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

question 98

Essay

Paul and Patty Black (both are age 66) are married and together have AGI of $105,000 in 2018. 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 2018, 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 2019. Determine the deduction allowable for medical expenses incurred in 2018.
c. Assume that the Blacks received the $3,500 insurance reimbursement in February 2019.
Discuss whether the reimbursement will be included in their gross income for 2019.

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Definitions:

Autonomic Nervous System

is a part of the nervous system that controls involuntary bodily functions such as heartbeat, digestion, and breathing.

Sensory Nervous System

The part of the nervous system that processes input from sensory organs, enabling the perception of sight, sound, touch, taste, and smell.

Somatic Nervous System

The division of the peripheral nervous system that controls the body’s skeletal muscles. Also called the skeletal nervous system.

Parasympathetic Nervous

Part of the autonomic nervous system responsible for conserving energy and promoting restful states by slowing the heart rate and increasing intestinal and gland activity.