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

question 40

Essay

Paul and Patty Black (both are age 66) are married and together have AGI of $105,000 in 2017. 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 2017, 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 2018. Determine the deduction allowable for medical expenses incurred in 2017.
c.Assume that the Blacks received the $3,500 insurance reimbursement in February 2018. Discuss whether the reimbursement will be included in their gross income for 2018.

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Definitions:

Neolithic Transition

The period in which human societies transitioned from nomadic hunting and gathering to settled agricultural communities, dramatically changing human history and societies.

Years Ago

A phrase indicating a specific amount of time in the past relative to the current date.

Natufians

A prehistoric culture located in the Levant, around 12,000 to 9,500 BC, known for their early adoption of sedentism and plant cultivation.

Neolithic Transition

The shift from hunting and gathering societies to agriculture and settlement, marking the beginning of the Neolithic Age.