Question

USE 2018 TAX RULES TO ANSWER THE FOLLOWING:

Jane suffers from a degenerative spinal disorder. Her physician said that swimming could help prevent the onset of permanent paralysis and recommended the installation of a swimming pool at her residence for her use. Jane’s residence had a market value of approximately $500,000 before the swimming pool was installed. The swimming pool was built, and an appraiser estimated that the value of Jane’s home increased by $98,000 because of the addition.

The pool cost $194,000, and Jane claimed a medical expense deduction of $96,000 ($194,000 − $98,000) on her tax return. Upon audit of the return, the IRS determined that an adequate pool should have cost $70,000 and would increase the value of her home by only $31,000. Thus, the IRS claims that Jane is entitled to a deduction of only $39,000 ($70,000 − $31,000).

Is there any ceiling limitation on the amount deductible as a medical expense? Explain.

Can capital expenditures be deductible as medical expenses? Explain.

What is the significance of a “minimum adequate facility”? Should aesthetic or architectural qualities be considered in the determination? Why or why not?

Answer 1

a) There is no ceiling monetary limit for considering the deduction of medical expense. However only the minimum adequate facility or the requirement essential for curing the disease of the patient is allowed as deduction. This shows whatever cost a man brought about will be permitted as reasoning gave that the cost is typical and not includes any phenomenal exercises

b) Capital expenditure can be allowed as deduction provided that the expenditure is incurred for curing the disease of the person and is essential for medical treatment of the person. In the present circumstance, Jane has brought about the use of building swimming pool according to proposal from the doctor. However, only the minimum expenditure required to build the facility to cure the disease will only be allowed as deduction. Any additional expenses incurred will not be allowed. In the present circumstance just cost of $70,000 will be considered and derivation of $ 39000 will be permitted

c) Minimum adequate facility refers to the minimum expenditure or minimum infrastructure required for the treatment of the person. It WO exclude any extra use brought about for extravagance or comfort of individual.

Tasteful or building characteristics are not considered in assurance of least satisfactory office as the equivalent are extravagance treatment. They are not the essential requirement for curing the disease or for treatment of the disease