A review of the 2017 tax file of Gregory,a single taxpayer who is age 40,provides the following information regarding Gregory's 2017 tax status: In 2018,Gregory receives a reimbursement for last year's medical expenses of $1,200.As a result,Gregory must
A)include $200 in gross income for 2018.
B)include $1,200 in gross income for 2018.
C)reduce 2018's medical expenses by $1,200.
D)amend the 2018 return.

Question

A review of the 2017 tax file of Gregory,a single taxpayer who is age 40,provides the following information regarding Gregory's 2017 tax status:  In 2018,Gregory receives a reimbursement for last year's medical expenses of $1,200.As a result,Gregory must
A)include $200 in gross income for 2018. 
B)include $1,200 in gross income for 2018. 
C)reduce 2018's medical expenses by $1,200. 
D)amend the 2018 return.

Quizplus · Accepted Answer

A)Include in 2018's income the lesser of the reimbursement or to the extent the tax benefit received in 2017.
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A Review of the 2017 Tax File of Gregory,a Single