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Sam’s Form 8853:

Enter your share of the per diem

Step 1. They complete a statement for

limitation and the taxable payments on

Mrs. Smith for the first LTC period as

1st LTC

2nd LTC

lines 27 and 28. Leave lines 23 through

follows.

Line

Period

Form 8853

26 blank.

Line

Amount

Example 1

$-0-

$16,200

Mrs. Smith was chronically ill throughout

$12,000 ($2,000 x 6 mos.)

$-0-

$9,360

2001 and received 12 monthly payments

$36,200 ($200 x 181 days)

$-0-

$6,840

on a per diem basis from a qualified LTC

insurance contract. She was paid $2,000

$18,100 ($100 x 181 days)

Deborah’s Form 8853:

per month ($24,000 total). Mrs. Smith

$36,200

incurred expenses for qualified LTC

1st LTC

2nd LTC

$9,050 ($50 x 181 days)

services of $100 per day ($36,500) and

Line

Period

Form 8853

was reimbursed for one-half of those

$27,150

expenses ($18,250). She uses the equal

$-0-

$10,800

$ -0-

payment rate method and therefore has a

$-0-

$6,240

single benefit period for 2001 (January

Step 2. They complete the aggregate

1 – December 31). Mrs. Smith completes

$-0-

$4,560

statement for the second LTC period as

lines 22 through 28 of Form 8853 as

follows.

Paperwork Reduction Act Notice. We

Line

Amount

ask for the information on this form to

Line

Amount

carry out the Internal Revenue laws of the

$39,000 ($6,500 x 6 mos.)

United States. You are required to give us

$24,000 ($2,000 x 12 mos.)

$36,800 ($200 x 184 days)

the information. We need it to ensure that

$73,000 ($200 x 365 days)

you are complying with these laws and to

$18,400 ($100 x 184 days)

$36,500 ($100 x 365 days)

allow us to figure and collect the right

$36,800

amount of tax.

$73,000

You are not required to provide the

$9,200 ($50 x 184 days)

$18,250 ($50 x 365 days)

information requested on a form that is

$27,600

$54,750

subject to the Paperwork Reduction Act

$11,400

unless the form displays a valid OMB

$-0-

control number. Books or records relating

Step 3. They allocate the aggregate per

to a form or its instructions must be

Example 2

diem limitation of $27,600 on line 27

retained as long as their contents may

among Mrs. Smith, Sam, and Deborah.

The facts are the same as in Example 1,

become material in the administration of

Because Mrs. Smith is the insured, the

except Mrs. Smith’s son, Sam, and

any Internal Revenue law. Generally, tax

per diem limitation is allocated first to her

daughter, Deborah, each also own a

returns and return information are

to the extent of the per diem payments

qualified LTC insurance contract under

confidential, as required by section 6103.

she received during the second LTC

which Mrs. Smith is the insured. Neither

The time needed to complete and file

period ($12,000). The remaining per diem

Sam nor Deborah incurred any costs for

this form will vary depending on individual

limitation of $15,600 is allocated between

qualified LTC services for Mrs. Smith in

circumstances. The estimated average

Sam and Deborah.

2001. From July 1, 2001, through

time is:

December 31, 2001, Sam received per

Allocation ratio to Sam: 60% of the

diem payments of $2,700 per month

remaining limitation is allocated to Sam

Recordkeeping . . . . . . . . 1 hr., 31 min.

($16,200 total) and Deborah received per

because the $16,200 he received during

diem payments of $1,800 per month

the second LTC period is 60% of the

Learning about the law or

($10,800 total). Mrs. Smith, Sam, and

$27,000 received by both Sam and

the form . . . . . . . . . . . . .

34 min.

Deborah agree to use the equal payment

Deborah during the second LTC period.

Preparing the form . . . . . 1 hr., 44 min.

rate method to determine their LTC

Allocation ratio to Deborah: 40% of

periods.

the remaining limitation is allocated to

Copying, assembling, and

There are two LTC periods. The first is

Deborah because the $10,800 she

sending the form to the

181 days (from January 1 through June

received during the second LTC period is

IRS . . . . . . . . . . . . . . . . .

46 min.

30) during which the per diem payments

40% of the $27,000 received by both Sam

were $2,000 per month. The second is

and Deborah during the second LTC

If you have comments concerning the

184 days (from July 1 through December

period.

accuracy of these time estimates or

31) during which the aggregate per diem

Step 4. Mrs. Smith, Sam, and Deborah

suggestions for making this form simpler,

payments were $6,500 per month ($2,000

each complete Form 8853 as follows.

we would be happy to hear from you. You

under Mrs. Smith’s contract + $2,700

can write to the Tax Forms Committee,

Mrs. Smith’s Form 8853:

under Sam’s contract + $1,800 under

Western Area Distribution Center,

Deborah’s contract).

Rancho Cordova, CA 95743-0001. Do

1st LTC

2nd LTC

An aggregate statement must be

not send the form to this address.

Line

Period

Form 8853

completed for the second LTC period and

Instead, see Where Do You File? in the

attached to Mrs. Smith’s, Sam’s, and

Form 1040 instructions.

$12,000

$24,000

Deborah’s forms.

$27,150

$12,000

$39,150

$ -0-

$-0-

-8-

Instructions For Form 8853 - Archer Msas And Long-Term Care Insurance Contracts - 2001 Page 8

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