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:

Costs Expire

The concept that certain costs represent the consumption of assets over time or through use and are thus recorded as expenses.

Net Income

The total profit or loss of a business after all expenses, taxes, and costs have been deducted from total revenue.

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is received or paid.

IFRS

International Financial Reporting Standards, which are a set of accounting standards developed by the International Accounting Standards Board (IASB) for global use in financial reporting.