Arthur L. Rubin wrote:

- quote -

Yep, that's the result based on the Pub's worksheets. But,
my question is, where is the authoritative support for that
approach? It appears to be loosely based on a discussion of
taxable recoveries contain in regs under IRC 213 (medical
deductions), but said regs are silent (as near as I can
tell) on the notion that BASIS is partially restored in the
case of a deduction for a capital item.

Here's what throws me a loop: If an employee deducts
(depreciates) a capital item as an employee business
expense, he is clearly NOT entitled to restore to basis the
portion of the deduction that is wiped out by the 2% of AGI
floor (such depreciation is "allowed/allowable" and you are
stuck with it, like it or not). So why should a different
rule apply when a capital item is deducted for medical
purposes??? Me thinks that this unexplained discrepancy
casts doubt on the validity of the approach taken by the IRS
worksheet in Pub 502.

MTW

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MTW wrote:

- quote -

In this simple case, $5,000, according to pub 502.

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- quote -

You'll find the worksheets on Page 19 of Publication 502:

http://www.irs.gov/pub/irs-pdf/p502.pdf

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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Frank S. Duke, Jr. wrote:

- quote -

Normally a charitable deduction of personal property would
be limited to the lower of FMV or basis. Since he already
deducted the cost of the chair as a medical expense, his
basis would arguably be zero (but see below).

However, if he owned the chair for more than a year, and
donated it to an organization that will USE it in their
exempt activities (and it sounds like that's the case), then
he arguably gets to deduct the FMV at that time as a
charitable contribution. Sounds like a "double dip," but
maybe it works.

(Note: One thing I've never been clear on is how the 7.5% of
AGI that you WEREN'T allowed to deduct as medical expenses
impacts the basis of "property" items that were deducted.
Say that 7.5% of his AGI was $5,000 and that the $8,000
chair was his only medical expense. His allowed medical
deduction would be $3,000. But what is the resulting basis
of the chair? Zero??? Or $5,000??? Or???)

MTW

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Frank S. Duke, Jr. wrote:

- quote -

Heck no. although it might depend on the total of his
itemized deductions that year versus the cost of the chair
in relation to the amount that 7.5% of AGI was.

If the chair cost 8000$, and other medical brought total up
to.... say 11,000$, and 7.5$ of AGI had been 6000$, then
it's easy to calculate the tax benefit of that portion of
the itemized deduction for that year. Hmmm, with these
figures, maybe that is how HE got the 5000$ value!

But of course no double dippling.

ChEAr$,
Harlan Lunsford, EA n LA

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I am reviewing a tax return for a person who is confined to
a motorized wheelchair. He purchased this chair for about
$8000 back in 2000 and after owning it for about a year
found out that it did not meet his needs. He bought a
different chair for $12,500 and donated the one year old
chair to a qualified rehabilitation hospital here in
Cincinnati. Although he valued the chair at $6000, he only
deducted $5000 because he did not believe it was worth it to
get a formal written appraisal.

My question is whether he should have taken the charitable
deduction at all. In the year he bought the chair, he
deducted qualified medical expenses far in excess of the
7.5% floor and the chair was included. Since he already
took a deduction for it when he bought it, can he take
another when he gives it away?

All freely provided advice guarantee correct or double your
money back

Frank S. Duke, Jr. CPA
Cincinnati, OH USA

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