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Article Date:
July 2007

Word Count:



Lack of a Time Sheet Kills the Section 105 Plan

Ronald Francis operated his sole proprietor farm in Pipestone, Minnesota. He hired his wife, Judith, under a written employment agreement that required Judith to keep the farm’s books, run business errands, and answer telephone calls.


The employment agreement between Ronald and Judith specified that Judith would receive $2,004 in wages and be an employee qualified for coverage under the proprietorship’s section 105 medical reimbursement plan. The proprietorship reimbursed Judith $9,502 for eligible medical expenses.


In its audit, the IRS disallowed ... Log in to view full article.

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