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Jewish World Review March 6, 2001 / 11 Adar, 5761

Tax Tales by A. J. Cook

A.J. Cook
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Consumer Reports

Home improvements as medical deductions? -- Lawrence S. Zipkin built a new home and deducted as a medical expense $645,659 of its cost. And a judge approved it.

The rule is that some permanent improvements to property will qualify as a medical deduction if directly related to medical care. The deduction is limited, however, to the extent cost exceeds the property value increase.

Zipkin's wife, Shirley, suffers from Multiple Chemical Sensitivity Syndrome. Her physician recommended the Zipkins build a house made of steel, concrete and other special components including special ventilation and filtering systems.

Even though the couple spent $1,216,230, the house was only worth $570,571 on the market, a short-fall of $645,659.

The court allowed the deduction in the year the house was ready to live in.

But remember, the reduction in taxable income is limited: Taxpayers must itemize and then may deduct only that amount exceeding 7.5 percent of adjusted gross income. Still, a nice deduction for the Zipkins.

In another home improvement case, part of the cost of an elevator qualified for a person with a heart disease. But what about a swimming pool? Could that qualify?

Bonnie B. Ferris suffered from a degenerative spinal disorder, which her doctor said could lead to paralysis. He recommended that she and her husband install a pool so she could swim twice a day.

The couple deducted as a medical expense much of the cost of their almost $200,000 enclosed swimming pool. The IRS cut this down to $6,500. In court, however, the IRS upped their allowed deduction to $39,000, conceding that year-round swimming in Maple Bluff, Wis., required an enclosure.

The appeals court, not ready to agree with either side, explained its position:

It isn't necessary that a pool be the cheapest, nor should it be built in the "grand and luxurious style employed here."

The Ferris's deduction wouldn't include luxury items such as the bar, sauna bath, hand-cut stone, ceramic tile and cathedral ceiling. The judge sent the case back to a lower court to determine the deduction considering the above factors.

A.J. Cook, lawyer and accountant, is counsel with the law firm of Pietrangelo Cook PLC. Comment by clicking here.


02/14/01: Distinguishing income from receipts confuses
02/07/01: IRS sank its teeth into hunters' expenses
01/30/01: 'Match game' could mean big bucks for IRS
01/22/00: Getting the address right

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