46 MODULE 33 TAXES: INDIVIDUAL
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III.A. Medical and Dental Expenses
106. (b) The requirement is to determine Carroll's maxi-
mum medical expense deduction after the applicable thresh-
old limitation for the year. An individual taxpayer's unre-
imbursed medical expenses are deductible to the extent in
excess of7.5% of the taxpayer's adjusted gross income.
Although the cost of cosmetic surgery is generally not de-
ductible, the cost is deductible if the cosmetic surgery or
procedure is necessary to ameliorate a deformity related to a
congenital abnormality or personal injury resulting from an
accident, trauma, or disfiguring disease. Here, Carroll's
deduction is ($5,000 + $15,000) - ($100,000 x 7.5%) =
$12,500.
107. (b) The requirement is to determine the Blairs' item-
ized deduction for medical expenses for 2009. A taxpayer
can deduct the amounts paid for the medical care of himself,
spouse, or dependents. The Blairs' qualifying medical ex-
penses include the $800 of medical insurance premiums,
$450 of prescribed medicines, $1,000 of unreimbursed doc-
tor's fees, and $150 of transportation related to medical care.
These expenses, which total $2,400, are deductible to the
extent they exceed 7.5% of adjusted gross income, and result
in a deduction of $150. Note that nonprescription medi-
cines, including aspirin and over-the-counter cold capsules, .
are not deductible. Additionally, the Blairs cannot deduct
the emergency room fee they paid for their son because they
did not provide more than half of his support and he there-
fore does not qualify as their dependent.
108. (a) The requirement is to determine the amount the
Whites may deduct as qualifying medical expenses without
regard to the adjusted gross income percentage threshold.
The Whites' deductible medical expenses include the $600
spent On repair and maintenance of the motorized wheelchair
and the $8,000 spent for tuition, meals, and lodging at the
special school for their physically handicapped dependent
child. Payment for meals and lodging provided by an insti-
tution as a necessary part of medical care is deductible as a
medical expense if the main reason for being in the institu-
tion is to receive medical care. Here, the item indicates that
the Whites' physically handicapped dependent child was in
the institution primarily for the availability of medical care,
and that meals and lodging were furnished as necessary in-
cidents to that care.
109. (c) The requirement is to determine the amount
Wells can deduct as qualifying medical expenses without
regard to the adjusted gross income percentage threshold.
Wells' deductible medical expenses include the $500 pre-
mium on the prescription drug insurance policy and the $500
unreimbursed payment for physical therapy. The earnings
protection policy is not considered medical insurance be-
cause payments are not based on the amount of medical
expenses incurred. As a result, the $3,000 premium is a
nondeductible personal expense.
110. (d) The requirement is to determine the amount of
expenses incurred in connection with the adoption of a child
that can be deducted by the Sloans on their 2009 joint re-
turn. A taxpayer can deduct the medical expenses paid for a
child at the time of adoption if the child qualifies as the tax-
payer's dependent when the medical expenses are paid.
Additionally, if a taxpayer pays an adoption agency for
medical expenses the adoption agency already paid, the tax-
payer is treated as having paid those expenses. Here, the
Sloans can deduct the child's medical expenses of $5,000
that they paid. On the other band, the legal expenses of
$9,000 and agency fee of $4,000 incurred in connection with
the adoption are treated as nondeductible personal expenses.
However, the Sloans will qualify to claim a nonrefundable
tax credit of up to $12,150 (for 2009) for these qualified
adoption expenses.
111. (a) The requirement is to determine the amount that
can be claimed by the Clines in their 2009 return as quali-
fying medical expenses. No medical expense deduction is
allowed for cosmetic surgery or similar procedures, unless
the surgery or procedure is necessary to ameliorate a de-
formity related to a congenital abnormality or personal in-
jury resulting from an accident, trauma, or disfiguring dis-
ease. Cosmetic surgery is defined as any procedure that is
directed at improving a patient's appearance and does not
meaningfully promote the proper function of the body or
prevent or treat illness or disease. Thus, Ruth's face-lift and
Mark's hair transplant do not qualify as deductible medical
expenses in 2009.
112. (d) The requirement is to determine the amount that
Scott can claim as deductible medical expenses. The medi-
cal expenses incurred by a taxpayer for himself, spouse, or a
dependent are deductible when paid or charged to a credit
card. The $4,000 of medical expenses for his dependent son
are deductible by Scott in 2009 when charged on Scott's
credit card. It does not matter that payment to the credit
card issuer had not been made when Scott filed his return.
Expenses paid for the medical care of a decedent by the de-
cedent's spouse are deductible as medical expenses in the
·1 year they are paid, whether the expenses are paid
before or
after the decedent's death. Thus, the $2,800 of medical ex-
penses for his deceased spouse are deductible by Scott when
paid in 2009, even though his spouse died in 2008.
113. (d) The requirement is to determine which expendi-
ture qualifies as a deductible medical expense. Premiums
paid for Medicare B supplemental medical insurance qualify
as a deductible expense: Diaper service, funeral expenses,
and nursing care for a healthy baby are not deductible as
medical expenses. .
114. (b) The requirement is to determine Stenger's net
medical expense deduction for 2009. It would be computed
as follows:
Prescription drugs $300
Medical insurance premiums 750
Doctors ($2,550 - $900) 1,650
Eyeglasses ----12
$2,775
Less 7.5% of AGI ($35,000)
Medical expense deduction for 2009 2.ru
$---.l.5
115. (d) The requirement is to determine the total amount
Q
of deductible medical expenses for the Bensons before the
application of any limitation rules. Deductible medical ex-
penses include those incurred by a taxpayer, taxpayer's
spouse, dependents of the taxpayer, or any person for whom
the taxpayer could claim a dependency exemption except
that the person had gross income of $3,650 or more, or filed
a joint return. Thus, the Bensons may deduct medical ex-
penses incurred for themselves, for John (i.e., no depen-
dency exemption only because his gross income is $3,650 or
more), and for Nancy (i.e., a dependent of the Bensons).