Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, February 7, 1994                   TAG: 9402040288
SECTION: MONEY                    PAGE: 6   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium

CARE INSURANCE ISN'T MEDICAL CLAIM

A: Long-term care insurance premiums are not qualifying medical expenses. The Internal Revenue Code allows a deduction of expenses paid for medical care during the year. Regular medical insurance premiums are qualifying medical expenses because the medical insurance, if used, would provide for the payment for medical care in the current year.

Insurance premiums paid for long-term health care are not deductible by an individual as a medical expense for the current year. The expenses are not deductible because the premiums represent payments that are for medical care (and other living expenses) in the future, and this care may not be provided at all.

The Internal Revenue Service clarified this issue in a Revenue Ruling in October 1993. The ruling stated that a current deduction could not be taken for payments for future medical care, including medical insurance, extending substantially beyond the close of the tax year.

Answered by F. Fulton Galer of McLeod & Co.

A widow's home

Q: A widow in 1990 owned a home, bought a second home, moved into the second home and put the first home up for sale.

She remarried in 1991, sold the first home and filed a 2119 Form delaying capital gain because the second home cost more than the realized gain on the first home. The 2119 Form was filed in 1991 with a joint return with her new husband.

In 1993, the husband sold his house and moved in with the wife.

Can the husband and wife revoke the first 2119 Form and file a new one, each using a $62,500 exclusion? Both were 55 years of age at the time of the sale of both houses.

A: You can file a 1991 amended return and take the once-in-a-lifetime $125,000 exclusion on the wife's gain, or you can take this exclusion on the husband's gain. However, a husband and wife may not use their gain exclusion on two different residences.

When a husband and wife each own separate homes before their marriage and sell after they are married, they can exclude the gain on one of them, but not both.

Answered by Deborah N. Mattern of Budd, Ammen & Co.