Aaron,age 45,had AGI of $40,000 for 2016

question 93

Essay

Aaron,age 45,had AGI of $40,000 for 2016.He was injured in a skiing accident and paid $3,600 for hospital expenses and $1,400 for doctor bills.Aaron also incurred medical expenses of $1,200 for his child,who lives with his former wife and is claimed as a dependent by her.In 2017,Aaron was reimbursed $1,300 by his insurance company for the medical expenses attributable to the skiing accident.
a.Compute Aaron's deduction for medical expenses in 2016.
b.Assume that Aaron would have elected to itemize his deductions even if he had no medical expenses in 2016.How much,if any,of the $1,300 reimbursement must be included in gross income in 2017?
c.Assume that Aaron's other itemized deductions in 2016 were $8,000 and that he filed as a head of household.How much of the $1,300 reimbursement must he include in gross income in 2017?

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Definitions:

Transactions

Economic events that affect a business's financial position, involving the transfer of assets, provision of services, or incurring of obligations.

Merchandise Inventory

Products that a retailer, wholesaler, or distributor has on hand to sell to customers.

Cash Effect

The impact of any transaction on a company's cash and cash equivalents, indicating how the transaction alters the company's liquidity.

Accounts Receivable

Funds due to a company from its clients for products or services already provided but still unpaid.