Lang v. Comr. – Donee Can Deduct Payments Made By Donor On Donee's Behalf

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By Steven B. Gorin  

Thompson Coburn LLP, St. Louis, MO 

In Lang v. Comr., T.C. Memo 2010-286, the taxpayer's mother paid $24,559 directly to medical providers on account of the taxpayer's medical expenses and $5,508 directly to the city government on account of the taxpayer's real estate tax. The mother had no duty to support the taxpayer and no other legal obligation to pay these expenses.

The payments of medical expenses were excludible gifts under §2503(e). The payment of real estate tax constituted a gift to the taxpayer.

The court upheld the taxpayer's deduction of the medical expenses and real estate tax that her mother had paid for her, because the taxpayer herself was legally obligated to pay those expenses. Someone had to be able to deduct these expenses, and the taxpayer's mother could not because she was not legally obligated to pay them.

For more information, in BNA's Tax Management Portfolios, see Maule, 503 T.M., Deductions: Overview and Conceptual Aspects, Lischer, 845 T.M., Gifts, and Lischer, 846 T.M., Gifts to Minors, and in Tax Practice Series, see ¶2840, Medical Expenses.