Phillip 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 the year was $100,000.How much of these expenditures can Phillip deduct as a medical expense?
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 entrance ramp ($5,500) and the cost of widening the hallways ($8,500) as medical expenses. For the first-floor bedroom, only the amount that exceeds the increase in home value is deductible: $32,000 - $17,000 = $15,000. Total deductible expenses: $5,500 + $8,500 + $15,000 = $29,000. However, medical expenses are only deductible to the extent they exceed 7.5% of AGI. 7.5% of $100,000 is $7,500, so $29,000 - $7,500 = $21,500 is deductible.

Phillip Developed Hip Problems and Was Unable to Climb the Stairs