Linda Larue has arthritis. Her chiropractor advised her that she needed to swim

Question

Linda Larue has arthritis. Her chiropractor advised her that she needed to swim daily to alleviate her pain and other symptoms. Consequently, Linda and her husband, Philo, purhcased for $400,000 a new home that had a swimming pool, after selling their home for $325,000.00. If the Larues had constructed a pool at their former residence, it would have cost $75,000 to build, and it would have increased the value of their home by $50,000. a. List as many possible tax reasearch issues as you can to determine whether the Larues can deduct any of their current-year expenditures for Linda's arthritis. b. After completing your list of tax issues, list the keywords you might use to construct an online tax research query. c. Execute an online search using your query. For simplicity, select the IRS Revenue Rulings database from whichever online tax service you use. Summarize your findings.

Explanation / Answer

1. Since the Pool is specially equipped to alleviate Linda Larue's arthritis condition and her physician prescribed swimming several times a day as treatment, the IRS will likely allow it as a deductible medical expense.

2. Tax treatment would not differ on whether the pool is purchased at a new residence or constructed on the taxpayer's existing property.

3. Quotations can be obtained from various vendors to determine the price of building a pool in that locality, the average value of these quotations could be taken as the value of the pool for tax purposes. The value by which the property value increases after building the pool has to be deducted from the total cost of the pool. for example $20,000 is spent to build a pool that increases home’s value by $17,000, $3,000 can be calimed as deduction.

4. yes the cost of maintaining a swimming pool is deductible. Maintaining a swimming pool includes the cost of heating the pool and pool chemicals.

5. Since the expense if captial in nature , the benefit from pool is derived accross a period of time , depreciation can be claimed over the estimated useful life of the pool.

6. There is no limitation on the deduction based on the elaborateness of the pool. but the value increase in the property price due to construction of a pool would be deducted from the cost of the pool.

7. Amt of deduction would be over the estimated useful life of the pool.

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