Ochs v. Commissioner
195 F.2d 692 (2d Cir. 1952)

  • 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 treatments work.
  • 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."