Diego, Who Is Single and Lives Alone, Is Physically Handicapped

question 23

Multiple Choice

Diego, who is single and lives alone, is physically handicapped as a result of a diving accident. In order to live independently, he modifies his personal residence at a cost of $20,000. The modifications included widening halls and doorways for a wheelchair, installing support bars in the bathroom and kitchen, installing a stairway lift, and rewiring so he could reach electrical outlets and appliances. Diego pays $200 for an appraisal that places the value of the residence at $124,000 before the improvements and $129,000 after. As a result of the operation of the stairway lift, Diego experienced an increase of $475 in his utility bills for the current year. Disregarding percentage limitations, how much of the above expenditures qualify as medical expense deductions?

• A)$25,475.
• B)$20,475.
• C)$15,675.
• D)$15,475.
• E)None of the above.

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Definitions:

Journal Entry

A record in the books of account that represents a financial transaction.

Payroll Taxes Expense

Taxes that employers are required to pay based on the wages and salaries of their employees, such as Social Security and Medicare taxes.

FICA Tax

A U.S. federal payroll tax used to fund Social Security and Medicare, distributed between employees and employers.

FUTA Tax

A United States federal tax levied on employers to fund state workforce agencies and unemployment benefits.