Finzer v. United States
United States District Court for the Northern District of Illinois
496 F. Supp. 2d 954 (2007)
Facts
In 2002 John and Elizabeth Finzer (plaintiffs) moved into an assisted-living facility operated by Hyatt. The Finzers paid an entrance fee of approximately $724,000 to live in a large villa at the facility. A smaller but functionally adequate unit would have cost $275,000. The Finzers also agreed to pay Hyatt $4,665 per month. In exchange for the entrance fee and monthly fees, the Finzers were provided residential accommodations, meals, various amenities, and assisted living and nursing services. The agreement between the Finzers and Hyatt explained that the entrance fee did not cover any medical services. Rather, medical services were covered by the monthly fee. Hyatt sent a letter to the Finzers stating that 41 percent of their entrance fee could be claimed as a deductible medical expense. The Finzers’ accountant relied on the letter and amended the couple’s income-tax to increase their itemized deductions. The accountant also requested a tax refund on behalf of the Finzers due to their increased deductions. The Internal Revenue Service (the IRS) (defendant) denied the refund and disallowed the deduction. The Finzers appealed.
Rule of Law
Issue
Holding and Reasoning (Kennelly, J.)
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