Timothy suffers from heart problems and, upon the recommendation of a physician,

Question

Timothy suffers from heart problems and, upon the recommendation of a physician, has an elevator installed in his personal residence. In connection with the elevator, Timothy incurs and pays the following amounts during the current year: Elevator and cost of installation $ l 5,500 Increase in utility bills due to the elevator 750 Cost of certified appraisal 500 The system has an estimated useful life of 20 years. The appraisal was to determine the value of Timothy's residence with and without the system. The appraisal states that the system increased the value of Timothy's residence by $2,000. How much of these expenses qualify for the medical expense deduction (before application of the I 0% limitation) in the current year?

Explanation / Answer

Timoty's Medical Expenses Statement

Elevator cost and intallation charges

$       15,500

Less:- Scrap value

$         2,000

(increased cost of Timothy's residence)

Depreciable Cost

$       13,500

Reduction in value of Equipment

Depreciable Cost

$       13,500

estimated useful life

20

Depreciation expenses for 1year ($13500/20years)

$             675

Expenses qualify for for the medical expenses

Utility Bills

$             500

Depreciation

$             675

Total

$         1,175

In the problem the Adjusted Gross Income (AGI) of Timothy not given. Therefore we can assume that the medical expenses $1175 qualify for deduction

If the AGI given the qualify medical expenses should be over 7.5% of AGI for deduction

Timoty's Medical Expenses Statement

Elevator cost and intallation charges

$       15,500

Less:- Scrap value

$         2,000

(increased cost of Timothy's residence)

Depreciable Cost

$       13,500

Reduction in value of Equipment

Depreciable Cost

$       13,500

estimated useful life

20

Depreciation expenses for 1year ($13500/20years)

$             675

Expenses qualify for for the medical expenses

Utility Bills

$             500

Depreciation

$             675

Total

$         1,175

In the problem the Adjusted Gross Income (AGI) of Timothy not given. Therefore we can assume that the medical expenses $1175 qualify for deduction

If the AGI given the qualify medical expenses should be over 7.5% of AGI for deduction

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