Last Year, Mr. Smith Was Involved in an Automobile Accident, Severely Injuring His Legs. as a Part of a Long-Term Rehabilitation Process, His Physician Prescribes a Daily Routine of Swimming. Because There Is Not

1735 Words Oct 17th, 2011 7 Pages
Case:
Last year, Mr. Smith was involved in an automobile accident, severely injuring his legs. As a part of a long-term rehabilitation process, his physician prescribes a daily routine of swimming. Because there is not readily available public facility nearby, Mr. Smith purchases a house with a pool for $175,000. Replacing the pool would cost $20,000. The existing pool increases the fair market value of the house by $8,000. Mr. Smith spends $500 maintaining the pool and $1,800 in other medical expenses. Mr. Smith wants to know the total amount of medical expenses that he may claim in the current year. His AGI is $60,000.
Relevant Tax Law:
IRC Sec. 213(a) states that “there shall be allowed as a deduction the expenses paid
…show more content…
(http://www.taxalmanac.org/index.php/Treasury_Regulations%2C_Subchapter_A%2C_Sec._1.213-1) Any costs of operating or maintain the assets are subject to the 7.5% of AGI floor. (textbook)
According to IRS Publication 502, “you can include in medical expenses amounts you pay for special equipment installed in a home, or for improvements, if their main purpose is medical care for you, your spouse, or your dependent. The cost of permanent improvements that increase the value of your property may be partly included as a medical expense. The cost of the improvement is reduced by the increase in the value of your property. The difference is a medical expense. If the value of your property is not increased by the improvement, the entire cost is included as a medical expense.
Only reasonable costs to accommodate a home to a disabled condition are considered medical care. Additional costs for personal motives, such as for architectural or aesthetic reasons, are not medical expenses.” (http://www.irs.gov/publications/p502/ar02.html)
“Rev. Rul. 83-33, 1983-1 C.B. 70;
ISSUE
Are expenditures for the costs of constructing, operating, and maintaining an exercise pool deductible as medical expenses under section 213 of the Internal Revenue Code?

FACTS
A, an individual,…

Related Documents