Dinardo v. Commissioner
United States Tax Court
In 1947, petitioners formed a partnership for the practice of medicine. They organized a nonprofit corporation which operated a private hospital, Collinwood Hospital. Admissions to the hospital were limited to patients of the petitioners. The petitioners' medical partnership had an accident and industrial injury practice; patients were referred to petitioners because they could provide hospital care at Collinwood Hospital.
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In 1947, petitioners formed a partnership for the practice of medicine. They organized a nonprofit corporation which operated a private hospital, Collinwood Hospital. Admissions to the hospital were limited to patients of the petitioners. The petitioners' medical partnership had an accident and industrial injury practice; patients were referred to petitioners because they could provide hospital care at Collinwood Hospital. The medical partnership received fees from patients referred to the hospital for medical services rendered by petitioners as members of the partnership. There was a direct…
1Opinion of the Court
OPINION.
HaRRON, Judge:
The principal question to be decided is whether payments made by petitioners’ partnership in 1948 and 1949 to Collin-wood Hospital.to make up operating deficits sustained by Collinwood, were properly deductible by the partnership under section 23 (a) (1) (A) of the Internal Revenue Code as ordinary and necessary business expenses.
The respondent disallowed the deductions taken in the partnership returns for these payments and increased the distributive share of partnership income on the individual returns of each petitioner for 1948 and 1949. Respondent’s position is that…
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