Sharisma suffered a serious stroke and was admitted to a nursing home for 140 days. Nursing home charges,including physician fees and other related expenses were $63,000.Under Sharisma's long-term care insurance contract,she received reimbursements of $56,000.How much of the $56,000 reimbursement must be included in Sharisma's gross income in 2014?

Question

Quizplus · Accepted Answer

According to the rules of taxation, if long-term care insurance meets certain requirements, then the reimbursements received are not included in gross income. However, in this case, the reimbursements received ($56,000) are less than the nursing home charges ($63,000). Therefore, Sharisma can include the difference of $7,000 as a medical expense deduction. As a result, the taxable amount of the reimbursement is $56,000 - $7,000 = $49,000. So, the correct answer is B.

Sharisma Suffered a Serious Stroke and Was Admitted to a Nursing