Broker Check


 June 30, 2003



Your Pension Plan is Invalid


           if  it is  not  amended by  September 30, 2003 for GUST.   If  the  plan  is not amended,  the plan will lose its tax qualified status and therefore the value of all assets in it will be taxable income immediately.

            You must amend the plans now.  There is no recourse after the deadline. Kiplinger Tax Letter 7/18/03


Want the Real Scoop?


            on Middle Eastern news?  Try, a website out of Jerusalem run by former Economist journalists  and  full  of  rumors and gossip.   The news you read on their site becomes front page news several  days, weeks or months later.  It reads like an intelligence briefing.   Chafing  to find out  where Saddam Hussein  is?   Check out  You will never look at The New York Times the same way.

            They’re so good, they must be illegal!


IRS Clarifies Deductible Status of Several Surgical Procedures    


            Generally, an expenditure that enhances the general health or wellbeing of an individual is not an expenditure for medical care.  Therefore, cosmetic surgery is not deductible  unless  it corrects a deformity,  arises  from a congenital defect, an injury caused by accident or trauma, or a disfiguring disease.


Weight Loss Program


            Expenses for a weight loss program may qualify as a medical deduction.  If the taxpayer is diagnosed as obese and is, therefore, suffering from obesity, which is a recognized disease, the cost of participation in a weight loss program is a deductible medical expense.

If a taxpayer is suffering from hypertension and is directed by a physician to lose weight in order to treat the hypertension, the cost of participation in a weight loss program is a deductible medical expense.

Although diet foods may be part of a weight loss program, they are substitutes for the food the taxpayer would normally eat.  Therefore, diet foods are not deductible medical expenses, even for taxpayers whose disease qualifies them to deduct the weight loss program costs.  IRS Revenue Ruling 2002-19

Our position is that, if provable, the excess cost of special food over the regular cost of food may be deductible.  However, it is only a litigation position. 


Health Club Membership Fees


            Since the IRS, in 2002, has now recognized obesity as a disease, health club membership  fees   incurred   primarily  to  prevent  or  alleviate  obesity  may  be   a deductible  medical expense.   Some of  the  factors the IRS said they will consider in determining whether membership fees are deductible:

1.      location of club

2.      whether another club is available closer to taxpayer’s home

3.      types of activities available

4.      services included in the club membership fee

5.      whether the taxpayer could safely fulfill the exercise needs without joining the club  IRS INFO 2002-0077


Breast Reconstruction


            The IRS ruled that breast reconstruction after mastectomy surgery as part of the treatment for cancer was to correct a deformity directly related to the disease and therefore, deductible.  IRS Revenue Ruling 2003-57


 Laser Eye Surgery


            Eye surgery to correct defective vision, including laser procedures such as LASIK and radial keratotomy, corrects a dysfunction of the body.  IRS Revenue Ruling 2003-57


Non Prescription Items


            The Internal Revenue Code limits the deduction for medicines or drugs to insulin and to drugs that require a prescription.  Even when recommended by a doctor, medicines that are available over the counter, including aspirin, are not deductible.  However, the IRS has ruled that this limitation will not apply to nonprescription items such as bandages, crutches, thermometers or blood sugar test kits.  IRS Revenue Ruling 2003-58


            If you have any questions about the foregoing or any other financial matters, please call us.  If you want to read more, visit the AOHL Newsletter Archives at


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