniel Boonin (hereinafter referred to as Boonin), a psychiatrist with offices in Princeton, N.J.
Don was first examined by Boonin in August 1960. Boonin found him to be a sincere and well-motivated boy who had significant neurotic blocks against learning. After treating Don for over a year, Boonin advised petitioner that psychotherapy had resulted in only partial improvement and optimum treatment required placing Don away from home in a school which could tailor-make a program to fit his highly individual needs. Boonin thought that an institution designed solely for psychiatric patients would have a regressive effect on Don, and recommended three schools, one of which was the Oxford Academy of Pleasantville, N.J.
After investigation of the recommended schools, petitioner decided upon the Oxford Academy (sometimes referred to below as the academy). Boonin then wrote a letter of referral to Edward R. Knight, headmaster of the school, in which he stated he was referring his patient, Don Fischer, to the academy in the expectation that a proper ‘therapeutic-educational program’ for him could be developed. The letter further stated that ‘the psychological effects of responding to * * * (a tailormade educational program) by beginning to experience success in the academic field, which for him is so highly charged with significance, will do more for Don at this stage than further psychotherapy.’ Boonin further stated that he thought Oxford Academy would ‘provide Don with the optimum therapeutic milieu in which to effect his recovery.’
The Oxford Academy is a small, private, boarding school specializing in handling of boys of normal intelligence who have failed to achieve success in other schools, primarily because of mental or emotional problems. It is a ‘referral school’ in the sense that boys with academic, emotional, psychological, and psychiatric problems are referred to it by psychologists, psychiatrists,...
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