Paul and Patty Black (Both Are Age 66)are Married and Together

question 63

Essay

Paul and Patty Black (both are age 66)are married and together have AGI of $140,000 in 2014.They have two dependents and file a joint return.During the year,they paid $8,000 for medical insurance,$15,000 in doctor bills and hospital expenses,and $1,000 for prescribed medicine and drugs.
a.In December 2014,the Blacks received an insurance reimbursement of $3,500 for hospitalization expenses.Determine the deduction allowable for medical expenses paid during the year.
b.Assume instead that the Blacks received the $3,500 insurance reimbursement in February 2015.Determine the deduction allowable for medical expenses incurred in 2014.
c.Assume that the Blacks received the $3,500 insurance reimbursement in February 2015.Discuss whether the reimbursement will be included in their gross income for 2015.

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Definitions:

Lens

A transparent optical component that focuses or disperses light rays, used in a variety of devices such as glasses, cameras, and microscopes to enhance vision or capture images.

Opponent-Process Cell

A type of cell in the visual system that is believed to be responsible for processing colors by encoding differences between pairs of colors such as red-green or blue-yellow.

Thalamus

A large, dual-lobed mass of grey matter buried under the cerebral cortex, involved in relaying sensory information and acting as a center for pain perception.

Bipolar Cell

A type of neuron which is found in the retina of the eye, acting as a relay between photoreceptors and ganglion cells.