Phillip,age 66,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 2015 was $100,000.How much of these expenditures can Phillip deduct as a medical expense in 2015?
A)$14,000
B)$15,000
C)$21,500
D)$29,000
E)None of the above

Question

Quizplus · Accepted Answer

Phillip can deduct the cost of the first-floor bedroom ($32,000) and the cost of the entrance ramp ($5,500) and hallway widening ($8,500) to the extent that the total cost of these improvements exceeds the increase in the value of his residence as a result of the improvements ($17,000).

Therefore, the amount of these expenditures that Phillip can deduct as a medical expense is calculated as follows:

$32,000 + $5,500 + $8,500 - $17,000 = $29,000

However, medical expenses are only deductible to the extent that they exceed 10% of Phillip's AGI.

10% of $100,000 (Phillip's AGI) = $10,000

Since $29,000 is greater than $10,000, Phillip can deduct $21,500 ($29,000 - $10,000) as a medical expense in 2015.

Therefore, the best choice is C) $21,500.

Phillip,age 66,developed Hip Problems and Was Unable to Climb the Stairs