Scott, Judge:
Respondent determined a deficiency in petitioners’ income tax for the calendar year 1970 in the amount of $1,043.48.
The issues for decision are:
(1) Whether petitioners contributed more than half of the support of the mother of one of them during the calendar year 1970 so as to be entitled to a dependency exemption for her and a medical expense deduction for medical expenses they paid for her where the total support payments made on her behalf by petitioners were less than her hospital expenses which were paid by medicare allowances.
(2) Whether petitioners are entitled to a deduction for a casualty loss of $375 as a result of damage to their automobile.
FINDINGS OF FACT
Some of the facts have been stipulated and are found accordingly.
Petitioners husband and wife, who resided in Douglaston, N.Y., at the time their petition in this case was filed, filed a joint Federal income tax return for the calendar year 1970 with the District Director of Internal Revenue, Brooklyn District, New York.
Frances Kavanaugh, the mother of Frances Turecamo and the mother-in-law of Alfred H. Turecamo, who was 81 years old during the calendar year 1970, began living with petitioners prior to the beginning of the calendar year 1970. Mrs. Kavanaugh, during the calendar year 1970, received $1,140 in social security benefits. During this year petitioners provided Mrs. Kavanaugh with two and one-half rooms in their home which she used as her apartment. They maintained a telephone in these rooms for Mrs. Kavanaugh’s use. During the time that Mrs. Kavanaugh was residing in petitioners’ home, they provided her meals which she ate with petitioners’ family. They provided the furnishings in Mrs. Kavanaugh’s rooms including a television set, some clothing for Mrs. Kavanaugh, and occasional entertainment. Mrs. Kavanaugh did not reimburse petitioners for any of the support furnished to her but used the amount she received from social security for her own support as she saw fit. The total amount contributed by petitioners toward Mrs. Kavanaugh’s support through the furnishing of an apartment, food, clothing, and entertainment for her was approximately $4,000.
On August 5,1970, Mrs. Kavanaugh was admitted to the Long Island Jewish Hospital in New Hyde Park, Long Island, New York, and was discharged from the hospital on October 9, 1970. Her total hospital charges while she was in the hospital were $11,095.75, of which $10,434.75 was discharged by “Medicare allowances,” which benefits were payments which were made pursuant to the provisions of “Part A — Hospital Insurance Benefits for the Aged,” 42 U.S.C., ch. 7, sec. 1395c, amending tit. XVIII of the Social Security Act.
In addition to hospital costs, Mrs. Kavanaugh’s condition required nursing care. During the calendar year 1970, petitioners expended $3,531 for hospital and nursing care for Mrs. Kavanaugh. Mrs. Kavanaugh died in the early part of December 1970.
On their joint Federal income tax return for the calendar year 1970, petitioners claimed a dependency exemption for Mrs. Kavanaugh and claimed $3,531 as deductible medical expenses which they paid on behalf of Mrs. Kavanaugh in the year 1970. The total medical expenses claimed by petitioners amounted to $4,017 from which they subtracted $674 as representing 3 percent of their reported adjusted gross income, leaving a medical expense deduction claimed by them of $3,343.
Respondent in his notice of deficiency disallowed petitioners’ claimed dependency exemption for Mrs. Kavanaugh, stating that petitioners had not established that Mrs. Kavanaugh had qualified as their dependent under sections 151 and 152, I.R.C. 1954.1 Respondent also disallowed petitioners’ claimed medical expense deduction of $3,343 with the explanation that it had not been established that this amount was expended for the purposes designated.
In August 1970 petitioners had their 1966 Chrysler Newport sedan automobile, which they had purchased new in 1966 for approximately $3,600, parked in the parking area of the shopping center in Douglaston, N.Y. Upon returning to the car petitioners found that both doors and one fender on the car had been badly smashed. No note or any other indication was left on the car to show by whom or how the damage was caused. Petitioners had no insurance on the car. They had the car repaired at a cost of between $475 and $500.
Petitioners on their income tax return for the calendar year 1970 claimed a casualty loss deduction of $375.
Respondent in his notice of deficiency disallowed the claimed $375 casualty loss which petitioners claimed as resulting, from damage to their automobile, stating that it had not been established that any deductible loss had been sustained.
OPINION
Respondent’s primary position is that the amounts paid as basic medicare benefits under part A — “Hospital Insurance Benefits for the Aged” of the Social Security Act are in the nature of disbursements made in furtherance of the social welfare objectives of the Federal Government; and, therefore, in determining whether the individual for whom the medicare benefits are paid is a dependent of another, these payments, though not includable in the gross income of the recipient, should be viewed as amounts paid by the recipient for his own support just as are social security benefits. Respondent distinguishes the payments under part B from those under part A and states that in his view payments made under part B are in the nature of health insurance benefit payments and therefore are not a part of the support of the person for whom made.2
Petitioners take the position that medicare payments made on behalf of an individual to a hospital under part A are health benefit insurance payments just as are payments made under part B or any private insurance program. In support of their position petitioners point to the provisions of sections 3101(b) and 3111(b) of the 1954 Internal Revenue Code, both of which are entitled “Hospital Insurance,” the former providing for a tax on the income of every individual equal to stated percentages of his wages, and the latter providing for an excise tax on the employer based on a percentage of his employees’ wages and to title 42, section 1395i (entitled “Federal Hospital Insurance Trust Fund”) of the United States Code which provision is in part A of subchapter XVIII of the Social Security Act as amended. This section provides for the creation of a “Federal Hospital Insurance Trust Fund” with the amounts received from the taxes imposed by sections 3101(b) and 3111(b) of the Internal Revenue Code.
Petitioners further point to the testimony of an expert witness offered by respondent to the effect that the basic medicare program is not a need or welfare program but a work-oriented insurance program provided without regard to means for those persons who qualify for the benefits based on work done either by them or their spouses.
Respondent’s argument in summary is that since the basic medicare benefits provided for under part A of title XVIII of the Social Security Act as amended are financed by taxes, which taxes are not stated in section 213(e)3
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Scott, Judge:
Respondent determined a deficiency in petitioners’ income tax for the calendar year 1970 in the amount of $1,043.48.
The issues for decision are:
(1) Whether petitioners contributed more than half of the support of the mother of one of them during the calendar year 1970 so as to be entitled to a dependency exemption for her and a medical expense deduction for medical expenses they paid for her where the total support payments made on her behalf by petitioners were less than her hospital expenses which were paid by medicare allowances.
(2) Whether petitioners are entitled to a deduction for a casualty loss of $375 as a result of damage to their automobile.
FINDINGS OF FACT
Some of the facts have been stipulated and are found accordingly.
Petitioners husband and wife, who resided in Douglaston, N.Y., at the time their petition in this case was filed, filed a joint Federal income tax return for the calendar year 1970 with the District Director of Internal Revenue, Brooklyn District, New York.
Frances Kavanaugh, the mother of Frances Turecamo and the mother-in-law of Alfred H. Turecamo, who was 81 years old during the calendar year 1970, began living with petitioners prior to the beginning of the calendar year 1970. Mrs. Kavanaugh, during the calendar year 1970, received $1,140 in social security benefits. During this year petitioners provided Mrs. Kavanaugh with two and one-half rooms in their home which she used as her apartment. They maintained a telephone in these rooms for Mrs. Kavanaugh’s use. During the time that Mrs. Kavanaugh was residing in petitioners’ home, they provided her meals which she ate with petitioners’ family. They provided the furnishings in Mrs. Kavanaugh’s rooms including a television set, some clothing for Mrs. Kavanaugh, and occasional entertainment. Mrs. Kavanaugh did not reimburse petitioners for any of the support furnished to her but used the amount she received from social security for her own support as she saw fit. The total amount contributed by petitioners toward Mrs. Kavanaugh’s support through the furnishing of an apartment, food, clothing, and entertainment for her was approximately $4,000.
On August 5,1970, Mrs. Kavanaugh was admitted to the Long Island Jewish Hospital in New Hyde Park, Long Island, New York, and was discharged from the hospital on October 9, 1970. Her total hospital charges while she was in the hospital were $11,095.75, of which $10,434.75 was discharged by “Medicare allowances,” which benefits were payments which were made pursuant to the provisions of “Part A — Hospital Insurance Benefits for the Aged,” 42 U.S.C., ch. 7, sec. 1395c, amending tit. XVIII of the Social Security Act.
In addition to hospital costs, Mrs. Kavanaugh’s condition required nursing care. During the calendar year 1970, petitioners expended $3,531 for hospital and nursing care for Mrs. Kavanaugh. Mrs. Kavanaugh died in the early part of December 1970.
On their joint Federal income tax return for the calendar year 1970, petitioners claimed a dependency exemption for Mrs. Kavanaugh and claimed $3,531 as deductible medical expenses which they paid on behalf of Mrs. Kavanaugh in the year 1970. The total medical expenses claimed by petitioners amounted to $4,017 from which they subtracted $674 as representing 3 percent of their reported adjusted gross income, leaving a medical expense deduction claimed by them of $3,343.
Respondent in his notice of deficiency disallowed petitioners’ claimed dependency exemption for Mrs. Kavanaugh, stating that petitioners had not established that Mrs. Kavanaugh had qualified as their dependent under sections 151 and 152, I.R.C. 1954.1 Respondent also disallowed petitioners’ claimed medical expense deduction of $3,343 with the explanation that it had not been established that this amount was expended for the purposes designated.
In August 1970 petitioners had their 1966 Chrysler Newport sedan automobile, which they had purchased new in 1966 for approximately $3,600, parked in the parking area of the shopping center in Douglaston, N.Y. Upon returning to the car petitioners found that both doors and one fender on the car had been badly smashed. No note or any other indication was left on the car to show by whom or how the damage was caused. Petitioners had no insurance on the car. They had the car repaired at a cost of between $475 and $500.
Petitioners on their income tax return for the calendar year 1970 claimed a casualty loss deduction of $375.
Respondent in his notice of deficiency disallowed the claimed $375 casualty loss which petitioners claimed as resulting, from damage to their automobile, stating that it had not been established that any deductible loss had been sustained.
OPINION
Respondent’s primary position is that the amounts paid as basic medicare benefits under part A — “Hospital Insurance Benefits for the Aged” of the Social Security Act are in the nature of disbursements made in furtherance of the social welfare objectives of the Federal Government; and, therefore, in determining whether the individual for whom the medicare benefits are paid is a dependent of another, these payments, though not includable in the gross income of the recipient, should be viewed as amounts paid by the recipient for his own support just as are social security benefits. Respondent distinguishes the payments under part B from those under part A and states that in his view payments made under part B are in the nature of health insurance benefit payments and therefore are not a part of the support of the person for whom made.2
Petitioners take the position that medicare payments made on behalf of an individual to a hospital under part A are health benefit insurance payments just as are payments made under part B or any private insurance program. In support of their position petitioners point to the provisions of sections 3101(b) and 3111(b) of the 1954 Internal Revenue Code, both of which are entitled “Hospital Insurance,” the former providing for a tax on the income of every individual equal to stated percentages of his wages, and the latter providing for an excise tax on the employer based on a percentage of his employees’ wages and to title 42, section 1395i (entitled “Federal Hospital Insurance Trust Fund”) of the United States Code which provision is in part A of subchapter XVIII of the Social Security Act as amended. This section provides for the creation of a “Federal Hospital Insurance Trust Fund” with the amounts received from the taxes imposed by sections 3101(b) and 3111(b) of the Internal Revenue Code.
Petitioners further point to the testimony of an expert witness offered by respondent to the effect that the basic medicare program is not a need or welfare program but a work-oriented insurance program provided without regard to means for those persons who qualify for the benefits based on work done either by them or their spouses.
Respondent’s argument in summary is that since the basic medicare benefits provided for under part A of title XVIII of the Social Security Act as amended are financed by taxes, which taxes are not stated in section 213(e)3 to constitute amounts paid for health insurance, benefits received by an individual through payment of hospital costs on his behalf by basic medicare should be considered a part of his support.
Respondent concludes from his ruling (Rev. Rui. 66-216,1966-2 C.B. 100) that premiums paid by an individual under part B of title XVIII of the Social Security Act as amended are part of deductible medical expenses under section 213, and it therefore follows that the payments made on behalf of an individual under part B are not to be included in the amount furnished by that individual for his own support for the purpose of the dependency exemption provided under sections 151 and 152.4
We have in a number of cases recognized that medical expense is a part of an individual’s support and have held premiums paid for medical insurance to be a part of medical expense for support determinations. See Warren C. Mawhinney, 43 T.C. 443 (1965), affd. per curiam 355 F. 2d 462 (3d Cir. 1966), in which we listed medical fees, medicines, and health insurance payments, all as part of the support of the taxpayer’s children.
In our view it is clear that hospital expenses are medical expenses which form a part of an individual’s support. If the expenses are paid and not covered by any form of insurance, there would appear to be no question that the person paying the hospital expense has contributed the amount of the payment to the support of the individual for whom the payment is made. The problem is how should such expenses paid by insurance be treated and should medicare payments made under part A be treated as other insurance payments.
We agree with petitioner that no valid basis exists for distinguishing between the hospital insurance benefit payments made under part A of title XVIII of the Social Security Act as amended and the medical benefit payments made under part B of that Act or some form of private insurance policy for determining the total support of an individual for the purposes of sections 151 and 152. The fact that the part A benefits are financed by a tax imposed and withheld from the wages of all individuals to whom the tax applies5 without the necessity of their consent does not distinguish the nature of the payments made under the basic medicare provisions for hospital benefits from payments made under a program carried voluntarily by an employer for an employee or by an individual voluntarily for himself, either under part B of title XVIII of the Social Security Act as amended which is partially financed from the general funds of the Federal Government or with a private insurance company. Part A, as well as part B, of title XVIII of the Social Security Act as amended pays benefits only under the conditions specified therein.6
Private insurance carried for an individual either by his employer or in a private policy carried by the individual himself pays benefits only under the contractual conditions specified. The part A and part B medicare provisions, as well as private health insurance contracts, pay only for the risks insured against, which basically are when hospital or medical treatment is required by an individual. All of these insurance agreements pay for medical costs.
The fact that Congress chose to allow a medical expense deduction under section 213 for the part B premium payments but not for the tax paid to finance part A, has no bearing on the nature of the benefits paid when the risk insured against occurs. There is no necessary correlation between section 213 and sections 151 and 152. Likewise, respondent’s so-called “duplication” theory of including in support both premium payments for health insurance and the benefits paid by the insurance does not find support in sections 151 and 152. The premiums may well be paid in a different year from that in which the benefits are received (see section 213(e)(3) allowing deduction for premiums paid for prepaid medical insurance under certain circumstances) and certainly in many instances the benefits received in 1 year from the insurance often exceed by many times the total of premiums paid for all prior years during which the insurance was carried. Respondent apparently makes no distinction between health benefits furnished by an employer received in a particular year and payments made by a private insurance contract or part B of Medicare, even though in his Rev. Rul. 64-223,1964-2 C.B. 50, he holds that since certain employees incur no “cost” from employer-furnished medical services, there is no amount to include as support of a dependent from such medical services being available to the dependent from another’s employment.
In our view none of the distinctions which respondent attempts to make between benefits paid by part A medicare and other forms of health or medical insurance is valid.
Respondent bases his position in this case solely on his distinction between hospital cost payments made under the basic medicare provisions of part A of title XVIII of the Social Security Act as amended and those made under part B of that Act or a private insurance policy. Since respondent clearly concedes that part B or private insurance payments are not includable in determining the support furnished to an individual and we conclude that there is no proper basis for distinguishing these payments from payments made under part A of Medicare, we will not consider whether all such payments should be included as part of an individual’s support. Therefore, we hold that under the facts here present, petitioners contributed over one-half of Mrs. Kavanaugh’s support in 1970 and are entitled to their claimed dependency exemption for her and to include the medical expenses they paid for her in computing their medical expense deduction for 1970.
The issue with respect to the casualty loss claimed by petitioners because of damage to their automobile is purely factual. Section 165(c)(3) allows an individual to deduct losses of property not connected with a trade or business if such losses arise from fire, storm, shipwreck, or other casualty, or from theft. Damage to an automobile which occurred while the automobile was parked for a short time in a parking lot has generally been recognized as an “other casualty.” Respondent does not contend to the contrary, but rather argues that petitioners have not carried their burden of proof with respect to the amount of deduction to which they are entitled. Respondent points out that a casualty loss deduction is limited to the lesser of the adjusted basis of the property or the amount by which the fair market value of the property immediately before the casualty exceeds the fair market value of the property immediately after the casualty. Respondent argues that petitioners have failed to show either the fair market value of their automobile before the casualty or after the casualty.
Petitioner Alfred H. Turecamo testified that he paid $3,600 for his automobile, and he estimated that before the casualty the automobile had a fair market value of between $1,200 and $1,500. Petitioner argues that the fair market value of the automobile would be reduced by the casualty by at least the amount required to have the damage repaired. Section 1.165-7(a)(2)(i) and (ii), Income Tax Regs., provides the method of valuation of property involved in a casualty. While providing that generally a competent appraisal must be obtained of the fair market value of the property immediately before and immediately after the casualty, the regulation further states that the cost of repairs to the property damaged is acceptable as evidence of the loss of value if the taxpayer shows that the repairs are necessary to restore the property to its condition immediately before the casualty; the amount spent for the repairs is not excessive; the repairs do not cover more than the damage suffered; and the value of the property after the repairs does not as a result of the repairs exceed the value of the property immediately before the casualty.
While the evidence in this case is not as strong as might have been desirable, the testimony of Alfred H. Turecamo in our view is in all respects truthful. Petitioners were not represented by counsel. It is clear from the record that petitioners spent between $475 and $500 in repairs to their automobile. Alfred Turecamo also testified that he had an argument with the person who repaired the automobile concerning the quality of the work. Taking the testimony as a whole, in our view, it is sufficient to support a claimed casualty loss of $475 which is deductible to the extent of $375. We therefore sustain petitioners’ claimed casualty loss deduction of $375.
Decision will be entered for the petitioners.
Reviewed by the Court.