\"lso possible to prepare sotutes materials found in a standard tax library Rese
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"lso possible to prepare sotutes materials found in a standard tax library Research Problem 1. Jane suffers from a degenerative spinal disorder. Her physician hat swimming could help prevent the onset of permanent paralysis and recom mended the installation of a swimming pool at her residence for her dence had a market value of approximately $500,000 before the swimming pool was installed. The swimming pool was built, and an appraiser estimated that the value of Jane's home increased by $98,000 because of the addition. se. Jane's resi- The pool cost $194,000, and Jane claimed a medical expense deduction of $96,000 ($194,000 $98,000) on her tax return. Upon audit of the return, the IRS determined that an adequate pool should have cost $70,000 and would increase the value of her home by only $31,000. Thus, the IRS claims that Jane is entitled toa deduction of only $39,000 ($70,000 $31,000). a Is there any ceiling limitation on the amount deductible as a medical expens Explain b. Can capi ital expenditures be deductible as medical expenses? Explain. .What is the significance of a "minimum adequate facility" Should aesthetic or d af- chitectural qualities be considered in the determination? Why or why not?Explanation / Answer
Answer to question a) There is no ceiling monetary limit for considering the deduction of medical expense. However only the minimum adequate facility or the requirement essential for curing the disease of the patient is allowed as deduction. This indicates that whatever expense a person incurred will be allowed as deduction provided that the expense is normal and not involves any extraordinary activities
Answer to question a) Capital expenditure can be allowed as deduction provided that the expenditure is incurred for curing the disease of the person and is essential for medical treatment of the person. In the current situation, Jane has incurred the expenditure of building swimming pool as per recommendation from the physician. However, only the minimum expenditure required to build the facility to cure the disease will only be allowed as deduction. Any additional expenses incurred will not be allowed. In the current situation only expense of $70,000 will be considered and deduction of $ 39000 will be allowed
Answer to question c) Minimum adequate facility refers to the minimum expenditure or minimum infrastructure required for the treatment of the person. It will not include any additional expenditure incurred for luxury or convenience of person.
Aesthetic or architectural qualities are not considered in determination of minimum adequate facility as the same are luxury treatment. They are not the essential requirement for curing the disease or for treatment of the disease
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