Commissioner v. Bilder

Background

A New Jersey lawyer, aged 43 and recovering from multiple heart attacks, was advised by a heart specialist to spend the winter in a warm climate. He, his wife, and his young daughter moved to Fort Lauderdale for two separate winter periods and rented apartments costing $1,500 and $829. The lawyer claimed those rental payments as deductible medical expenses on his 1954 and 1955 tax returns. The IRS disallowed the deductions; the Tax Court allowed one-third (attributing that share to the taxpayer’s own lodging); a Court of Appeals later allowed the full deductions, creating a conflict among appeals courts and prompting review by the Supreme Court.

Reasoning

The legal question was whether Section 213 of the Internal Revenue Code counts payments for meals and lodging while away from home as deductible "medical care." The Court examined the statute and the House and Senate committee reports and concluded Congress intended to exclude meals and lodging from deductible medical expenses. The reports expressly said that transportation primarily for medical care could be deducted but that the cost of meals and lodging while away receiving treatment would not be deductible. Applying that clear legislative purpose, the Court reversed the appeals court and disallowed the rental deductions.

Real world impact

Taxpayers cannot deduct rent or lodging for a temporary residence taken on a doctor's orders as a medical expense under Section 213. Transportation costs for the patient may still be deductible if primarily for and essential to medical care. Family members' living costs while accompanying a patient are not deductible under this rule. The decision resolves a circuit split and establishes that legislative history controls this interpretation of the 1954 Code.

Dissents or concurrances

Justice Douglas would have affirmed the lower court’s allowance of the full deduction, relying on the reasoning of Judge Kalodner; two Justices did not take part.