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Opinion & Essays - Apr, 1993 Issue #21 


The following are letters and a memo regarding the issues of the deductibility of John Dewey Academy's tuition costs as a medical deduction under the Internal Revenue Code. Although the circumstances for each school and program are different, the general issues of IRS deductibility seem to be well covered here and is printed here as a resource for those schools and parents who want to research the issue as to how it applies to their own situation. - Lon

Mark D. Zuckerman, CPA, PC
Certified Public Accountant 300 Martine
Avenue White Plains, NY 10601

February 22, 1993

Dr. Thomas E. Bratter
The John Dewey Academy
389 Main Street
Great Barrington, MA 01230

Dear Tom,

Enclosed herewith are my findings and conclusions regarding the deductibility of John Dewey's tuition costs as a medical deduction under the Internal Revenue Code.

Parents can rely on my findings only to the extent that it provides them with reasonable cause in which to take a tax position regarding the deductibility of tuition expenses as a medical deduction when filing their Income Tax Returns. (emphasis added).


Mark D. Zuckerman

Date: February 14, 1993
To: Dr. Thomas E. Bratter, President-John Dewey Academy
From: Mark D. Zuckerman
Subject: John Dewey Academy Tuition Costs and the Internal Revenue Service

Facts: The John Dewey Academy is a coeducational year round college-preparatory residential therapeutic school, which provides individual group and family psychotherapy for troubled teens, aged 15 to 21, who need residential placement. The school has a formulated therapeutic structure, such that advising and counseling are integrated into every aspect of school life. Most students have been referred by psychiatrists or psychologists; 33% come from inpatient psychiatric hospitals or rehabilitation psychiatric facilities. 40% arrive being medicated with potent psychotropic medication. The John Dewey Academy concerns itself primarily with the psycho-educational, needs, strengths and deficiencies of each student. The educational process enables the learner to understand societal attitudes, beliefs, values and expectations that promote the conditions for a student's continued individualized exploration, and prepare the student to exist in society. John Dewey facilitates the student's emotional development through a program that includes peer support and an ever-changing array of both group process and individual intervention to bring about positive change.

Issue: Are the costs of attending the John Dewey Academy deductible as a medical expense under Section 213 of the Internal Revenue Code?

Conclusion: Based on the facts as submitted, we conclude that the costs of attending the John Dewey Academy are deductible under Section 213 of the Internal Revenue Code. Furthermore, all other expenses incurred primarily, for and essential to, the medical care of the student while attending the John Dewey Academy would also be deductible in the same manner.

Discussion: The Internal Revenue Code allows a deduction, for medical care of the taxpayer, the taxpayer's spouse, or dependents to the extent that those expenses exceed 7.5 percent of the taxpayer's adjusted gross income.

Medical care is defined as amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease or for the purpose of affecting any structure or function of the body, and for transportation primarily for and essential to medical care.

Where an individual is in an institution because his condition is such that the availability of medical care in such institution is a principal reason for his presence there, and meals and lodging are furnished as a necessary incident to such care, the entire cost of medical care and meals and lodging at the institution shall constitute an expense for medical care. In addition, while ordinary education is not medical care, the cost of medical care includes the cost of attending a special school for a mentally or physically handicapped individual, if his condition is such that the resources of the institution for alleviating such conditions are a principal reason for his presence there.

As it is used in the regulations , the term "special school" is a limited category within the broader term "institution". The curriculum of a special school may include some ordinary education, but this must be incidental to the primary purpose of the school - to enable the student to compensate for or overcome a handicap in order to prepare that student for future normal education and living . In Revenue Ruling 78-340 the Service approved the deductibility of tuition paid to a school, attended on the advice of the child's doctor, which designed its educational program to enable a learning disabled child to return to regular school.

In addition, the I.R.S. concluded in P.L.R. 8447014 that a psychiatrically-oriented boarding school is a special school within the meaning of Regulation 1.213-(1) (e) (v) (a). Thus, the taxpayer could deduct, as a medical expense, his son's tuition and the expenses of transportation to and from the school, to the extent such transportation expenses were primarily for and essential to medical care of his son.

In a recent Tax Court case , the taxpayers claimed medical expense deductions for the costs of their son's treatment for behavioral and drug related problems at a college-preparatory school. In addition to the deductions for the son's tuition and room and board (which the Service had allowed), the court allowed a school-required expense allowance and the parents' plane fare to and from the school for required therapy sessions. Since the Service had allowed tuition and room and board, it was deemed to have agreed that the son was attending the school primarily for medical care. As a result, the other school-required expenses for such medical care were deductible. However, the court disallowed the parents' lodging expenses as the taxpayers did not prove the sessions were conducted by a physician.

In an earlier case , the court allowed the taxpayer, as a medical deduction, the costs of sending their daughter to a private school which specialized in treating children with emotional handicaps. The court held that the school was a "special school" within the meaning of the IRC Sec 213 , and that the student had been sent to the institution to further her medical treatment.

244 Westchester Ave., Suite 410
White Plains, New York 10604-2902

February 26, 1993

Dr. Thomas Bratter
The John Dewey Academy
Searles Castle
389 Main Street
Great Barrington, MA 10230

Re: Medical Expense Deduction

Dear Tom:

At one of the parents' meetings, you circulated a Wall Street Journal article dated April 22, 1992 concerning medical deductions for anti-drug therapy and schooling. We have followed up on that article and found the case. It is Matter of Urbauer, 1992 RIA TC Memo #92,170. I am enclosing a copy of the case.

My review of the case indicates that it should probably be circulated among all the parents and perhaps included in a packet given to parents when students sign up. However, before you do that, I think that the staff should come to some policy decisions based upon the report of the arguments made in the case.

It is clear from the case that the general costs associated with enrollment in The John Dewey Academy including your one or two week "look-see" are probably deductible. The tuition charged for Dewey is also deductible.

The funds provided by parents for routine day-to-day expenses of the children are probably not deductible since the Dewey system is not the same as the DeSisto system in requiring an account from which the students draw for "canteen" expenses on the premises. Similarly, clothing and other "self esteem" items are not deductible.

Transportation (airfare and car rental and mileage for those parents who travel to Dewey by car) probably are deductible under certain circumstances. It appears from the Urbauer case that a staff form letter inviting the parents to a therapy session on a particular day (even if that day is associated with a parent's weekend) is likely to make the transportation expense from the parent's home to Great Barrington a deductible medical expense. In order to justify those expenses in event of audit, I recommend that the school keep a file of those letters sent to parents, which include invitations to a counseling session and a log of counseling sessions.

I would recommend that the possibility of deductible phone calls be disregarded since the record keeping requirement at Dewey would be onerous and unnecessarily burdensome.

I trust you will find my comments helpful.

Yours sincerely,


Copyright 1993, Woodbury Reports, Inc. (This article may be reproduced without prior approval if the copyright notice and proper publication and author attribution accompanies the copy.)

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