Sch A - Malpractice insurance

[ILLMAS]

TP who is a physician left before employment contract expired, as part of the contract if TP left early he would be held accountable for a certain amount of malpractice insurance also known as tail.  I did some research and found it is deductible on a Sch-C for example, but is there a reason why it wouldn't be deductible on Sch A?  I just want to double check with other that might have experience with this before.

 

Thanks

 

MAS

[Margaret CPA in OH]

If on Schedule A, it would be unreimbursed employee expense subject to 2%, wouldn't it?  As he is paying for an expense as an employee, that might be correct.  Does the insurance cover him outside of that employment contract?  If so, then I would think a Sch. C would work. 

 

Surely others will chime in.  Can't be the first time!

[joanmcq]

Tail insurance covers you for mistakes made in during the employment, not after. Let's say you quit doing taxes. You buy E&O tail insurance for 3 years to cover any issued on returns that might come up before the SOL tolls.

[easytax]

If on Schedule A, it would be unreimbursed employee expense subject to 2%, wouldn't it?  As he is paying for an expense as an employee, that might be correct.  Does the insurance cover him outside of that employment contract?  If so, then I would think a Sch. C would work. 

 

Illmas,

              Above might be a possibility (sch. C) BUT physicians typically have very stringent liability insurance.  As an example, my doctor has coverage while at the clinic he is employed at (or other clinics he might be assigned to by the employer --- however this does not even cover him outside the building where the clinic is located ---- and goes further --- only for any clinic patients.   My physician also works with some drug theory individuals (different employer - yes Doctors have 2nd jobs too) and his clinic employer's insurance does NOT cover any of that --- he has to have a different and separate policy for that employment.

 

Therefore --- if the employer he left makes him pay for that part of the insurance, the insurance may only be deductible as sch. A because it can not be used otherwise.

 

And we thought our E&O had limitations at times.

[Lion EA]

Yeah, I have a psychiatrist who works from a CT office but also works at a NYnursing home, mostly SS patients there, so he does have separate items that have to do only with his NY practice and others for CT and still others that we prorate based on income.  I usually do a spreadsheet before I start on his Schedule C.