Frank, a Widower, Had a Serious Stroke and Is No

question 93

Essay

Frank, a widower, had a serious stroke and is no longer capable of caring for himself. He has three sons, all of whom live in different states. Because they are unable to care for Frank in their homes, his sons have placed him in a nursing home equipped to provide medical and nursing care facilities. Total nursing home expenses amount to $45,000 per year. Of this amount, $18,000 is directly attributable to medical and nursing care.Frank's Social Security benefits are used to pay for $12,000 of the nursing home charges. He has no other income. His sons plan to split the remaining medical expenses equally.
a. What portion of the nursing home charges is potentially deductible as a medical expense?
b. Can you provide Frank's sons with a tax planning idea for maximizing the deduction for his medical expenses?

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Definitions:

Committed Fixed Costs

Long-term fixed costs that cannot be easily altered in the short term, such as leases, depreciation on equipment, and salaries of permanent employees.

Short Run

A period in which at least one factor of production is fixed, allowing limited adjustments to production or operational levels.

Variable Costs Per Unit

The costs that vary directly in proportion to changes in the level of production or sales volume.

Activity

A task, action, or operation performed in a business or industrial context, often contributing to a larger set of operations.