Ochs had two incorrigible
children and a nervous wife who was recovering from cancer. Her doctor
suggested sending the kids to boarding school in order to keep the wife
from having a nervous breakdown. He did, and she got better.
When Ochs filed his taxes, he
claimed a deduction for the costs of the boarding school as a medical
expense, which is deductible under 26
U.S.C. 23(x) (now 26 U.S.C. §213). The IRS denied the deduction. Ochs appealed.
The IRS argued that this
wasn't a medical expense at all,
it was for boarding school. Medical expenses should be limited to things like doctor's fees
and prescription drugs.
Ochs argued that it didn't
matter what the costs were for, as
long as they were incurred for
medical purposes. He suggested a 'but for' test for determining if
something is a medical expense.
"But for my wife's
health, I would not have sent my child to boarding school."
Ochs argued that it was not
even necessary for the treatment to actually work, since not all medical
The Trial Court found for the
IRS. Ochs appealed.
The Appellate Court affirmed
and found the expenses non-deductible.
The Appellate Court compared
Ochs' situation to how you calculate deductions related to a trade or business
under 26 U.S.C. §162.
Under §162, a deduction is not allowed for things that
are primarily personal expenses.
The Court found that in this
case, even though there was a medical consequence, the primary reason for the expense was the education of the
children. Therefore the expenses could not be deducted under §213.
In a dissent it was argued
that the expenses should be deductible as long as "the taxpayer, in
incurring the expense, was guided by a physician's bona fide advice that
such a treatment was necessary to the patient's recovery from, or
prevention of, a specific ailment."