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was reimbursed for one-half of those

Deborah’s Form 8853:

$34,390

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

$ -0-

1st LTC

2nd LTC

payment rate method and therefore has a

Line

Period

Form 8853

single benefit period for 2005 (January

Step 2. They complete the aggregate

1 – December 31). Mrs. Smith completes

statement for the second LTC period as

$-0-

$10,800

Form 8853, lines 22 through 28, as

follows.

$-0-

$9,184

Line

Amount

$-0-

$1,616

Line

Amount

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

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

Paperwork Reduction Act Notice. We

$44,160 ($240 x 184 days)

$87,600 ($240 x 365 days)

ask for the information on this form to

$18,400 ($100 x 184 days)

carry out the Internal Revenue laws of the

$36,500 ($100 x 365 days)

United States. You are required to give us

$44,160

$87,600

the information. We need it to ensure that

$9,200 ($50 x 184 days)

you are complying with these laws and to

$18,250 ($50 x 365 days)

allow us to figure and collect the right

$34,960

$69,350

amount of tax.

$4,040

$-0-

You are not required to provide the

information requested on a form that is

Step 3. They allocate the aggregate per

Example 2

subject to the Paperwork Reduction Act

diem limitation of $34,960 on line 27

unless the form displays a valid OMB

among Mrs. Smith, Sam, and Deborah.

The facts are the same as in Example 1,

control number. Books or records relating

Because Mrs. Smith is the insured, the

except Mrs. Smith’s son, Sam, and

to a form or its instructions must be

daughter, Deborah, each also own a

per diem limitation is allocated first to her

retained as long as their contents may

to the extent of the per diem payments

qualified LTC insurance contract under

become material in the administration of

which Mrs. Smith is the insured. Neither

she received during the second LTC

any Internal Revenue law. Generally, tax

Sam nor Deborah incurred any costs for

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

returns and return information are

limitation of $22,960 is allocated between

qualified LTC services for Mrs. Smith in

confidential, as required by section 6103.

2005. From July 1, 2005, through

Sam and Deborah.

December 31, 2005, Sam received per

Allocation ratio to Sam: 60% of the

The average time and expenses

diem payments of $2,700 per month

required to complete and file this form will

remaining limitation ($13,776) is allocated

($16,200 total) and Deborah received per

vary depending on individual

to Sam because the $16,200 he received

diem payments of $1,800 per month

circumstances. For estimated averages,

during the second LTC period is 60% of

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

see the instructions for your income tax

the $27,000 received by both Sam and

Deborah agree to use the equal payment

return.

Deborah during the second LTC period.

rate method to determine their LTC

Allocation ratio to Deborah: 40% of

If you have suggestions for making this

periods.

the remaining limitation ($9,184) is

form simpler, we would be happy to hear

There are two LTC periods. The first is

allocated to Deborah because the

from you. See the instructions for your

181 days (from January 1 through June

$10,800 she received during the second

income tax return.

30) during which the per diem payments

LTC period is 40% of the $27,000

were $2,000 per month. The second is

received by both Sam and Deborah

184 days (from July 1 through December

during the second LTC period.

31) during which the aggregate per diem

Step 4. Mrs. Smith, Sam, and Deborah

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

each complete Form 8853 as follows.

under Mrs. Smith’s contract + $2,700

Mrs. Smith’s Form 8853:

under Sam’s contract + $1,800 under

Deborah’s contract).

1st LTC

2nd LTC

An aggregate statement must be

Line

Period

Form 8853

completed for the second LTC period and

attached to Mrs. Smith’s, Sam’s, and

$12,000

$24,000

Deborah’s forms.

$34,390

$12,000

$46,390

Step 1. They complete a statement for

$ -0-

$-0-

Mrs. Smith for the first LTC period as

follows.

Sam’s Form 8853:

Line

Amount

1st LTC

2nd LTC

Line

Period

Form 8853

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

$-0-

$16,200

$43,440 ($240 x 181 days)

$-0-

$13,776

$18,100 ($100 x 181 days)

$-0-

$2,424

$43,440

$9,050 ($50 x 181 days)

-8-

Instructions For Form 8853 - Archer Msas And Long-Term Care Insurance Contracts - 2005 Page 8

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