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 2014 was $100,000.How much of these expenditures can Phillip deduct as a medical expense in 2014?
A)$14,000
B)$15,000
C)$21,500
D)$29,000
E)None of these

Question

Quizplus · Accepted Answer

A capital improvement that ordinarily would not have a medical purpose qualifies as a medical expense if it is directly related to prescribed medical care and is deductible to the extent that the expenditure exceeds the increase in value of the related property.Examples of such improvements include dust elimination systems,elevators,and vans specially designed for wheelchair-bound taxpayers.Phillip's medical expense related to the room addition is $15,000 ($32,000 - $17,000).
The full cost of home-related capital expenditures incurred to enable a physically handicapped individual to live independently and productively qualifies as a medical expense.Qualifying costs include expenditures for constructing entrance and exit ramps to the residence,widening hallways and doorways to accommodate wheelchairs,installing support bars and railings in bathrooms and other rooms,and adjusting electrical outlets and fixtures.These expenditures are subject to the AGI floor only,and the increase in the home's value is deemed to be zero.The 7.5% AGI floor applies to Phillip because of his age .So Phillip's medical expense deduction is as follows:
Qualifying medical expenses ($15,000 + $14,000)$29,000
Less: 7.5% × $100,000 (AGI)(7,500)
Deductible medical expenses $21,500

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