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was reimbursed for one-half of those

Step 2. They complete the aggregate

Deborah’s Form 8853:

expenses ($18,300). She uses the equal

statement for the second LTC period as

1st LTC

2nd LTC

payment rate method and therefore has a

follows.

Line

Period

Form 8853

single benefit period for 2004 (January

1 – December 31). Mrs. Smith completes

Line

Amount

$-0-

$10,800

lines 22 through 28 of Form 8853 as

follows.

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

$-0-

$8,448

$42,320 ($230 x 184 days)

$-0-

$2,352

Line

Amount

$18,400 ($100 x 184 days)

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

$42,320

Paperwork Reduction Act Notice. We

$84,180 ($230 x 366 days)

ask for the information on this form to

$9,200 ($50 x 184 days)

carry out the Internal Revenue laws of the

$36,600 ($100 x 366 days)

$33,120

United States. You are required to give us

$84,180

the information. We need it to ensure that

$5,880

you are complying with these laws and to

$18,300 ($50 x 366 days)

Step 3. They allocate the aggregate per

allow us to figure and collect the right

$65,880

diem limitation of $33,120 on line 27

amount of tax.

among Mrs. Smith, Sam, and Deborah.

$-0-

You are not required to provide the

Because Mrs. Smith is the insured, the

information requested on a form that is

per diem limitation is allocated first to her

Example 2

subject to the Paperwork Reduction Act

to the extent of the per diem payments

unless the form displays a valid OMB

The facts are the same as in Example 1,

she received during the second LTC

control number. Books or records relating

except Mrs. Smith’s son, Sam, and

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

to a form or its instructions must be

daughter, Deborah, each also own a

limitation of $21,120 is allocated between

retained as long as their contents may

qualified LTC insurance contract under

Sam and Deborah.

become material in the administration of

which Mrs. Smith is the insured. Neither

Allocation ratio to Sam: 60% of the

any Internal Revenue law. Generally, tax

Sam nor Deborah incurred any costs for

remaining limitation ($12,672) is allocated

returns and return information are

qualified LTC services for Mrs. Smith in

to Sam because the $16,200 he received

confidential, as required by section 6103.

2004. From July 1, 2004, through

during the second LTC period is 60% of

December 31, 2004, Sam received per

The time needed to complete and file

the $27,000 received by both Sam and

diem payments of $2,700 per month

this form will vary depending on individual

Deborah during the second LTC period.

($16,200 total) and Deborah received per

circumstances. The estimated average

Allocation ratio to Deborah: 40% of

diem payments of $1,800 per month

time is:

the remaining limitation ($8,448) is

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

allocated to Deborah because the

Deborah agree to use the equal payment

Recordkeeping . . . . . . . . 1 hr., 18 min.

$10,800 she received during the second

rate method to determine their LTC

LTC period is 40% of the $27,000

Learning about the law or

periods.

received by both Sam and Deborah

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

34 min.

There are two LTC periods. The first is

during the second LTC period.

182 days (from January 1 through June

Preparing the form . . . . . 1 hr., 37 min.

Step 4. Mrs. Smith, Sam, and Deborah

30) during which the per diem payments

each complete Form 8853 as follows.

Copying, assembling, and

were $2,000 per month. The second is

sending the form to the

184 days (from July 1 through December

Mrs. Smith’s Form 8853:

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

46 min.

31) during which the aggregate per diem

1st LTC

2nd LTC

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

If you have comments concerning the

Line

Period

Form 8853

under Mrs. Smith’s contract + $2,700

accuracy of these time estimates or

under Sam’s contract + $1,800 under

suggestions for making this form simpler,

$12,000

$24,000

Deborah’s contract).

we would be happy to hear from you. See

An aggregate statement must be

$32,760

$12,000

$44,760

the Instructions for Form 1040.

completed for the second LTC period and

$ -0-

$-0-

attached to Mrs. Smith’s, Sam’s, and

Deborah’s forms.

Sam’s Form 8853:

Step 1. They complete a statement for

Mrs. Smith for the first LTC period as

1st LTC

2nd LTC

Line

Period

Form 8853

follows.

$-0-

$16,200

Line

Amount

$-0-

$12,672

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

$-0-

$3,528

$41,860 ($230 x 182 days)

$18,200 ($100 x 182 days)

$41,860

$9,100 ($50 x 182 days)

$32,760

$ -0-

-8-

Instructions For Form 8853 - Archer Msas And Long-Term Care Insurance Contracts - 2004 Page 8

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