Tax Research Paper

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Charles Burton

2201 York Avenue,

Clinton, New Jersey

Dear Mr. Burton:

We have met last Friday, and talked about your medical expenses deduction issue and your question about whether the expense of building a high-end swimming pool is deductible. We follow Code § 213(a) that basically states that we can deduct the expense exceeding 7.5% of AGI for medical care of taxpayer, spouse, and dependent during the taxable year. I am writing this letter to give you some advices on your tax issue and a schedule of 2009 estimated medical deduction.

According to my research and experiences, my suggestions are as follow:

1. You can only deduct the difference between the elevator expense and the increase in value of your home. As stated in Reg 1.213-1(e)(1)(iii), “where a taxpayer is advised by a physician to install an elevator in his residence so that the taxpayer's wife who is afflicted with heart disease will not be required to climb stairs.” And “the amount in excess of the value enhancement, is deductible as a medical expense. “ In your case, you can deducted the difference between the installation cost of the elevator $150,000 and the amount increase your house’s market value which is $60,000, so only $90,000 is deductible but not all of your expense.

2. You could deduct the expense of acupuncture. After the research, I found out that Rev. Rul. 72-593, 1972-2 CB 180 stated that” Amounts paid for acupuncture services qualify as medical care expenses.” That’s also what your physician suggested.

3. You may not deduct the amount you pay for the trip to Hawaii. The Reg1.213-1(e)(2)(1)(ii) says “However, an expenditure which is merely beneficial to the general health of an individual, such as an expenditure for a vacation, is not an expenditure for medical care.” Your expense for vacation cannot be taken in as medical expenses.

4. The medical expense for prescription drug is deductable. Code §213(b) stated that the amount paid (not...
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