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    Medical Expenditures for Individual Taxpayers

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    Phillip developed hip problems and was unable to climb the stairs to reach his second-floor bedroom. His physician advised him to add a first-floor bedroom to his home. The cost of constructing the room was
    $32,000. The increase in the value of the residence as a result of the room addition was determined to be $17,000. In addition, Phillip paid the contractor $5,500 to construct an entrance ramp to his home and $8,500
    to widen the hallways to accommodate his wheelchair. Phillip's AGI for the year was $100,000. How much of these expenditures can Phillip deduct as a medical expense?
    a. $14,000.
    b. $15,000.
    c. $21,500.
    d. $29,000.
    e. None of the above.

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    Your friend Scotty informs you that he received a "tax-free" reimbursement in 2007 of some medical expenses he paid in 2006. Which of the following statements best explains why Scotty is not required to
    report the reimbursement in gross income?
    a. Scotty itemized deductions in 2006.
    b. Scotty did not itemize deductions in 2006.
    c. Scotty itemized deductions in 2007.
    d. Scotty did not itemize deductions in 2007.
    e. Scotty itemized deductions in 2007 but not in 2006.

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    In 2007, Boris pays a $4,800 premium for high-deductible medical insurance for himself and his family. In addition, he contributes $3,000 to a Health Savings Account. Which of the following statements is true?
    a. If Boris is self-employed, he may deduct $7,800 as a deduction for AGI.
    b. If Boris is self-employed, he may deduct $3,000 as a deduction for AGI and may include
    the $4,800 premium when calculating his medical expense deduction.
    c. If Boris is an employee, he may deduct $7,800 as a deduction for AGI.
    d. If Boris is an employee, he may include $7,800 when calculating his medical expense deduction.
    e. None of the above.

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    During the current year, Hugh, a self-employed individual, paid the following amounts:

    Real estate tax on Iowa residence $3,800
    State income tax 1,700
    Real estate taxes on land in Puerto Rico (held as an investment) 1,100
    Gift tax paid on gift to daughter 1,200
    State sales taxes 1,750
    State occupational license fee 300
    Property tax on value of his automobile (used 100% for business) 475

    What is the maximum amount Hugh can claim as taxes in itemizing deductions from AGI?
    a. $6,600.
    b. $6,650.
    c. $7,850.
    d. $8,625.
    e. None of the above.

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    During 2007, Nancy paid the following taxes:

    Taxes on residence (for the period from March 1 through August 31, 2007) $5,250
    State motor vehicle tax (based on the value of the personal use automobile) 430
    State sales tax 3,500
    State income tax 3,050

    Nancy sold her personal residence on June 30, 2007, under an agreement in which the real estate taxes were not prorated between the buyer and the seller.
    What amount qualifies as a deduction from AGI for 2007 for
    Nancy?
    a. $9,180.
    b. $9,130.
    c. $7,382.
    d. $5,382.
    e. None of the above.

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    https://brainmass.com/business/accounting/medical-expenditures-for-individual-taxpayers-205873

    Solution Preview

    1. Phillip
    The first hurdle to jump over is the 7.5% of AGI. $100,000 * .075 = $7,500
    Medical expenditures must be directly related to the medical condition. The addition of the room, the ramp construction and the widening of the hallways for the wheelchair are deductible expenditures.
    Room addition is calculated as follows the cost of $32,000 - increase in value of $17,000 leaves $15,000 to be deductible. Then add in the ramp construction of $5,500 and the widening of the halls of $8,500 for total medical expenditures of $29,000 subtracting the $7,500 leaves deductible medical expenses of $21,500 which is answer c.

    2. Scotty
    The best answer here is B that Scotty did ...

    Solution Summary

    This solution contains questions and answers concerning medical expenditures for use on Schedule A of Form 1040 and self-employed health insurance deduction on the front of 1040.

    $2.19

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