Rev. Rul. 79-173

FACTS

The Internal Revenue Service has reconsidered Rev. Rul. 70-341, 1970-2 C.B. 31, in view of the decision of the United States Court of Appeals for the Second Circuit in Turecamo v. Commissioner, 554 F.2d 564 (1977), aff'g, 64 T.C. 720 (1975).

Rev. Rul. 70-341 holds, in part, that basic medicare benefits paid under Part A of title XVIII of the Social Security Act, 42 U.S.C. sections 1395c-1395i-2 (Supp II 1972), are received by (or on behalf of) an individual and are includible as the individual's own contribution to the individual's support in determining who provided more than one-half of such individual's total support.

In Turecamo the court held that Part A medicare benefits are indistinguishable in form and substance from Part B medicare benefits, as well as from those received under private health insurance plans, and should be similarly treated. Benefits received under Part B or under private health insurance plans are disregarded in the support computation. Therefore, the court concluded that Part A medicare benefits are not considered support provided by the medicare beneficiary for purposes of determining whether another individual may claim the beneficiary as a dependent under section 152(a) of the Internal Revenue Code of 1954.

HOLDING

The Service will follow the decision of the United States Court of Appeals for the Second Circuit in Turecamo as precedent in the disposition of similar cases involving sections 151 and 152 of the Code.

EFFECT ON OTHER REVENUE RULINGS

Rev. Rul. 70-341 is revoked to the extent that it holds that Part A medicare benefits are includible as the individual's own contribution to support in determining who provided more than one-half of the individual's total support.