Tax Practice Series Analysis
¶2000 Deductions
	¶2840. Medical Expenses
¶2840. Medical Expenses
by
Keith E. Smith 
Assoc. Prof. of Accountancy
George Washington University
Washington, D.C.
OVERVIEW
In general, a taxpayer may deduct unreimbursed amounts paid for his own medical care and for that of his spouse and dependents. The scope of medical care includes the diagnosis, cure, mitigation, treatment, or prevention of disease, procedures affecting a structure or function of the body, related transportation, qualified long-term care services, and medical insurance. It does not include measures taken for the benefit of the taxpayer's general health.
For the regular tax, the deduction is permitted to the extent that the expenses exceed 7.5% of the taxpayer's adjusted gross income. For alternative minimum tax purposes, the floor is increased from 7.5% to 10%. In general, the taxpayer is entitled to the deduction only in the year the expense is paid. If not claimed as a medical expense deduction, the taxpayer may be able to claim the medical expense as a business deduction or a dependent care credit.
EXPLANATION
¶2840.01. Allowance of Deduction
Taxpayers may deduct their unreimbursed medical expenses and those of their spouses and dependents to the extent that the expenses exceed 7.5% of their adjusted gross income (AGI).1 The 7.5% of AGI floor substantially reduces the tax savings that the medical expenses would otherwise produce.2
1 §213(a). If adjusted gross income is changed (for example due to an audit or an amended return), the medical expense deduction must be recomputed. Thayer v. Comr., 12 T.C. 795, 798 (1949).
2 Note that for alternative minimum tax purposes, the floor is raised from 7.5% to 10% of adjusted gross income. §56(b)(1)(B). See ¶2840.13.
 Example—7.5% Floor
T has gross income of $85,000 and adjusted gross income of $80,000. He pays $9,000 of medical expenses and receives insurance reimbursements of $2,000. His unreimbursed expenses of $7,000 are deductible only to the extent that they exceed $6,000 (7.5% x AGI of $80,000). Therefore, the unreimbursed expenses of $7,000 yield a deduction of only $1,000.
The deduction for medical expenses is an itemized deduction. Therefore, the benefit of it is lost entirely in years in which the taxpayer takes the standard deduction.
 Example—Itemized Deductions Less Than Standard Deduction
The taxpayer in the preceding example had $1,000 of deductible medical expenses, net of the 7.5% of AGI floor. If the taxpayer is a single individual and the taxable year is 2001, then his standard deduction is $4,550. If the taxpayer has only $3,500 of other itemized deductions, then he will not itemize at all, because the total itemized deductions of $4,500 are less than his standard deduction. In this case, his medical expenses save him no tax at all.
To the extent possible, taxpayers should schedule their payments of medical expenses so that they occur in years in which they will exceed 7.5% of AGI floor. They can do this either by delaying elective medical procedures or delaying the payment of expenses.3
3 Early payments of medical expenses do not have the same effect of "bunching" the deductions. In general, prepaid medical expenses are deductible only in the future period when the services paid for in advance are actually rendered. Rose v. Comr., 52 T.C. 521 (1969), aff'd, 435 F.2d 149 (5th Cir. 1970); Bassett v. Comr., 26 T.C. 619 (1956).
 Example—Deferral of Payment of Expenses
T has $40,000 of AGI and $3,000 of unreimbursed medical expenses in both 2001 and 2002. T itemizes his deductions, but his medical expenses save him no taxes in either year, because in neither year do they exceed 7.5% of AGI.
	
		2001	2002	
	AGI	$40,000	$40,000	
	Medical expenses	3,000	3,000	
	less 7.5% of AGI	3,000	3,000	
	Deductible part of 
medical expenses	$0	$0	

If payment of $2,000 of the $3,000 of expenses incurred in 2001 were deferred until the later year, then expenses for the two years would be $1,000 and $5,000, respectively, and $2,000 could be deducted in 2002.
	
		2001	2002	
	AGI	$40,000	$40,000	
	Medical expenses	1,000	5,000	
	less 7.5% of AGI	3,000	3,000	
	Deductible part of medical 
expenses	$0	$2,000	

The tax benefit of medical expenses can be lost not only if the payments do not exceed the 7.5% of AGI floor, but also if the amount of the deduction exceeds the amount of income available for it to offset.4
4 Medical expenses do not produce a net operating loss capable of being carried back or forward to other taxable years. §172(b). See ¶2410, for a discussion of net operating losses.
 Example—Medical Expense Deduction Exceeds Income
T has AGI of $40,000. During the year he becomes seriously ill and incurs medical expenses of $50,000. T is uninsured, and uses his life's savings to pay the expenses. He has other non-miscellaneous itemized deductions of $10,000. His taxable income is computed as follows:
	
	AGI	$40,000		
	Itemized deductions:			
	Medical	(50,000)		
	7.5% of AGI	3,000		
	Excess	(47,000)		
	Other	(10,000)		
	Total itemized	(57,000)		
	Personal exemption	(2,900)		
	Total itemized deductions & personal 
exemption	(59,900)		
	Taxable Income	($19,000)		

Once taxable income reaches zero, there is no more tax for further deductions to save. The tax benefit of $19,900 of expense is lost. If T had been able to shift the unused deductions to the following year by deferring payment, some of the tax benefit might have been saved.
¶2840.02. Whose Medical Expenses Qualify?
The taxpayer's deduction for medical expenses may be based on his payment of his own expenses, and/or those of his spouse and his dependents. This is one of the few areas of the tax law in which the taxpayer may claim a deduction for the payment of another individual's expense.
 Example—Dependent's Medical Expenses
During 2004, T provided more than half of the support of his adult son, who was forced to leave his job due to illness. The son qualifies as T's dependent. T paid medical expenses for his son in the amount of $3,000. T may deduct the $3,000 of medical expenses, subject to his 7.5% of AGI limitation.
¶2840.02.A. Expenses of Dependents
The taxpayer may claim a deduction for the payment of medical expenses incurred by another individual if that individual is the taxpayer's dependent.5 The taxpayer may deduct amounts paid for the medical expenses of a dependent even if he or she is not allowed to claim an additional personal exemption for that dependent.6
5 §213(a); Regs. §1.213-1(a)(3)(i). To be a dependent, the requirements of §152 must be met. See also Rossoniello v. Comr., 21 T.C. 828 (1954). 
6 Regs. §1.213-1(a)(3)(i). Whether an individual is the taxpayer's dependent and, if he is, whether the taxpayer may claim an exemption for him, are distinct questions. Section 152 defines whether an individual is the taxpayer's dependent. Section 151(c), which cross-refers to §152, determines whether the taxpayer may claim an exemption for that dependent. See ¶2830 for a discussion of personal exemptions and the definition of a dependent.
Note: For taxable years beginning in 2005 and 2006, the Treasury is authorized to make any adjustments in the application of the internal revenue laws that "may be necessary to ensure that taxpayers do not lose any deduction or credit or experience a change of filing status by reason of temporary relocations by reason of Hurricane Katrina, Hurricane Rita, or Hurricane Wilma." 7 Such adjustments may include, for example, addressing the application of the residency requirements relating to dependency exemptions in the case of relocations. Any such authorized adjustment must ensure that an individual is not taken into account by more than one taxpayer with respect to the same benefit.7.1
7 §1400S(e), added by the Gulf Opportunity Zone Act of 2005, P.L. 109-135 §201(a).
7.1 §1400S(e).
 Example—Dependent's Medical Expenses Allowed Even If No Dependency Exemption Allowed
T pays over half of his adult son's support in 2004, and his son is his dependent. The son earned $10,000 in wages before illness forced him to leave his job. T is not allowed to claim a dependency exemption for the son for 2004 because he fails the gross income test.7.2 Nevertheless, the son is still T's dependent in 2004, and T may deduct any amount spent in 2004 to pay the son's medical expenses. (For taxable years beginning in 2005 and thereafter, the definition of a dependent is modified to comprise qualifying children and qualifying relatives, and the gross income test does not apply for purposes of determining whether an individual is a qualifying child; instead, the child must reside in the taxpayer's principal place of abode for more than half of the taxable year, must meet the age requirement, and must not provide more than half of his/her own support.) 
7.2 Pre-2005 §151(c)(1)(A); §152(d)(1)(B), as amended by the Working Families Tax Relief Act of 2004, P.L. 108-311, §201, effective for taxable years beginning after 2004.
 Example—Pre-2005 Years: Taxpayer Must Provide Over Half of Support
For 2004, more than half of the support of T's grandchild is provided by the grandchild's parents, T's son and daughter-in-law. T did, however, pay $1,000 for braces for the grandchild's teeth. T may not deduct the $1,000 because he did not provide more than half of the grandchild's support; therefore, the grandchild is not his dependent. (For taxable years beginning in 2005 and thereafter, the definition of a dependent is modified to include qualifying children and qualifying relatives. The "more than half of support" test does not apply for purposes of determining whether an individual is a qualifying child; instead, the child must reside in the taxpayer's principal place of abode for more than half of the taxable year, must meet the age requirement, and must not provide more than half of his/her own support.) 
In general, the minor child of divorced or separated parents is the dependent of the custodial parent,8 but is treated as the dependent of both parents for purposes of the medical expense deduction.9
8 See §152(e).
9 §213(d)(5) (Reference to §152(e)).
 Example—Expenses Paid by Divorced Parents
H and W are divorced. Their child, C, lives with W and is supported by H's support payments. During 2004, C has medical expenses of $3,000, of which H pays $2,000 and W pays the remaining $1,000. For tax purposes generally, C is the dependent of W, the custodial parent. For purposes of the medical expense deduction, however, C is considered to be the dependent of both H and W, and each may deduct the amount paid by him or her for C's medical expenses on his or her own return, subject to his or her own AGI limitation.
If an individual is the dependent of the taxpayer under a multiple support agreement,10 the taxpayer's deduction for the dependent's medical expenses is limited to the amount paid by the taxpayer individually.11 It does not include expenses paid by other members of the support group. Therefore, the group member to whom the dependency exemption is allocated for any year should also be the one who pays the dependent's medical expenses for that year.
10 Pre-2005 §152(c); §152(d)(3), as amended by the Working Families Tax Relief Act of 2004, P.L. 108-311, §201. See ¶2830 for a discussion of multiple support agreements. 
11 Regs. §1.213-1(a)(3)(i). 
 Example—Multiple Support Agreement
B, C, and D are brothers who, as a group, provide over half of their mother's support for 2004, although none of them provides over half individually. They paid for medical care and other expenses as follows:
	
	B	C	D	Total	
Medical	$1,000	$1,000	$1,000	$3,000	
Food, clothing, 
shelter	3,000	3,000	3,000	9,000	
Total	$4,000	$4,000	$4,000	$12,000	

A multiple support agreement is executed in which the dependency exemption for the mother is allocated to B. Accordingly, in addition to claiming the exemption, he may deduct the $1,000 that he paid for his mother's medical expenses. He may not deduct the amounts paid by C or D, nor may they deduct those amounts in their own returns.
If the expenses had been paid by the brothers as follows:
	
	B	C	D	Total	
Medical	$3,000			$3,000	
Food, clothing, 
shelter	1,000	4,000	4,000	9,000	
Total	$4,000	$4,000	$4,000	$12,000	

then each would have paid the same overall amount, but B would have been able to deduct $3,000 of medical expenses as well as the dependency exemption.
A taxpayer may deduct amounts paid for the medical expenses of his or her spouse even if they file separate returns.12
12 §213(a). One such taxpayer was denied a deduction for payment of his wife's expenses in his separate return, however, because it was made with funds drawn from an account that contained both his separate funds and those of the marital community. Taxpayer was unable to establish that he paid with his separate funds. Clemens v. Comr., 44 T.C. 186 (1965).
 Example—Spouses Filing Separate Returns
H and W each earned a salary of $30,000. During 2004, W had medical expenses of $4,000, all of which were paid by H. If separate returns are filed, H may claim the $4,000 of medical expenses he paid for W as an itemized deduction, subject to the 7.5% of AGI limitation. This will yield him a net deduction of $1,750 ($4,000 minus 7.5% times $30,000). If a joint return had been filed, there would have been no tax benefit realized from the $4,000 of medical expenses, because they would not have exceeded 7.5% of the combined AGI of $60,000.
Although filing separately may enable the spouses to take advantage of the medical expense deduction, the savings generally will be more than offset by the additional tax due to the higher rate schedule for married taxpayers filing separately. A computation should be made in each case.
The taxpayer has the burden to establish that medical expenses are for the care of a dependent. Taxpayers who adopted a child on the day of its birth and paid the birthing expenses were denied a deduction because they failed to show how much of the expenses were related to the care of the child, who was their dependent, rather than to the care of the natural mother, who was not.13
13 Kilpatrick v. Comr., 68 T.C. 469 (1977); Hornish v. Comr., T.C. Memo 1978-213.
¶2840.02.B. Status as the Taxpayer's Spouse or Dependent
For the taxpayer to claim a deduction based on his or her payment of the medical expenses of another individual, that individual must be the taxpayer's spouse or dependent either at the time the medical services were rendered or at the time the taxpayer paid for them.14
14 Regs. §1.213-1(e)(3). See also Rev. Rul. 60-255, 1960-2 C.B. 105, modifying Rev. Rul. 56-401, 1956-2 C.B. 169. Section 213(d)(8) refers to §6013(d) for determining whether an individual is married at any time during the taxable year.
Note: For taxable years beginning in 2005 and 2006, the Treasury is authorized to make any adjustments in the application of the internal revenue laws that "may be necessary to ensure that taxpayers do not lose any deduction or credit or experience a change of filing status by reason of temporary relocations by reason of Hurricane Katrina, Hurricane Rita, or Hurricane Wilma." 14.1 Such adjustments may include, for example, addressing the application of the residency requirements relating to dependency exemptions in the case of relocations. Any such authorized adjustment must ensure that an individual is not taken into account by more than one taxpayer with respect to the same benefit.14.2
14.1 §1400S(e), added by the Gulf Opportunity Zone Act of 2005, P.L. 109-135 §201(a).
14.2 §1400S(e).
 Example—Status at Time Services Rendered
T's spouse underwent an operation in 2003. T and his spouse were divorced later that year. T paid for the operation in 2004. T may claim the medical expense as a deduction for 2004 since the patient was T's spouse at the time the treatment was received, even though she was not at the time T paid for the operation.
 Example—Status at Time Expense Paid
T's future spouse underwent an operation two months before their marriage in November 2003. T paid for the operation in 2004. T may claim the expense as a deduction for 2004. The patient was T's spouse at the time the expense was paid, even though she was not at the time the treatment was received.
Common-law marriage is sufficient to establish the spousal relationship for purposes of the medical expense deduction. Therefore, the deduction can turn on the question of whether such marriages are recognized by the jurisdiction in which the taxpayers reside.15 A taxpayer who is legally separated from his or her spouse under a decree of separate maintenance is not considered to be married.16
15 Ross v. Comr., T.C. Memo 1972-122 (Taxpayer allowed to claim deduction based on his payment of medical expenses of father of his common-law wife under District of Columbia law); Cox v. Comr., T.C. Memo 1977-360 (Woman with whom taxpayer was living in Arizona was not his common-law wife because Arizona does not recognize common-law marriages unless validly created outside the state).
16 §§6013(d)(2) and 7703(a)(2); Regs. §1.213-1(e)(3).
¶2840.03. What Is "Medical Care"?
The IRS has specifically acknowledged the expenditures incurred on a typical visit to a doctor to be costs of medical care, including "[a]mounts paid for operations or treatments affecting any portion of the body, including obstetrical expenses and expenses of therapy or X-ray treatments," as well as the expenses of "hospital services, nursing services (including nurses' board where paid by the taxpayer), medical, laboratory, surgical, dental and other diagnostic and healing services, X-rays, medicine and drugs . . . artificial teeth or limbs, and ambulance hire."17 Acupuncture also qualifies.18 The cost of illegal operations or treatments is specifically nondeductible.19
17 Regs. §1.213-1(e)(1)(ii).
18 Rev. Rul. 72-593, 1972-2 C.B. 180.
19 Regs. §1.213-1(e)(1)(ii).
There remains, however, a gray area of procedures, treatments, and health regimens that are neither clearly inside nor clearly outside the scope of medical care, and a large body of litigation and rulings has grown around the question of what medical care is.
¶2840.03.A. General Definition of Medical Care
The expenses of medical care are amounts paid for: 
• the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body;20
• transportation primarily for and essential to medical care;21
• qualified long-term care services (for amounts paid after Dec. 31, 1996);22 and
• insurance covering medical care.23
20 §213(d)(1)(A).
21 §213(d)(1)(B).
22 §213(d)(1)(C), as amended by the Health Insurance Portability and Accountability Act of 1996 ("1996 HIPAA"), P.L. 104-191, §322(b). "Qualified long-term care services," for this purpose, has the meaning supplied by §7702B(c) (also added by P.L. 104-191).
23 §213(d)(1)(D); Regs. §1.213-1(e).
¶2840.03.B. Disease/Structure or Function of the Body
1. Medical Care vs. General Health
One of the most often-litigated questions in the area of medical expenses is whether an expenditure benefits a particular ailment of the taxpayer, or is merely beneficial to his or her general health, or, worse yet, is simply a personal expense unrelated to health. Expenditures in the first category are deductible; those in the latter two are not.24
24 Regs. §1.213-1(e)(1)(ii),  (vi). Gerstacker v. Comr., 414 F.2d 448 (6th Cir. 1969) (Expense must be proximately related to medical care to be deductible); Donnelly v. Comr., 262 F.2d 411 (2d Cir. 1959). See PLR 9030049 (Costs of selling retirement home and searching for new one at location recommended by doctor as beneficial to taxpayer's health not deductible as medical expenses because they are of a type that benefit taxpayer's general health, rather than treating specific disease or condition).
 Example—Expenditures for Medical Care
T paid $200 to enroll in a karate class to help him lose weight and improve his general health. While sparring one night in the class, however, T suffered a cracked rib, which he paid his doctor $200 to treat. The $200 paid to the doctor is an expense of medical care; the $200 paid for the karate class is not.
To qualify an expenditure for the medical expense deduction, it is necessary to show the "present existence" or "imminent probability" of an illness as well as to demonstrate that the expense was incurred "primarily" for the treatment of the illness.25 A personal expense is not deductible merely because some indirect medical benefit results from it.26 The expense must be one which would not have been incurred but for the medical condition to which it relates.27 There must be a "direct or proximate relationship" between the expense and the diagnosis, cure, mitigation, treatment, or prevention of disease, or the expense must have been incurred for the purpose of affecting some structure or function of the body.28
25 Jacobs v. Comr., 62 T.C. 813 (1974); Daniels v. Comr., 41 T.C. 324 (1963); Stringham v. Comr., 12 T.C. 580 (1949); Regs. §1.213-1(e)(1)(ii). The "imminent probability" requirement severely limits the scope of expenses that might otherwise be deductible under the general "prevention of disease" language of the statute.
26 Brown v. Comr., 62 T.C. 551 (1974).
27 Jacobs v. Comr., 62 T.C. 813 (1974).
28 Lingham v. Comr., T.C. Memo 1977-152; Glaze v. Comr., T.C. Memo 1961-244. See also Havey v. Comr., 12 T.C. 409 (1949) (Travel expenses to resorts not deductible).
2. Limitation with Respect to Medicine and Drugs
Amounts paid for medicine and drugs are deductible only if paid for a prescribed drug or for insulin.29 The IRS ruled that the costs of taxpayer's crutches and bandages are deductible because they mitigate the effect of taxpayer's injured leg.29.1 Moreover, taxpayer's blood sugar test kit is also deductible because it monitors and assists in treating taxpayer's diabetes.29.2 A prescribed drug is "a drug or biological" that requires a prescription of a physician for its use by an individual.30
29 §213(b). For example, in Rev. Rul. 99-28, 1999-25 I.R.B. 6, the IRS ruled that the costs of nicotine gum and nicotine patches are not deductible medical expenses because they contain a drug (other than insulin) and do not require a physician's prescription. In Rev. Rul. 2003-58, 2003-22 I.R.B. 959, the IRS ruled that the cost of aspirin is not deductible because an individual can obtain it without a physician's prescription. 
29.1 Rev. Rul. 2003-58, 2003-22 I.R.B. 959. See also IRS Info. Letter 2003-0169 (Wound care supplies). 
29.2 Id. 
30 §213(d)(3). The term "physician" has the same meaning it has for purposes of the Social Security Act. §213(d)(4). That definition includes legally authorized doctors of medicine and osteopathy, dentists and dental surgeons, podiatrists (limited to services which they are authorized under state law to perform), optometrists (limited to services related to condition of aphakia), and chiropractors (limited to treatment by means of manual manipulation of spine to correct subluxation which has been demonstrated by X-ray to exist). 42 U.S.C. §1395x(r).
However, amounts paid for a controlled substance, illegal under federal law, are not deductible as medical expenses, even if legal under state law.31 In addition, since the Food and Drug Administration (FDA) has announced that it is illegal for individuals to import drugs from other countries, no deduction is available for the cost of drugs imported from Canada.31.1
31 Rev. Rul. 97-9, 1997-1 C.B. 77 (Amount paid to obtain controlled substance (such as marijuana) for medical purposes, in violation of federal law, is not deductible expense for medical care notwithstanding legality under state law). Rev. Rul. 97-9 applies even in situations where state law requires a physician's prescription to obtain and use the controlled substance and changes the IRS position with respect to laetrile as set forth in Rev. Rul. 78-325, 1978-2 C.B. 124 (Obsolete).
31.1 See IRS Info. Letter 2005-0011 (citing the 2003 Medicare Prescription Drug, Improvement, and Modernization Act, P.L. 108-173, §1121 and the FDA Traveler Alert at http://www.fda.gov/ora/import/traveler_alert.htm).
3. Services of Medical and Quasi-Medical Personnel
a. Doctors and Dentists
The expenses of a doctor's or dentist's services are deductible in the vast majority of cases.32 However, an expense that is merely beneficial to the taxpayer's general health is not deductible simply because his or her doctor recommended it,33 and expenses for cosmetic surgery, absent congenital abnormality, personal injury or disfiguring disease, are not deductible.34
32 The IRS has stated that, "In general, any expense paid primarily for the diagnosis, cure, mitigation, treatment, or prevention of disease is allowable as a medical expense deduction. Such expenses include payments for services rendered by physicians, surgeons, dentists, optometrists, chiropractors, osteopaths, qualified psychiatrists and psychologists, and authorized Christian Science practitioners." Rev. Rul. 55-261, 1955-1 C.B. 307.
33 Jacobs v. Comr., 62 T.C. 813 (1974); Atkinson v. Comr, 44 T.C. 39 (1965), acq., 1965-2 C.B. 4; Volwiler v. Comr., 57 T.C. 367 (1971). For example, the expenses of dancing lessons have been held nondeductible in a number of cases, even when recommended by a doctor. Thoene v. Comr., 33 T.C. 62 (1959) (Psychiatrist believed that taxpayer would benefit from social atmosphere of dance studio); France v. Comr., 620 F.2d 68 (6th Cir. 1982) (Dancing recommended by taxpayer's doctor as therapy for her arthritis); Ende v. Comr., T.C. Memo 1975-256 (Ballet lessons undertaken on doctor's advice to treat curvature of spine, but it was not shown that lessons would not have been undertaken but for spinal condition).
34 §213(d)(9). See ¶2840.03.B.10.
 Example—Doctor's Recommendation Insufficient
When T visited his physician for his regular checkup, the doctor told him, "You've been working too hard. You should take a week off and go fishing." T followed the doctor's advice and went fishing. On his return, T felt rested and rejuvenated, just as his doctor told him he would, but the expense of the fishing trip is still nondeductible.
b. Doctors Without M.D.s
Amounts paid for medical services rendered by chiropractors, psychologists, psychotherapists, and others rendering similar services may be deductible even when the practitioner is not licensed.35
35 Rev. Rul. 63-91, 1963-1 C.B. 54. Regs. §1.213-1(e)(1)(ii) provides that "[a]mounts expended for illegal operations or treatments are not deductible," but Rev. Rul. 63-91 indicates that this proscription applies to "operations or treatments which are illegal regardless of whether they are rendered by licensed or unlicensed practitioners." A procedure is not "illegal" within the meaning of the regulations merely because the practitioner is unlicensed.
c. Nurses and Other Attendants
Medical care includes nursing services.36 Accordingly, the nurse's wages and any related payroll tax expenses may be deductible.37 If the taxpayer pays for the nurse's meals, that expense is also deductible,38 as well as any lodging costs in excess of those which the taxpayer would otherwise have incurred.39
36 Regs. §1.213-1(e)(1)(ii).
37 Marantz Est. v. Comr., T.C. Memo 1979-463; Rev. Rul. 57-489, 1957-2 C.B. 207.
38 Regs. §1.213-1(e)(1)(ii). See also Rev. Rul. 76-106, 1976-1 C.B. 71.
39 Rev. Rul. 76-106, 1976-1 C.B. 71. As an example of such additional expense, the IRS cites "additional rent required when the taxpayer moves to an apartment with an additional bedroom to accommodate the attendant and additional utilities attributable to the attendant." Id.
 Example—Deductible Nurse's Expenses
In 2001, T needs almost constant medical attention due to his failing health. He hires a nurse for that purpose. To provide a room for the nurse to stay in, T moves to a larger apartment. The rent is $8,000 per year, $1,000 of which is allocable to the room which T provides for the nurse. T pays the nurse a salary of $25,000 and also pays payroll taxes of $1,913. The cost of the nurse's meals is $2,000. The nurse does not do any cooking or housekeeping. T employs another individual to perform these services, paying her a salary of $20,000, incurring payroll taxes of $1,530. The expenses may be summarized as follows:
	
		Nurse	Housekeeper	Total	
	Wages	$25,000	$20,000	$45,000	
	Payroll taxes	1,913	1,530	3,443	
	Meals	2,000		2,000	
	Lodging	1,000		1,000	
	Total	$29,913	$21,530	$51,443	

The expenses allocated to the nurse are costs of medical care. The expenses related to the cook/housekeeper are nondeductible personal expenses.40
40 Such expenses may be for household services for someone incapable of self-care and may be eligible for the §21 child or dependent care credit as discussed at ¶3120.01.E.1. It is possible, after Dec. 31, 1996, that such expenses might be considered to be maintenance or personal care services under §7702B(c)(3). See ¶2840.03.D.
The cost of nursing services is an expense of medical care even if the person who provides the services is not trained as a nurse. In general, the determination of what is medical care depends on the nature of the services rendered, not on the experience, qualifications, or title of the person rendering them.41 Services may constitute medical care even if they are provided by persons with no medical training.42
41 Rev. Rul. 63-91, 1963-1 C.B. 54; Wendell v. Comr., 12 T.C. 161, 163 (1949); Dodge Est. v. Comr., T.C. Memo 1961-346.
42 Note, however, that, while the nature of the services rather than the training of the person providing them is controlling, the lack of special training on the part of the provider is often mentioned in cases in which the court denies a deduction based on a finding that the services were not medical in nature. See, e.g., Van Vechten v. Comr., T.C. Memo 1973-282. For amounts paid after Dec. 31, 1996, however, "maintenance or personal care services" are medical expenses for chronically ill individuals. See §§213(d)(1)(C) and 7702B(c), as added by the 1996 HIPAA. See ¶2840.03.D.
For persons who do not meet the definition of chronically ill,43 it is necessary, however, to distinguish between medical care and other services that nurses and attendants provide. If, in addition to providing medical attention, the attendant does cooking or housekeeping, the cost of those additional non-medical services is not deductible,44 and an apportionment of the attendant's total compensation must be made on the basis of the time devoted to medical and non-medical activities.45 The cost of meals provided to the attendant should be apportioned on the same basis. If lodging is furnished to the attendant, it must be shown that the taxpayer incurred an additional expense for that lodging before any deduction can be claimed with regard to it.46 If an additional expense can be shown, then it must be apportioned on the basis of the time devoted by the attendant to nursing services and to general household services.
43 A chronically ill individual is defined in §7702B(c)(2) as one who has been certified within the preceding 12-month period by a licensed health care practitioner as (i) being unable to perform without substantial assistance from another individual at least two activities of daily living (eating, toileting, transferring, bathing, dressing or continence) for at least 90 days due to a loss of functional capacity; (ii) having a similar disability level under regulations to the level of disability in (i); or (iii) requiring substantial supervision to protect such individual from threats to health and safety due to severe cognitive impairment. Effective for expenses after Dec. 31, 1996, the medical expenses of chronically ill individuals include "maintenance or personal care services." §§213(d)(1)(C) and 7702B.
44 Rev. Rul. 76-106, 1976-1 C.B. 71 (Wages allocable to dressing, grooming, and bathing of quadriplegic taxpayer by attendant were deductible; wages allocable to household duties such as cooking and cleaning were not); Rev. Rul. 58-339, 1958-2 C.B. 106 (Cost of domestic help engaged to enable taxpayer's wife to obtain complete rest prescribed by a physician not deductible, except to the extent attributable to nursing-type services). See also Borgmann v. Comr., 438 F.2d 1211 (9th Cir. 1971) (Taxpayer who lived alone after suffering heart attack was denied deduction for cost of live-in maid, whose duties consisted of housekeeping and being available to call for emergency medical help); Van Vechten v. Comr., T.C. Memo 1973-282 (Cost of maid in home in which the wife was a residual alcoholic schizophrenic was disallowed because (a) maid performed no medical services; (b) it was not shown that, but for the maid's presence, the wife would have had to remain institutionalized; and (c) maid's services benefitted all family members). Note: the authority above interprets §213 prior to the addition of §213(d)(1)(C) in the 1996 HIPAA.
45 Rev. Rul. 76-106, 1976-1 C.B. 71. The Tax Court has been willing to estimate the amount of the overall wages allocable to nursing-type services by applying the Cohan Rule (Cohan v. Comr., 39 F.2d 540 (2d Cir. 1930)). Hentz Est. v. Comr., 12 T.C.M. 368 (1953); Frier v. Comr., T.C. Memo 1971-84.
46 Rev. Rul. 76-106, 1976-1 C.B. 71.
The deduction may also be based on an indirect payment for an attendant to provide nursing services.47
47 Ungar v. Comr., T.C. Memo 1963-159.
 Example—Indirect Payment for Services
T needs someone to care for his mother, who is convalescing following an operation. His sister is willing to help, but she is needed to serve as a clerk in her husband's shoe store. T pays a third party to replace his sister in the shoe store, so that his sister will be free to nurse their mother. T's payment to the replacement clerk is an expense for the medical care of his mother, just as if he had paid the money directly to his mother's attendant.
The services of a nurse who cares for a healthy child do not constitute medical care, and the expense is not deductible.48
48 Wendell v. Comr., 12 T.C. 161 (1949).
d. Unconventional Practitioners
Deductible medical care may also be rendered by Christian Science practitioners49 and Navajo medicine men.50 No deduction was allowed, however, for the expense of an "audit" performed by representatives of the Church of Scientology.51 The IRS has privately ruled that amounts paid to an "unauthorized psychologist" to "deprogram" the taxpayer's son, who had been a member of a religious cult, were not deductible because they were not in the nature of medical care.52
49 Rev. Rul. 55-261, 1955-1 C.B. 307.
50 Tso v. Comr., T.C. Memo 1980-399. In Tautolo v. Comr., T.C. Memo 1975-277, the court denied a deduction for the expense of treatment by a native Samoan doctor, but the adverse result was based on a finding that the treatment was not related to the particular malady of the patient and that it was undertaken as a last resort rather than out of a reasonable expectation that her condition would be improved. The court passed no judgment on the competence of native Samoan doctors or on the efficacy of the treatments they administer.
51 Rev. Rul. 78-190, 1978-1 C.B. 74; Brown v. Comr., 62 T.C. 551 (1974), aff'd, 523 F.2d 365 (8th Cir. 1975).
52 TAM 8021004.
4. Services of Non-Medical Personnel
A deduction was allowed for amounts paid to an individual to accompany the taxpayer's blind child to school for the purpose of guiding the child through the halls.53 The services of the guide constituted medical care because they alleviated the condition of blindness. A deduction was similarly available for amounts paid to an individual who took notes for a deaf person attending college.54 Also deductible was the expense of hiring a non-professional individual to assist the taxpayers in giving their child physical therapy.55
53 Rev. Rul. 64-173, 1964-1 C.B. (Part I) 121.
54 Baer Est. v. Comr., T.C. Memo 1967-34.
55 Rev. Rul. 70-170, 1970-1 C.B. 51.
Taxpayers have not been successful, however, in attempting to deduct the cost of a chauffeur as a medical expense.56 The expenses of babysitters have also consistently been held to be nondeductible personal expenses,57 even if they are paid for watching the children while the taxpayer visits his or her physician.58 Taxpayers attempting to claim the expenses of their children's day care as medical expenses have fared no better, even when the services are provided in a hospital day care center.59 A deduction was also denied for the expense of sending children to a boarding school on the advice of a physician so that their mother who was suffering from throat cancer, would be able to rest her voice.60
56 Buck v. Comr., 47 T.C. 113 (1966) (Deduction denied where taxpayer, after suffering convulsive seizure, advised by doctor not to drive but to remain active in business to limited degree); Goldaper v. Comr., T.C. Memo 1977-343.
57 McVicker v. Comr., 194 F. Supp. 607 (D. Cal. 1961); Grimaldi v. Comr., T.C. Memo 1963-156; Martin v. Comr., T.C. Memo 1960-140;
58 Rev. Rul. 78-266, 1978-2 C.B. 123.
59 Kennedy v. Comr., T.C. Memo 1973-15.
60 Ochs v. Comr., 195 F.2d 692 (2d Cir. 1952).
5. Hospital Care
The cost of in-patient hospital care and hospital services is deductible.61
61 Regs. §1.213-1(e)(1)(ii),  (v).
6. Lifetime Care Residences
Taxpayers who pay monthly fees for lifetime care residence in retirement homes or continuing care retirement communities may deduct only the portion of the fees that are allocable to medical care.61.1 Taxpayers may use the actuarial method or the percentage method to determine the portions of the monthly service fees that are allocable to medical care.61.2
61.1 Rev. Rul. 76-481, 1976-2 C.B. 82; Rev. Rul. 75-302, 1975-2 C.B. 86, clarified, Rev Rul. 93-72, 1993-2 C.B. 77; Rev. Rul. 67-185, 1967-1 C.B. 70.
61.2 Baker v. Comr., 122 T.C. 143 (2004) (Tax Court also held that the same amount should be allocated to each resident, not to each residence, for purposes of determining the appropriate medical deduction for the payment of monthly service fees).
Under the percentage method, the amount of fees allocable to medical care is determined by multiplying the total amount of fees by the allocation fraction. The numerator of the allocation fraction is the amount of the retirement home or community's medical expenses. The denominator of the allocation fraction is the amount of the retirement home or community's total expenses.61.3
61.3 In Baker v. Comr., 122 T.C. 143 (2004), the Tax Court ruled that in that case, depreciation and amortization had to be included in both the numerator and the denominator of the allocation fraction.
7. Schools and Other Institutions
The expenses of care received in an institution other than a hospital may qualify as a deduction, depending on the individual's condition and the nature of the services that he or she receives.62
62 Regs. §1.213-1(e)(1)(v). See Rev. Rul. 58-280, 1958-1 C.B. 157; INFO 2002-0169.
a. Principal Reason
If the availability of medical care in an institution is "a principal reason" for the individual's presence in it, and meals and lodging are furnished as a necessary incident to the medical care, then the cost of medical care, meals, and lodging at the institution is deductible as a medical expense.63
63 Regs. §1.213-1(e)(1)(v); Rev. Rul. 58-280, 1958-1 C.B. 157; Counts v. Comr., 42 T.C. 755 (1964) (Medical care need only be "a" principal reason, as distinguished from "the" principal reason, for presence at institution.) Cf. IRS Info. Letter 2002-0169 (When the principal reason for taxpayer's presence is not medical care available in the nursing home, only that part of the cost of nursing home care attributable to medical care is treated as an expense for medical care; thus, cost of meals and lodging are not treated as an expense for medical care in such a case). Note that in IRS Info. Letter 2002-0169, the IRS repeatedly stated that the amount of the cost of nursing home care that is deductible as a medical expense depends on the principal reason for a taxpayer's presence in the nursing home. It is unclear whether this represents a change in the IRS's position or is merely an unintentional misstatement of the rule as stated in the regulations.
 Example—Expenses Incurred in Nursing Home
T resides in a home for the aged because he requires constant medical attention. During the year, he pays his entire income of $20,000 to the home for meals, lodging and medical care. The entire $20,000 qualifies as a medical expense, but only $18,500, consisting of $20,000 less 7.5% of T's adjusted gross income of $20,000, is deductible. See ¶2840.01, above.
Similarly, while ordinary education is not medical care,64 the costs of attending a special school for a mentally or physically handicapped individual are medical expenses if the school's resources for alleviating the individual's condition are a principal reason for his or her being there.65 In that case, the expenses of attending the school are medical expenses, including the cost of ordinary education which is incidental to the school's special services.66
64 Regs. §1.213-1(e)(1)(v)(a). 
65 Id. See, e.g., PLR 200521003 (Payments for special education for taxpayer's children, disabled by dyslexia and other medical conditions, qualify for deduction). 
66 Id.; Rev. Rul. 58-280, 1958-1 C.B. 157; IRS Info. Letter 2003-0206 (Behavior modification program to break drug addition is medical care; behavior modification program to resolve bad personal attitudes does not treat a medical condition).
 Example—Special Services Furnished by School
A blind individual is enrolled in a special school for the blind, principally to receive the special training for the blind. The school also offers classes in English, history, and mathematics. The entire cost of attending the school is an expense of medical care.67 
67 Baer Est. v. Comr., T.C. Memo 1967-34. 
The cost of special education for a mentally retarded individual is also an expense of medical care when the availability of medical care is a principal reason for the individual attending the school.68 A deduction was also allowed for the tuition of a special school for a child with psychological and emotional problems that prevented her from functioning normally in a public school.69
68 Rev. Rul. 58-280, 1958-1 C.B. 157; IRS Info. Letter 2003-0206. 
69 Greisdorf v. Comr., 54 T.C. 1684 (1970), acq., 1970-2 C.B. xix (Distinguished from Grunwald v. Comr., 51 T.C. 108 (1968), and Fischer v. Comr., 50 T.C. 164 (1968), on grounds that those schools were not special). However, in Fischer, on similar facts, a deduction was not allowed for the entire cost of sending the child to private school, but was allowed for as much as could be specifically allocated to medical care. In PLR 9852015, a deduction was allowed for the costs of a special program offered by a private school to students with attention deficit hyperactivity disorder, but no deduction was allowed for basic tuition costs for attending the school. See also Urbauer v. Comr., T.C. Memo 1992-170, where taxpayers' son with behavioral and drug problems was sent to a special school. Tuition, room, board and amounts expended on accounts at school, telephone calls and transportation of parents for therapeutic visits were held to be deductible.
b. Not a Principal Reason
If the availability of medical care in an institution is not a principal reason for the individual's presence there, only the costs of actual medical care received are deductible; the expenses of meals and lodging in the institution are not deductible.70
70 Regs. §1.213-1(e)(1)(v)(b). See Rev. Rul. 58-280, 1958-1 C.B. 157.
 Example—Deduction Limited to Actual Medical Care
T's father, who qualifies as T's dependent, resides in a home for the aged because there is not enough room in T's house for his father to live with him. T pays $20,000 to the home during the year, $17,000 of which is allocable to his father's meals and lodging and $3,000 to medical care provided by the in-house medical personnel. Only the $3,000 paid for actual medical care is a medical expense.
The tuition of a deaf person, who attended "regular" college where she took special classes in speech correction and aural rehabilitation, as well as English classes which improved her lip-reading, comprehension, and oral communication, was held to be deductible.71 The same student's expenses of room and board, however, were nondeductible personal expenses.
71 Baer Est. v. Comr., T.C. Memo 1967-34. Compare Rowe v. Comr., T.C. Memo 1959-100, in which a deduction for the college costs of the taxpayer's son was denied. The son had been diagnosed as a paranoid schizophrenic, but the taxpayer failed to show that the son's attendance at college was on the advice of a doctor, or had any medical purpose. The taxpayer similarly failed to establish that school costs were related to blind student's medical needs in Grunwald v. Comr., 51 T.C. 108 (1968). 
The cost of sending a "problem child" to a special school where the curriculum and disciplinary methods employed are intended to have a beneficial effect on the child's attitude are not expenses of medical care.72 Similarly, no deduction was allowed for the expense of sending a child to military school in the hope that the disciplined environment would have a salutary effect on his social adjustment,73 or for the expense of sending a blind child to a college preparatory school, where the school made no special accommodations to the child's condition.74
72 Rev. Rul. 58-280, 1958-1 C.B. 157; Pascal v. Comr., T.C. Memo 1956-83. See also LIchterman v. Comr., 37 T.C. 586 (1961), acq. (Medical deduction for an asthmatic child's tuition, room, and board at a private school in Arizona denied because the expense was found to relate primarily to the child's education; some of parent's expense of visiting the child on advice of doctor that it would help him adjust were held deductible, however); IRS Info. Letter 2003-0206 (Behavior modification program to resolve bad personal attitudes does not treat a medical condition).
73 Atkinson v. Comr., 44 T.C. 39 (1965); Rev. Rul. 58-280, 1958-1 C.B. 157. 
74 Grunwald v. Comr., 51 T.C. 108 (1968).
8. Lessons
The cost of special instruction or training, such as speech and lip-reading, designed to alleviate the loss of speech due to deafness or to compensate in part for the deaf person's loss of hearing is a deductible medical expense.75 Also deductible were clarinet lessons recommended by an orthodontist to alleviate a congenital defect causing a severe malocclusion of the taxpayer's son's teeth.76
75 Rev. Rul. 55-261, 1955-1 C.B. 307, modified by Rev. Rul. 58-280, 1958-1 C.B. 157.
76 Rev. Rul. 62-210, 1962-2 C.B. 89. A deduction was also allowed for the cost of an instrument not exceeding the cost of the cheapest one that would produce the therapeutic effect.
Taxpayers have been uniformly unsuccessful in attempting to claim the expense of dancing lessons as medical expenses. The expenses have been ruled nondeductible under the following circumstances: 
• upon a doctor's recommendation to correct postoperative weakness in the taxpayer's abdominal and leg muscles;77
• upon a psychiatrist's recommendation, who believed that the taxpayer would benefit from the social atmosphere of the dance studio;78
• upon a doctor's recommendation as therapy for her arthritis;79
• upon a doctor's recommendation to treat curvature of the spine.80
77 Thoene v. Comr., 33 T.C. 62 (1959) ("[W]hat the doctors were recommending were purely personal activities").
78 Id.
79 France v. U.S., 620 F.2d 68 (6th Cir. 1982) (Taxpayer failed to establish that lessons bore direct and proximate therapeutic relation to physical or mental function or structure of body).
80 Ende v. Comr., T.C. Memo 1975-256 (Taxpayer failed to show that lessons would not have been undertaken but for medical necessity; dancer had been taking ballet lessons since she was three, before spinal condition was diagnosed).
A deduction was also denied for lessons undertaken on the taxpayer's own initiative, rather than on a doctor's advice, allegedly in the belief that they would help cure varicose veins.81
81 Adler v. U.S., 330 F.2d 91 (9th Cir. 1964).
9. Lodging
The cost of lodging that is "primarily for and essential to medical care" may be deductible if the medical care is provided by a physician in a licensed hospital or equivalent facility,82 and there is "no significant element of personal pleasure, recreation, or vacation" in the travel away from home.83 There are limitations on the amount of the lodging expense that may be deducted: 
• it may not be "lavish or extravagant under the circumstances;" and
• it may not exceed $50 per night per individual.84
82 As to what a facility equivalent to a hospital might be, the report of the House Ways and Means Committee accompanying the Deficit Reduction Act of 1984 ("DRA 1984"), P.L. 98-369, states that "Medical care facilities described in this section include out-patient clinics which provide substantial services similar to those provided by hospitals (e.g., the Mayo Clinic)." H.R. Rep. No. 432, Part 2, 98th Cong., 2d Sess. (1984), accompanying H.R. Rep. No. 4170, 98th Cong., 2d Sess. (1984).
83 §213(d)(2). Note that Regs. §1.213-1(e)(1)(iv) has not been amended since the addition of §213(d)(2) in 1984. See Rev. Rul. 2000-24, 2000-19 I.R.B. 963 (Taxpayer not allowed to deduct cost of meals and lodging while attending a medical conference as medical expenses because neither taxpayer, taxpayer's spouse, nor taxpayer's dependent is receiving medical care from a physician at a licensed hospital or similar institution).
84 §213(d)(2). Both limitations are related to Congress's fear that taxpayers will attempt to deduct the cost of their vacations by scheduling medical treatment while they are away. The House Ways and Means Committee Report accompanying DRA 1984 states that, "The committee is concerned . . . that the new provision may be difficult for the Internal Revenue Service to administer. In particular circumstances, it may be difficult to distinguish between a trip that is primarily a vacation and a trip that is primarily for medical care. The committee believes that placing a per-diem cap on the amount that is deductible for away-from-home lodging will be useful in alleviating this concern." H.R. Rep. No. 432, Part 2, 98th Cong., 2d Sess. (1984), accompanying H.R. Rep. No. 4170, 98th Cong., 2d Sess. (1984).
If the person receiving treatment is unable to travel alone, the lodging expenses of the person accompanying him or her are also deductible.85 Other expenses of their stay, such as food, are not deductible. Expenses of the stay should be distinguished from expenses such as meals and lodging, while in transit.86
85 H.R. Rep. No. 432, Part 2, 98th Cong., 2d Sess. (1984), accompanying H.R. Rep. No. 4170, 98th Cong., 2d Sess. (1984).
86 Transportation expenses deductible as medical expenses under §213(d)(1)(B) are discussed at ¶2840.03.C.
 Example—Expenses Essential to Medical Care
T's minor child is required to travel to another city to receive medical treatment on an out-patient basis. The child is accompanied by his older brother, and T pays the cost of their lodging and meals while they are staying in the other city. Both of their lodging expenses are deductible, within the statutory limits discussed above. The expenses of their meals while they are staying in the other city are not deductible.
The lodging expenses of a taxpayer who is away from home merely for the benefit of a more congenial climate are not deductible.87
87 Polyak v. Comr., 94 T.C. 337 (1990).
 Example—Lodging in Congenial Climate
T is a resident of Michigan. He is prone to heart attack, has lung problems and acute arthritis, and has been advised by his heart specialist to spend the winter months in a warm climate. Accordingly, he travels to Florida for the winter. The expenses of his lodging in Florida are not deductible.
10. Birth Control
The IRS has ruled that the following birth control measures are deductible: 
• oral contraceptives prescribed by a physician;88
• vasectomies and legal abortions;89 and
• female sterilization.90
88 Rev. Rul. 73-200, 1973-1 C.B. 140, superseding Rev. Rul. 67-339, 1967-2 C.B. 126.
89 Rev. Rul. 73-201, 1973-1 C.B. 140.
90 Rev. Rul. 73-603, 1973-2 C.B. 76, clarifying Rev. Rul. 73-201, 1973-1 C.B. 140.
11. Cosmetic Procedures
The costs of "cosmetic surgery" and other similar procedures are not deductible medical expenses, unless the surgery or procedure is necessary to ameliorate a deformity arising from, or directly related to, any of the following: 
• a congenital abnormality;
• a personal injury resulting from an accident or trauma; or
• a disfiguring disease.91
91 §213(d)(9), added by the Revenue Reconciliation Act of 1990 ("1990 RRA"), P.L. 101-508, §11342(a). In tax years beginning before 1991, the IRS and the courts generally looked favorably upon taxpayers' attempts to improve their appearances. The expenses of a "face lift" qualified for deduction even if the procedure was not undertaken on the recommendation of a physician. Rev. Rul. 76-332, 1976-2 C.B. 81. More technically, the procedure was described in the ruling as the "elimination or removal of chin and neck sag, jowls, bags under the eyes, and excess tissue from under the eyelids." Surgical hair transplants also qualified, as did the cost of a wig recommended by a physician for a woman who had lost all her hair. Mattes v. Comr., 77 T.C. 650 (1981), acq., 1982-1 C.B. 1; Rev. Rul. 82-111, 1982-1 C.B. 48; Rev. Rul. 62-189, 1962-2 C.B. 88, distinguishing Rev. Rul. 55-261, 1955-1 C.B. 307, Item 16. Hair removal by electrolysis was also deductible, but the line was drawn at tattoos and ear piercing, the cost of which was, and still is, a nondeductible personal expense. Rev. Rul. 82-111, 1982-1 C.B. 48. See Rev. Rul. 2003-57, 2003-22 I.R.B. 959 (Amounts paid for breast reconstruction surgery following a mastectomy for cancer and amounts paid for vision correction surgery are deductible medical expenses; amount paid to whiten teeth resulting from discoloration due to age is not a deductible medical expense); PLR 200344010 (Cosmetic treatments to correct facial deformity that resulted from previous surgery to correct congenital abnormalities qualify as medical care).
"Cosmetic surgery" is defined as any procedure that is directed at improving the patient's appearance and that does not meaningfully promote the proper function of the body, or prevent or treat illness or disease.92
92 §213(d)(9)(B). The Senate Report to the 1990 RRA provides that procedures such as hair removal electrolysis, hair transplants, liposuction, and face lifts generally are not deductible, but that expenses for procedures that are medically necessary to promote the proper function of the patient's body and that only incidentally affect the patient's appearance, and expenses for treatment of a disfiguring condition (such as reconstructive surgery following removal of a malignancy) continue to be deductible. See Rev. Rul. 2003-57, 2003-22 I.R.B. 959 (Amounts paid for breast reconstruction surgery following a mastectomy for cancer and amounts paid for vision correction surgery are deductible medical expenses; amount paid to whiten teeth resulting from discoloration due to age is not a deductible medical expense); CCA 200603025 (Expenses related to gender reassignment surgery are nondeductible as such expenses are akin to nondeductible cosmetic surgery expenses).
12. Counseling
The expenses of counseling by psychiatrists, psychologists, and psychiatric social workers are generally deductible.93 Where, however, psychoanalysis is undertaken by students attending psychoanalytic training institutions, and the analysis is required as part of their training, the cost is a nondeductible personal expense.94 If the analysis is undertaken primarily for the patient's mental health, the cost is deductible even if the treatment also qualifies the patient for admission to psychiatric training.95
93 Rev. Rul. 55-261, 1955-1 C.B. 307, allows a deduction for payments for services rendered by "qualified psychiatrists and psychologists." Regs. §1.213-1(e)(1)(ii) specifically includes the "prevention or alleviation of a . . . mental defect or illness" within the scope of medical care. See also PLR 7839044 (Deduction allowed for cost of services of psychiatric social worker); and PLR 8034087 (Deduction allowed for long distance charges for calls to taxpayer's psychologist).
94 Rev. Rul. 56-263, 1956-1 C.B. 135.
95 Starrett v. Comr., 41 T.C. 877 (1964).
Psychiatric treatment received at a hospital on an out-patient basis by a husband and wife for sexual inadequacy and incompatibility has been ruled deductible,96 but no deduction was allowed for the expense of marriage counseling by a clergyman,97 or for counseling constituting spiritual guidance.98
96 Rev. Rul. 75-187, 1975-1 C.B. 92. The cost of meals and lodging at the hotel where they stayed while they received the treatment were not deductible; however, this ruling pre-dated the enactment of §213(d)(2) (relating to lodging costs) in 1984.
97 Rev. Rul. 75-319, 1975-2 C.B. 88.
98 Miller v. Comr., T.C. Memo 1980-136.
13. Drug, Alcohol, and Smoking Treatments
Amounts paid to maintain a dependent in a therapeutic center for drug99 or alcohol abuse100 are deductible as expenses of medical care, including the cost of meals and lodging incidental to the treatment.101 Additionally, the cost of a program to help a taxpayer stop smoking is deductible.102
99 Rev. Rul. 72-226, 1972-1 C.B. 96.
100 Rev. Rul. 73-325, 1973-2 C.B. 75; Rev. Rul. 63-273, 1963-2 C.B. 112 (Cost of transportation expenses incurred in attending meetings of Alcoholics Anonymous held a medical expense).
101 See Regs. §1.213-1(e)(1)(v)(a) (Meals and lodging as "necessary incident" to care in institution other than hospital deductible if medical care is "a principal reason for presence").
102 Rev. Rul. 99-28, 1999-25 I.R.B. 6, revoking Rev. Rul. 79-162, 1979-1 C.B. 116. Under Rev. Rul. 99-28, the costs for prescribed drugs designed to alleviate nicotine withdrawal are expenses for medical care deductible under §213; however, amounts paid for drugs (other than insulin) not requiring a prescription, such as nicotine gum and certain nicotine patches, are not deductible under §213. In Rev. Rul. 99-28 and IR-1999-55, the IRS reversed its position on smoking cessation programs and advised taxpayers to file amended returns for refunds if such programs were paid for in recent years or if such expenses would put the taxpayer's medical expenses above the 7.5% limitation.
14. Special Diets
In some extraordinary cases, the costs of special food or beverages may be deducted as a medical expense in their entirety.103 More usually, if a taxpayer is on a prescribed diet to treat a specific health condition, only the amount by which the cost of the special foods exceeds the amount the taxpayer would otherwise spend is deductible.104 However, the diet must be related to a specific health problem in order to be deductible at all.105
103 In Rev. Rul. 55-261, 1955-1 C.B. 307, the IRS stated that "if the prescribed food or beverage is taken solely for the alleviation or treatment of an illness, is in no way a part of the nutritional needs of the patient, and a statement as to the particular facts and to the food or beverage prescribed is submitted by a physician, the cost of such food or beverage may be deducted as a medical expense."
104 The position in Rev. Rul. 55-261 was initially adopted by the Tax Court. See Harris v. Comr., 46 T.C. 672 (1966); Clark v. Comr., 29 T.C. 196 (1957). In later cases, however, the Tax Court has taken a more liberal approach, allowing a deduction for the excess cost of a special diet required by the taxpayer's medical condition, even though the diet satisfied the taxpayer's "nutritional needs." See Randolph v. Comr., 67 T.C. 481 (1976) (Deduction allowed for additional expense of purchasing chemically uncontaminated food incurred by taxpayers who were allergic to chemical compounds found in pesticides and herbicides); Cohn v. Comr., 38 T.C. 387 (1962) (Deduction allowed for additional charge made by restaurants for preparing salt-free foods required on account of taxpayer's heart condition). But see Murray v. Comr., T.C. Memo 1982-269 (Taxpayer failed to show that low-sodium meals at health spa cost more than regular meals).
105 Massa v. Comr., T.C. Memo 1999-63 (Taxpayer failed to prove that special diet for Crohn's disease was other than a substitute for a normal diet); Flemming v. Comr., T.C. Memo 1980-583 (Taxpayer failed to prove that health foods were intended to alleviate his wife's medical condition, or that her medical condition was such that treatment was required, or that health foods purchased cost more than "plain, everyday fare").
 Example—Excess of Food Cost Deductible
T suffers violent allergic reactions when he eats foods that have been chemically treated. His doctor has prescribed that he limit his diet to non-treated foods, which he buys at a specialty store. The non-treated foods cost $4,000 per year, while "regular" chemically treated foods from the supermarket cost $3,000. The excess cost of $1,000 is deductible.
 Example—No Related Health Problem
T, who is not allergic to "regular" food, purchases non-chemically treated foods out of a general conviction that they are better for him. No part of the cost of the special foods is deductible.
A taxpayer was allowed to deduct the cost of a device for adding fluoride to his home water supply where the installation was undertaken on the advice of a dentist.106 A taxpayer who wanted to avoid fluorinated water, however, was denied a medical expense deduction for the cost of bottled distilled water purchased to avoid drinking the fluorinated water supplied by the city.107
106 Rev. Rul. 64-267, 1964-2 C.B. 69.
107 Rev. Rul. 56-19, 1956-1 C.B. 135.
15. Weight Reduction Programs
The cost of weight reduction programs have been ruled to be medical expenses where they were undertaken on a physician's recommendation for the treatment of specific medical conditions related to the taxpayer's obesity.108 Where the program is primarily for the taxpayer's general health, however, the cost is nondeductible.109
108 In Rev. Rul. 2002-19, 2002-16 I.R.B. 778, the IRS ruled that uncompensated amounts paid by individuals for participation in a weight-loss program as treatment for a specific disease or diseases (including obesity) diagnosed by a physician are expenses for medical care that are deductible under §213, subject to the limitations of that section. See also Rev. Rul. 55-261, 1955-1 C.B. 307 (Medical care includes the cost of special food if (1) the food alleviates or treats an illness, (2) it is not part of the normal nutritional needs of the taxpayer, and (3) the need for the food is substantiated by a physician); PLR 8251045 (Diet and exercise program recommended by physician for patient with hypertension and arteriosclerosis); PLR 8004111 (Hypertension and hearing problems aggravated by overweight condition); IRS Info. Letter 2003-0202 (Cost of home exercise equipment may qualify for deduction if used to treat obesity diagnosed by a physician). 
109 Rev. Ruls. 79-151, 1979-1 C.B. 116, 55-261, 1955-1 C.B. 307. See Murray v. Comr., T.C. Memo 1982-269. The cost of purchasing diet food items is not deductible under §213. See Rev. Rul. 2002-19, 2002-16 I.R.B. 778.
16. Health Clubs and Recreation
Most memberships in health clubs or fitness centers are acquired to benefit the member's general health, and thus the costs of the membership are not deductible.110 The IRS has ruled, however, that the club fees may be deductible when a physician prescribes the treatments offered and substantiates, by statement, that the treatments are necessary for the alleviation of a physical or mental defect or illness of the individual receiving them.111 The IRS has also stated that health club membership fees incurred primarily to prevent or alleviate obesity may be deductible as a medical expense, but it cautioned that it will consider additional facts and circumstances in each case.111.1
110 Rev. Rul. 55-261, 1955-1 C.B. 307, Item 9.
111 Rev. Rul. 55-261, 1955-1 C.B. 307, Item 9. In PLR 8251045, the IRS approved the deduction of the cost of a health club program prescribed by the taxpayer's physician for the treatment of his hypertension and arteriosclerosis. In Marantz Est. v. Comr., T.C. Memo 1979-463, however, the taxpayer's health club costs were not incurred at the direction of her physician, and were held to be a nondeductible personal expense.
111.1 INFO 2002-0077.
Similarly, the cost of playing golf was held not to be a medical expense, even though the taxpayer's physician had been recommending the sport as a means of treating the taxpayer's emphysema, because it was not shown that the same medical benefits could not have been gained by some less expensive form of exercise, such as walking.112
112 Altman v. Comr., 53 T.C. 487 (1969).
17. Legal Expenses 
Legal expenses may also be medical care expenses if they are incurred to establish the right to proceed with a course of treatment.113
113 Gerstacker v. Comr., 414 F.2d 448 (6th Cir. 1969), rev'g 49 T.C. 522 (1968). In Rev. Rul. 71-281, 1971-2 C.B. 166, revoking Rev. Rul. 68-320, 1968-1 C.B. 93, the IRS stated that it will follow the decision of the Sixth Circuit in Gerstacker.
 Example—Expenses Incurred in Establishing Guardianship
T's wife is mentally ill, and her physicians have recommended that she be committed to an institution. It is necessary to establish a guardianship before the commitment can proceed. T and his wife are represented by separate attorneys in the guardianship proceeding. Once the guardianship is established, additional legal expenses are incurred for the management of the wife's guardianship estate. The expenses of the proceeding to establish the guardianship and make the medical treatment possible are medical expenses. The subsequent expenses of managing the guardianship estate are not.114
114 Id.
No deduction was allowed, however, for the legal expenses of a divorce, even when it was recommended by the taxpayer's psychiatrist,115 or for the legal costs incurred by the taxpayer in attempting to put an end to the campaign of harassment launched against him by his wife, who suffered from a form of mental illness known as "conjugal paranoia."116 In both cases, the legal expenses were held to have been incurred primarily for personal rather than medical reasons. Similarly, a taxpayer failed to win a deduction for his legal and related expenses in attempting to gain a discharge from the Army with disability pay due to his bronchial asthmatic condition.117
115 Jacobs v. Comr., 62 T.C. 813 (1974) (Taxpayer failed to show that divorce would not have been obtained but for psychiatric condition).
116 Smith v. Comr., T.C. Memo 1982-441.
117 Carlisle v. Comr., 37 T.C. 424 (1961). In addition to lacking sufficiently proximate relationship to the taxpayer's medical condition, the legal expenses were not shown to have been paid in the year claimed.
18. Computer Data Bank
The cost of subscribing to a plan that provided storage and retrieval of personal medical information by a computer data bank has been ruled a deductible medical expense.118
118 Rev. Rul. 71-282, 1971-2 C.B. 166 (Data bank facilitates diagnosis, thereby serves to prevent or alleviate disease).
19. Capital Expenditures
a. General
Capital expenditures that have as their primary purpose the medical care of the taxpayer, his or her spouse, or his or her dependents, may be deducted in full in the year they are made, subject to the AGI limitation and to the exception, discussed below, for expenditures that constitute permanent improvements of the taxpayer's property.119
119 Regs. §1.213-1(e)(1)(iii).
 Example—No Capitalization Required
T buys a wheelchair for $2,000 which he uses to alleviate his handicap and which he expects to last for 5 years. The entire cost of the wheelchair is deductible in the year that it is paid for, subject to the AGI limitation. T is not required to capitalize and depreciate the chair over its useful life.
The capital item must be primarily for medical care for it to be deductible.120
120 Montgomery v. Comr., 51 T.C. 410 (1968), aff'd on other issues, 428 F.2d 243 (6th Cir. 1970).
 Example—Primary Purpose Must Be Medical Care
Before checking into the hospital for an operation, T bought a pair of pajamas to wear during his stay. The pajamas are suitable for general use. They are not primarily for medical care, and their cost is not deductible.
Examples of fully deductible capital expenditures include: 
• the cost of a wheelchair;121
• payments for eye glasses, hearing aids and component parts, and artificial teeth and limbs;122
• the cost of acquiring, training, and maintaining a dog purchased to assist a deaf person or a blind person;123
• the cost of crutches or an inclinator;124
• the cost of a reclining chair, where it was shown that the chair was prescribed by a doctor, served no purpose other than mitigation of the patient's condition, and was not to be used generally as an article of furniture;125 and
• the cost of a detachable air conditioner which is purchased solely for the use of a sick person.126
121 Rev. Rul. 58-8, 1958-1 C.B. 154 (modifying Rev. Rul. 55-261, 1955-1 C.B. 307, Item 13), as amplified by Rev. Rul. 67-76, 1967-1 C.B. 70 (relating to costs of maintaining and operating). The ruling indicates, however, that the cost of a self-propelled wheelchair (commercially known as an "autoette") is deductible only if it is used by the taxpayer to alleviate his sickness or disability and not merely to provide transportation between his home and place of work.
122 Rev. Rul. 55-261, 1955-1 C.B. 307.
123 Rev. Rul. 68-295, 1968-1 C.B. 92; Rev. Rul. 55-261, 1955-2 C.B. 307.
124 Regs. §1.213-1(e)(1)(iii); Hollander v. Comr., 219 F.2d 934 (3d Cir. 1955), rev'g 22 T.C. 646 (1954).
125 Rev. Rul. 58-155, 1958-1 C.B. 156.
126 Regs. §1.213-1(e)(1)(iii).
Special aids purchased to prevent further deterioration of the eyesight of a person who is afflicted with an eye condition, or to alleviate the condition, also qualify for the deduction.127 However, the amount deductible is only the excess over what would have been spent without regard to the medical condition.128
127 Rev. Rul. 58-223, 1958-1 C.B. 156. The "special aids" consisted of a tape recorder, special typewriter, projection lamp for enlarging written material, and special lenses.
128 Rev. Rul. 75-318, 1975-2 C.B. 88.
 Example—Braille Books for Blind Person
T is blind. T buys Braille editions of books costing $200. Regular printed editions of the same books cost $50. The amount of the medical expense incurred is $150.
A deduction was allowed for special equipment enabling a deaf person to communicate over the telephone as well as repair costs,129 and for the extra cost of a special television with a visual display of the audio portion for the deaf over the cost of a conventional set of the same model, and the cost of an adapter for a conventional television set.130
129 Rev. Rul. 71-48, 1971-1 C.B. 99, amplified by Rev. Rul. 73-53, 1973-1 C.B. 139.
130 Rev. Rul. 80-340, 1980-2 C.B. 81.
Deductions have also been allowed for the extra cost of specialized equipment installed in cars and vans to accommodate the taxpayer's medical condition.131 Where, however, it was not shown that the equipment was medically related, the deduction was denied.132 Furthermore, depreciation on such vehicles is not deductible.133
131 Weinzimer v. Comr., T.C. Memo 1958-137; Rev. Rul. 70-606, 1970-2 C.B. 66; Rev. Rul. 66-80, 1966-1 C.B. 57.
132 Robb v. Comr., T.C. Memo 1982-687 (Bed, toilet, sink and refrigerator installed in van not shown to be primarily related to taxpayer's medical condition).
133 Henderson v. Comr., T.C. Memo 2000-321.
Other items for which a deduction was not allowed include a vacuum cleaner134 and a dust elimination system135 purchased for a taxpayer allergic to house dust to decrease the amount of dust in the taxpayer's household. But in seemingly similar cases, deductions have been allowed for a central air conditioning unit installed in the home of a child with cystic fibrosis in order to protect her from exposure to dry, dusty air,136 and for air purifiers, humidifiers, and air conditioners to alleviate taxpayers' allergies.137
134 Rev. Rul. 76-80, 1976-1 C.B. 71.
135 Delp v. Comr., 30 T.C. 1230 (1958).
136 Gerard v. Comr., 37 T.C. 826 (1962), acq., 1966-2 C.B. 5.
137 PLR 8009080.
b. Permanent Improvement or Betterment of Property
If a capital expenditure for medical care also constitutes a permanent improvement or betterment of the taxpayer's property, then the expenditure is deductible only to the extent that it exceeds the increase in the property's value.138
138 Regs. §1.213-1(e)(1)(iii); Rev. Rul. 83-33, 1983-1 C.B. 70, modifying Rev. Rul. 54-57, 1954-1 C.B. 67, and Rev. Rul. 59-411, 1959-2 C.B. 100. No provision is made for claiming depreciation in later years on the part of the cost of the improvement that cannot be deducted in the year of purchase due to the increase in the value of the related property.
 Example—Deduction Limited to Excess of Increase in Value
Acting on the advice of his physician, T installs an elevator in his house so that his wife, who is afflicted with a heart disease, will not be required to climb stairs. The elevator costs $1,000 to install, and the value of the house is increased by $700. The medical expense is $300.
If the asset purchased is so specialized that it does not increase the property's value, then the expenditure is deductible in full.139 Legislative history states that this approach should be taken with regard to modifications to the residence of a physically handicapped individual for the purpose of accommodating his or her condition.140
139 Regs. §1.213-1(e)(1)(iii).
140 Examples of such modifications include: (1) constructing entrance or exit ramps to the residence; (2) widening doorways at entrances or exits to the residence; (3) widening or otherwise modifying hallways and interior doorways to accommodate wheelchairs; (4) railings, support bars, or other modifications to bathrooms to accommodate handicapped individuals; (5) lowering of or other modifications to kitchen cabinets and equipment to accommodate access by handicapped individuals; and six adjustment of electrical outlets and fixtures. The Committee stated its belief that these types of modifications would not add to the fair market value of the residence; therefore, the related expenses should be deductible in full, subject only to the AGI limitation. The six items listed above were set out by the Senate Finance Committee and were not intended by the Committee to be exclusive. S. Rep. No. 313, 99th Cong., 2d Sess. (1986).
c. Operating and Maintenance Expenses
The expenses of operating and maintaining a capital asset are deductible if its primary purpose is the medical care of a qualifying individual.141 The operating and maintenance expenses may be deductible in full even if none or only a portion of the asset's original cost qualified for the deduction.
141 Regs. §1.213-1(e)(1)(iii).
The expenses of operating and maintaining the asset are deductible only as long as the medical condition that required it persists.
d. Litigation/Rulings as to Specific Items
The taxpayer has the burden of proving that a capital expenditure is primarily for the medical care of the taxpayer or other qualifying individual.142 Each case is decided on its own facts and circumstances. The IRS has stated that it will not issue advance rulings or determination letters regarding whether a capital expenditure for an item that is ordinarily used for "personal, living, or family purposes, such as a swimming pool," qualifies as an expense of medical care.143
142 Wallace v. U.S., 439 F.2d 757 (8th Cir. 1971); Volwiler v. Comr., 57 T.C. 367 (1971); Hagerty v. Comr., T.C. Memo 1975-66.
143 Rev. Proc. 2006-3, 2006-1 I.R.B. 122, §3.01(21).
(1) Swimming Pools
If the cost of a pool was incurred primarily for the medical care of a qualifying individual, a deduction will be allowed for the excess of the cost of the pool over the increase in the value of the taxpayer's property, and for maintenance costs.
A deduction was allowed where it was shown that swimming was the best exercise for the taxpayer's emphysema and bronchitis, that he did in fact benefit from using the pool regularly (and considerably more than other family members), and that it would have been inconvenient for him to use public pool facilities due to his work schedule.144 No deduction was allowed, on the other hand, in cases in which the pool was found to have been built primarily for personal rather than medical reasons.145 Taxpayers have been denied a deduction for the allocated cost of an existing pool purchased with the underlying land, rather than the cost of a pool constructed on land the taxpayer already owned. The courts have reasoned that amount of the total purchase price that can be allocated to the pool is identical to the pool's contribution to the value of overall property.146
144 Cherry v. Comr., T.C. Memo 1983-470. Other cases and rulings allowing a deduction for a swimming pool include Mason v. U.S., 57-2 USTC ¶10,012 (D. Hi. 1957) (Pool constructed for use of poliomyelitis sufferer); Polacsek v. Comr., T.C. Memo 1981-569 (Limited use pool; taxpayer had "little residual breathing power" after operation); Rev. Rul. 83-33, 1983-1 C.B. 70 (Severe osteoarthritis sufferer; lap pool not suitable for recreational use); PLR 8208128. A deduction was also allowed for the annual swimming pool fee, and for the cost of transportation to the pool for a child with rheumatoid arthritis. PLR 8326095.
145 Haines v. Comr., 71 T.C. 644 (1979); Evanoff v. Comr., T.C. Memo 1982-600; Worden v. Comr., T.C. Memo 1981-366.
146 Robbins v. Comr., T.C. Memo 1982-565; Lerew v. Comr., T.C. Memo 1982-483.
If a pool is determined to have been constructed primarily for medical care, the deductible expense is limited to the cost of the least expensive pool adequate to produce the medical benefit.147 This cost is further reduced by the increase in the value of the taxpayer's property.
147 Ferris v. Comr., 582 F.2d 1112 (7th Cir. 1978), rev'g and rem'g T.C. Memo 1977-186.
 Example—Deduction for More Than Adequate Pool Limited
T's AGI is $50,000. During the year, T had a pool installed on his physician's advice, primarily for the alleviation of his arthritis. T spent $20,000 for the pool, but could have bought a smaller pool for $15,000 which would have provided the same health benefits. Only $15,000 of the $20,000 spent on the pool is a medical expense. The addition of the pool did not increase the value of T's property. The $15,000 must then be reduced by $3,750 (7.5% of $50,000), for a net deduction of $11,250. See ¶2840.01.
(2) Other Improvements
Deductions have been allowed for the cost of elevators in or outside the homes of taxpayers whose heart conditions made it difficult or dangerous for them to climb stairs or hills,148 and for an "inclinator" to transport a taxpayer who had suffered a heart attack up and down the stairs in her house.149
148 Riach v. Frank, 302 F.2d 374 (9th Cir. 1962); Berry v. Wiseman, 174 F. Supp. 748 (D. Okla. 1958) (Also holding that installation of elevator did not increase value of property); Post v. U.S., 150 F.Supp. 299 (N.D. Alabama 1956); Snellings v. U.S., 149 F.Supp. 825 (E.D. Va 1956), Rev. Rul. 54-57, 1954-1 C.B. 67, modified by Rev. Rul. 83-33, 1983-1 C.B. 70.
149 Hollander v. Comr., 219 F.2d 934 (3d Cir. 1955), rev'g 22 T.C. 646 (1954).
Deductions have been allowed for the cost of a central air conditioning unit installed in the home of a child with cystic fibrosis to protect her from exposure to dry, dusty air,150 and for air purifiers, humidifiers, and air conditioners to alleviate taxpayers' allergies.151
150 Gerard v. Comr., 37 T.C. 826 (1962), acq., 1966-2 C.B. 5.
151 PLR 8009080.
A taxpayer whose child suffered from lead poisoning was allowed a deduction for the cost of removing lead-based paint from surfaces accessible to the child, but not from other surfaces in the house. No deduction was allowed for repainting with unleaded paint, which was ruled a personal expense.152
152 Rev. Rul. 79-66, 1979-1 C.B. 114.
The cost of an attached garage was held to qualify as a medical expense, to the extent that it exceeded the increase in the value of the house, because the taxpayer's leg injury made it dangerous for him to walk to the former free-standing garage in winter time.153
153 Pols v. Comr., T.C. Memo 1965-222.
On the other hand, when a window was installed in the bedroom wall of a terminally ill child, who was denied contact with others, in order that she could see her family, the cost was ruled nondeductible on the grounds that the expenditure was merely for her "general well-being and comfort."154 Deductions also have been denied for the cost of an oil-heating furnace installed in the taxpayer's home,155 and for the cost of a fallout shelter, because the possibility of becoming ill from radiation fallout was deemed too remote.156
154 PLR 7907019.
155 Seymour v. Comr., 14 T.C. 1111 (1950); Ross v. Comr., T.C. Memo 1972-122.
156 Daniels v. Comr., 41 T.C. 324 (1963).
e. Basis and Subsequent Sale of Expensed Item
Ordinarily, the basis of an asset equals its cost,157 but any part of the cost that is deductible in the year the asset is acquired, does not result in an adjustment to basis.158 Medical expenses, however, are deductible only to the extent that they exceed 7.5% of AGI which complicates the determination of the basis of capital assets purchased for medical care.
157 §1012.
158 Regs. §1.1016-2(a).
 Example—Basis of Capital Asset (1)
T's AGI is $20,000. During the year, T purchased a wheelchair at a cost of $4,000. T's medical expense deduction is computed as follows:
	
	Medical expenses	4,000	
	7.5% of AGI	1,500	
	Medical expense deduction	2,500	

Because $1,500 of the $4,000 spent for the chair was not deducted due to the AGI limit, T's basis in the chair is $1,500. If, in a subsequent year, T sold the chair for $2,000, he would have a gain of $500.159
159 Rev. Rul. 78-221. 1978-1 C.B. 75. The ruling's examples are based on the 3% of AGI limit of prior law. Rev. Rul. 78-221 does not address the potential argument that the basis in the asset should be further increased by the amount of the deduction that is needed to bring total itemized deductions up to the level of the standard deduction (or the zero bracket amount, under the law in effect when the ruling was promulgated). Itemized deductions do not lower taxable income until the standard deduction is exceeded.
The computation is complicated further if, in addition to the capital expenditure, there are other deductible medical expenses.
 Example—Basis of Capital Asset (2)
The facts are the same as in the example above, except that T also had unreimbursed doctor bills of $2,000. His medical expense deduction is computed as follows:

	Wheel Chair	4,000	
	Doctor Bills	2,000	
	Total Medical Expenses	6,000	
	7.5% of AGI	1,500	
	Medical Expense Deduction	4,500	

Included in the $1,500 of medical expenses that were not deducted due to the AGI limitation is $1,000 of the $4,000 that was spent on the chair. This is determined by multiplying the amount of the limitation ($1,500) by the ratio of the cost of the chair to total medical expenses ($4,000/$6,000). Therefore, T's basis in the chair is $1,000, the amount of its cost that he was not able to deduct. On a subsequent sale for $2,000, T's gain would be $1,000.
The benefit of a medical expense may also be lost if there is not enough offsetting income.
 Example—Basis of Capital Asset (3)
If T's AGI in the example above were only $8,000 and T had other itemized deductions of $5,500, his deductions would exceed his AGI, computed as follows:
	
	AGI	$8,000	
	Itemized deductions:	
	Medical	6,000	
	7.5% of AGI	600	
	Medical expense deduction	5,400	
	Other itemized deductions	5,500	
	Total itemized deductions	10,900	
	Excess itemized deductions	(2,900)	

In these circumstances, $400 of the cost of the chair is nondeductible due to the AGI limitation ($4,000/$6,000 times $600). The other $3,600 of the chair's cost is included in the $10,900 of total itemized deductions. Therefore, by multiplying 3,600/10,900 times the excess deductions of 2,900, it can be determined that another $958 of the chair's cost yielded no tax benefit. Thus, T's basis in the chair is $1,358 (the $400 not deducted because of the AGI limitation plus the $958 of deductions lost because there was not enough income). If he were later to sell it for $2,000 he would report a gain of $642.
20. Losses When Property Is Sold Due to Illness
Medical expenses do not include losses incurred on the sale of property, even when the taxpayer's medical condition forced the sale.160
160 Rev. Rul. 68-319, 1968-2 C.B. 92; Harding v. Comr., 46 T.C. 502 (1966).
 Example—Loss Incurred on Forced Sale
T lived in a two-story house which he purchased for $75,000. When illness confined T to a wheelchair, the second story became inaccessible to him. He sold the house and bought a one-story one. T received $70,000 for his old house. The loss of $5,000 is not a medical expense, even though T's medical condition was the reason that he sold the house.
21. Eye Care
Expenditures for eyeglasses and for the acquisition of a seeing eye dog qualify as expenditures for medical care.161 Also, expenses for contact lenses and contact lens insurance have been determined to be payments for medical care.162 Costs associated with LASIK or radial keratotomy surgery (i.e., laser eye surgery), a procedure to correct the optical disorder myopia, have been ruled medical care.163
161 Regs. §1.213-1(e)(1)(iii). Maintenance expenses associated with a seeing eye dog are also deductible. See Rev. Ruls. 55-261, 1955-1 C.B. 307, 68-295, 1968-1 C.B. 92.
162 Rev. Rul. 74-429, 1974-2 C.B. 83.
163 Rev. Rul. 2003-57, 2003-22 I.R.B. 959; PLR 9625049.
22. Fertility Treatments
Expenditures for procedures to overcome infertility qualify as expenditures for medical care.164 Such procedures include in vitro fertilization (including temporary storage of eggs or sperm) and surgery (including reversing a prior operation that prevents you from having children).
164 IRS Pub. 502, Medical and Dental Expenses.
Costs of obtaining egg donor and related fees and expenses constitute deductible medical expenses.164.1 These expenses include the egg donor fee, the agency fee, the egg donor's medical and psychological testing expenses, the insurance for post-procedure medical or psychological assistance to the donor, and the cost of preparing the legal contract between the taxpayer and the egg donor.164.2
164.1 PLR 200318017.
164.2 Id.
23. DNA Collection and Storage
The collection and storage of DNA is not medical care by itself. An individual may, however, elect to have his or her DNA collected and stored so that the individual can use the DNA when genetic tests are developed for conditions such as breast cancer, Alzheimer's and Parkinson's disease. To be deductible, the individual must state when or whether the DNA will actually be used for medical diagnosis.165
165 PLR 200140017
¶2840.03.C. Transportation
Transportation costs are deductible if the transportation is primarily for, and essential to, medical care.166 Those costs, however, do not include the expenses of meals and lodging while at the away-from-home location, unless they are paid as part of a hospital bill.167
166 §213(d)(1)(B); Regs. §1.213-1(e)(1)(iv). See Rev. Rul. 2000-24, 2000-19 I.R.B. 963 (Taxpayer's travel to medical conference to obtain medical information that may be useful in making decisions for taxpayer's dependent considered as primarily for or essential to medical care). Section 213(d)(1)(B) refers to the medical care described in §213(d)(1)(A) and therefore does not include transportation for qualified long-term care services described in §213(d)(1)(C), except perhaps if such services also fit within the care described in §213(d)(1)(A). 
167 Regs. §1.213-1(e)(1)(iv). For a discussion of the costs of meals and lodging while at the location where treatment is received, see ¶2840.03.B.7.
 Example—Physician's Prescription
T's physician prescribed a trip to a warm climate to alleviate his acute arthritis. Accordingly, T traveled to Florida for two weeks. The costs of traveling to and from his destination are deductible, but the costs of meals and lodging in Florida are not. The expenses of lodging in Florida do not qualify, because the trip was not made to receive treatment in a hospital or equivalent facility.
If travel is undertaken merely for the general improvement of the taxpayer's health, none of the related expenses are deductible.168 Transportation costs are also nondeductible when incurred by taxpayer to take a cruise (upon the recommendation of a physician) on which a group of doctors provide both instructional seminars relating to the taxpayer's medical condition and certain medical services because the seminars were for the preservation of the taxpayer's general health only and the medical services were available in the taxpayer's home town.169
168 Regs. §1.213-1(e)(1)(iv); Marantz Est. v. Comr., T.C. Memo 1979-463. 
169 Rev. Rul. 76-79, 1976-1 C.B. 70.
 Example—Travel to Improve General Health
T is a CPA. At the end of tax season, needing a break from the stress of her work, she takes a cruise to the Bahamas. She returns rested and invigorated, convinced that the trip saved her from a nervous breakdown. The expenses of the trip are not deductible.
If a taxpayer chooses to undergo prescribed treatment in another locality for purely personal reasons, the transportation costs are not deductible.170
170 Regs. §1.213-1(e)(1)(iv).
 Example—Locality Chosen for Personal Reasons
T is required to undergo surgery, after which he will have to take two weeks off from work to recuperate. Because he believes that the recovery period would be more pleasant in Hawaii than at home, he arranges to have the operation in Honolulu. He spends $2,000 on his round-trip plane ticket, $4,000 for his hospital stay, and $3,000 in hotels and restaurants after being released from the hospital. Only the $4,000 hospital bill is deductible.
The medical expense deduction was allowed for the following transportation costs: 
• a trip to Arizona for a child suffering from "deep bronchitis bordering on pneumonia;"171
• a trip prescribed for an arthritis sufferer;172
• a trip to Florida during the winter for a taxpayer who, following a larynx operation, suffered spasms of coughing and ruptured blood vessels in the lungs in cold weather;173
• trips by parents to a psychiatric center to visit child at regular intervals;174
• a trip to a medical conference to obtain medical information that may be useful in making decisions for taxpayer's dependent.175
171 Stringham v. Comr., 12 T.C. 580 (1949).
172 Watkins v. Comr., 13 T.C.M. 320 (1954).
173 Rev. Rul. 55-261, 1955-1 C.B. 307.
174 Rev. Rul. 58-533, 1958-2 C.B. 108.
175 Rev. Rul. 2000-24, 2000-19 I.R.B. 963.
The following costs incurred in local transportation have been allowed: 
• transportation to Alcoholics Anonymous meetings;176
• transportation to a swimming pool for the purpose of allowing a child with arthritis to exercise;177 and
• transportation to special schools.178
176 Rev. Rul. 63-273, 1963-2 C.B. 112.
177 PLR 8326095. 
178 Baer Est. v. Comr., T.C. Memo 1967-34; Rev. Rul. 70-285, 1970-1 C.B. 52.
Deductions may also be taken for cab and bus fares incident to trips to a doctor's office. Medical transportation, however, does not include ordinary commuting expenses, even if they are larger than they otherwise would be due to the taxpayer's medical condition.179
179 Goldaper v. Comr., T.C. Memo 1977-343. Where the work itself has been prescribed as a form of therapy, however, the cost of transportation to the job has been held to be a medical expense. Weinzimer v. Comr., T.C. Memo 1958-137.
Taxpayers who use their own car for medical transportation may compute the deduction either on the basis of their actual expenses, or using a standard mileage rate,180 plus parking fees and tolls.181
180 See Rev. Proc. 2005-78, 2005-51 I.R.B. __ (18 cents per mile in 2006); Rev. Proc. 2004-64, 2004-49 I.R.B. 898, modified by Announcement 2005-71, 2005-41 I.R.B. __ (15 cents per mile for costs incurred from Jan. 1 — Aug. 31, 2005, and 22 cents per mile for costs incurred from Sept. 1 - Dec. 31, 2005); Rev. Proc. 2003-76, 2003-43 I.R.B. 924 (14 cents per mile for costs incurred in 2004); Rev. Proc. 2002-61, 2002-39 I.R.B. 616 (12 cents per mile for costs incurred in 2003); Rev. Proc. 2001-54, 2001-48 I.R.B. 530 (13 cents per mile for costs incurred in 2002); Rev. Proc. 2000-48, 2000-49 I.R.B. 570 (12 cents per mile in 2001).
181 Rev. Proc. 2005-78, 200-51 I.R.B. __, §7.04.
A controversy exists as to whether the costs of meals and lodging incurred while en route to receive medical care are included in the expenses of "transportation." The Sixth Circuit held that they are,182 but the IRS has continued to adhere to its position that they are not.183
182 Montgomery v. Comr., 428 F.2d 243 (6th Cir. 1970) (Meals and lodging deductible while en route from Kentucky to Minnesota to receive treatment at Mayo Clinic). 
183 PLR 8336011.
¶2840.03.D. Qualified Long-Term Care Services
Medical expenses include unreimbursed expenses for "qualified long-term care services."184 Qualified long-term care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating and rehabilitative services, and maintenance or personal care services that are required by a chronically ill individual and that are provided under a plan of care prescribed by a licensed health care practitioner.185
184 §213(d)(1)(C).
185 §7702B(c)(1).
A "chronically ill individual" is one who has been certified within the preceding 12-month period by a licensed health care practitioner as meeting one of the following three tests:186 
(i) being unable to perform, without substantial assistance from another individual, at least two activities of daily living (ADLs) , i.e., eating, toileting, transferring, bathing, dressing and continence, for at least 90 days due to a loss of functional capacity;187
(ii) having a level of disability (as determined by regulations) to the level described in (i);188 or
(iii) requiring substantial supervision to protect such individual from threats to health and safety due to severe cognitive impairment.189
186 §7702B(c)(2)(A).
187 Notice 97-31, 1997-1 C.B. 417, refers to this test as the ADL Trigger and defines the following safe harbor definitions: substantial assistance means hands on assistance (which means physical assistance of another person without which the ill person would be unable to perform the ADL) and standby assistance (which means the presence of another person within arm's reach of the ill person that is necessary to prevent, by physical intervention, injury while the ill person is performing the ADL (such as being ready to catch the ill person if he or she falls while getting in or out of the bathtub or being ready to remove food if the ill person chokes while eating) ) . Notice 97-31 also indicates that an individual does not meet the ADL Trigger unless so certified by a licensed health care practitioner.
188 Notice 97-31, 1997-1 C.B. 417, refers to this test as the Similar Level Trigger but does not provide guidance on this test.
189 Notice 97-31, 1997-1 C.B. 417, refers to this test as the Cognitive Impairment Trigger and defines the following safe harbor definitions: 
(1) Severe cognitive impairment means a loss or deterioration in intellectual capacity that is (A) comparable to and includes Alzheimer's Disease and similar forms of irreversible dementia, and (B) measured by clinical evidence and standardized tests that reliably measure impairment in the ill person's short-term or long-term memory, orientation to people, places or time, and deductive or abstract reasoning; and
(2) Substantial supervision means continual supervision (which may include verbal prompting, gestures, or other demonstrations) by another person that is necessary to protect the severely cognitively impaired person from threats to his or her health or safety (such as may result from wandering) .
Notice 97-31 indicates that an individual does not meet the ADL Trigger unless so certified by a licensed health care practitioner; however, §7702B(c)(2)(A) requires such certification for the Cognitive Impairment Trigger as well.
A licensed health care practitioner is a physician, a registered professional nurse or a licensed social worker.190 Other individuals may qualify under regulations to be prescribed by the Treasury. Maintenance or personal care services means care the primary purpose of which is providing needed assistance with any of the disabilities as a result of which the individual is a chronically ill individual and include protection from threats to health and safety due to severe cognitive impairment.191 No deduction is allowed for the cost of long-term care provided by a spouse or relative unless the spouse or relative is a licensed professional with respect to those services.192
190 §7702B(c)(4).
191 §7702B(c)(3). Maintenance or personal care services may include meal preparation, household cleaning and other similar services that the chronically ill person is unable to perform. See General Explanation (Blue Book) of Tax Legislation Enacted in the 104th Congress, prepared by the Staff of the Joint Committee on Taxation (1996).
192 §213(d)(11).
¶2840.03.E. Insurance
1. Medical Care Insurance
The cost of insurance covering medical care, transportation for medical care, and the cost of qualified long-term care insurance contracts (up to the amount of eligible premiums) is deductible as a medical expense.193
193 §213(d)(1)(D) referring to §213(d)(1)(A) and (B) and §§7702B(b), and 213(d)(1) (flush language). The deductibility of premiums for long-term care insurance contracts is discussed at ¶2840.03.E.2. However, if expenses for cosmetic surgery are not deductible because of §213(d)(9), then amounts paid for insurance coverage for such expenses are also not deductible. See H.R. Rep. No. 964, 101st Cong., 2d Sess. 1033 (1990). For the rules regarding the deduction of expenses for cosmetic surgery, see ¶2840.03.B.9, above.
Determination of the cost, however, can be difficult when the policy covers more than medical care, and payment is made with a single premium. An insurance policy may provide an indemnity for lost income during a period of illness, or for loss of life, limb, or sight. The cost of these additional coverages is not deductible.194 If an automobile insurance policy covers the medical expenses of the insured arising out of an automobile accident, as well as the usual property and liability coverage, only the cost of the medical coverage is deductible as a medical expense; the basic automobile insurance coverage is not.195 If an insurance contract covers other items besides medical expenses, then the premiums are not deductible unless the amount allocable to medical coverage is separately stated in the contract, or furnished to the policyholder by the insurance company in a separate statement.196 Even amounts separately stated as allocable to medical coverage are not deductible if they are unreasonably large in relation to the total charges under the contract.197 The determination of whether an amount separately stated as allocable to medical coverage is unreasonably large is made by considering the relationship of all the coverages under the contract together with all the facts and circumstances.198
194 Regs. §1.213-1(e)(4)(i)(a).
195 Notter v. Comr., T.C. Memo 1982-96.
196 §§213(d)(6)(A) and  (B): Regs. §1.213-1(e)(4)(i)(a)(1) and  (2). See also Rev. Rul. 73-483, 1973-2 C.B. 75, in which a reasonable portion of the taxpayer's automobile insurance was allocated to the medical care of persons injured in or by the taxpayer's car. The IRS ruled that even the portion of the premium so allocated was not deductible, because the coverage was not limited to the medical care of the taxpayer, his spouse, and his dependents.
197 §213(d)(6)(C); Regs. §1.213-1(e)(4)(i)(a)(3).
198 Regs. §1.213-1(e)(4)(i)(a)(3).
Premiums are considered allocable to other than medical care if the contract states that they are waived upon the occurrence of an event.199
199 Id.
 Example—Premiums Waived Upon Occurrence of Event
T purchases insurance under a contract that provides for the payment of his medical expenses and those of his family. The contract also provides that, in the event of T's death, premiums will be waived and his family's medical expenses will continue to be covered for five years. Because the premiums are waived upon the occurrence of an event, T's death, they are not deductible as medical expenses.
2. Long-Term Care Insurance
Medical expenses include unreimbursed amounts paid for "any qualified long-term care insurance contract"200 to the extent that the premiums do not exceed specified dollar limits.201
200 §213(d)(1)(D). For this purpose, amounts received under a long-term care insurance contract (regardless of whether the contract reimburses expenses or pays benefits on a per diem or other periodic basis) are treated as reimbursement for expenses actually incurred for medical care. §7702B(a)(2). Because 1996 HIPAA treats payments of eligible long-term care insurance premiums in the same manner as medical insurance premiums, the self-employed health insurance deduction applies to such premiums. See ¶2840.09. 
201 §7702B(a)(4). For those who before year-end are not more than 40 years old, up to $200 per year in premiums are deductible; for those over 40 but not over 50, up to $375 in premiums are deductible; for those over 50 but not over 60, up to $750 in premiums are deductible; for those over 60 but not over 70, up to $2,000 in premiums are deductible; for those over 70, up to $2,500 in premiums are deductible. §213(d)(10). These dollar limits are indexed for inflation. §7702B(d)(5). For 2003, (1) 40 or less, $250; (2) over 40 but not over 50, $470; (3) over 50 but not over 60, $940; (4) over 60 but not over 70, $2,510; and (5) over 70, $3,130. Rev. Proc. 2002-70, 2002-46 I.R.B. 845. For 2004, (1) 40 or less, $260; (2) over 40 but not over 50, $490; (3) over 50 but not over 60, $980; (4) over 60 but not over 70, $2,600; and (5) over 70, $3,250. Rev. Proc. 2003-85, 2003-49 I.R.B. 1184. For 2005, (1) 40 or less, $270; (2) over 40 but not over 50, $510; (3) over 50 but not over 60, $1,020; (4) over 60 but not over 70, $2,720; and (5) over 70, $3,400. Rev. Proc. 2004-71, 2004-50 I.R.B. 970. For 2006, (1) 40 or less, $280; (2) over 40 but not over 50, $530, (3) over 50 but not over 60, $1,060, (4) over 60 but not over 70, $2,830, and (5) over 70, $3,530. Rev. Proc. 2005-70, 2005-47 I.R.B. __.
A qualified long-term care insurance contract is an insurance contract that: 
(1) covers only qualified long-term care services,202
(2) generally does not pay or reimburse expenses reimbursable under Medicare,203
(3) is guaranteed renewable,204
(4) does not provide for a cash surrender value or other money that can be paid, assigned, pledged or borrowed,205
(5) under which refunds and dividends may be used only to reduce future premiums or increase future benefits,206 and
(6) contains certain consumer protection provisions.207
202 §7702B(b)(1)(A). Qualified long-term care services are defined in §7702B(c). See also Notice 97-31, 1997-1 C.B. 417 (Safe harbors for pre-1997 insurance standards). However, a long-term care insurance contract can provide for payments on a per diem or other periodic basis without regard to expenses incurred during the period. §7702B(b)(2). The per diem limitation for 2003 is $220. Rev. Proc. 2002-70, 2002-46 I.R.B. 845. For 2004, $230. Rev. Proc. 2003-85, 2003-49 I.R.B. 1184. For 2005, 240. Rev. Proc. 2004-71, 2004-50 I.R.B. 970. 
For 2006, 250. Rev. Proc. 2005-70, 2005-47 I.R.B. __. Note that a contract is not a qualified long-term care insurance con tract unless it takes into account at least five of the six activities of daily living in determining whether an individual is a chronically ill individual. §7702B(c)(2)(B) (flush language) .
203 §7702B(b)(1)(B). This includes expenses that would be reimbursable except for the deductible or co-pay, but does not apply where Medicare is a secondary payor, the benefits are coordinated with Medicare or the contract makes per diem or other periodic payments without regard to expenses). §7702B(b)(1)(B) and  (2)(A) and  (B).
204 §7702B(b)(1)(C).
205 §7702B(b)(1)(D).
206 §7702B(b)(1)(E). This does not apply to refunds (not exceeding the aggregate premiums paid) on the death of the insured or complete surrender or cancellation of the contract. 
207 §7702B(b)(1)(F) and  (g).
An arrangement also is treated as a qualified long-term care insurance contract if an individual receives coverage for qualified long-term care services under a state long-term care plan, and the terms of the arrangement would satisfy the requirements for a long-term care insurance contract under the Code, if the arrangement were an insurance contract.208
208 §7702B(f).
As with health insurance, costs reimbursed by long-term care insurance are not includible as medical expenses and, subject to certain limits, benefits paid under a long-term care insurance policy are not includible in income. See ¶5920.
3. Special Rule for Taxpayers for Premiums for Periods After Age 6
A special rule allows certain insurance payments made by the taxpayer before attaining age 65 for insurance covering the medical care of the taxpayer, his or her spouse, or his or her dependents after the taxpayer turns 65 to be deductible in advance of the related coverage. To be deductible in the year paid, the premiums must be payable on a level payment basis for a period of 10 years or more, or until the taxpayer reaches age 65, but in no case for less than five years.209
209 §213(d)(7); Regs. §1.213-1(e)(4)(i)(b). Premiums are considered payable on a level premium basis if the total premium is payable in equal installments at least annually.
 Example—Level Payments of Premiums
T is 50 years old. He is concerned about high medical costs after he retires, so he buys an insurance policy that will provide medical coverage for himself and his spouse after he reaches age 65. The policy calls for payments of $2,000 per year for the next 15 years, ceasing when T turns 65. The payments are deductible in the years made, along with T's current medical expenses of those years.
 Example—Level Payments for at Least 5 Years
If T waited until he was 61 to begin making payments on the policy in the example above, the payments would not be deductible in the years made. The payments must in all cases be spread out over at least five years.
Although both the social security tax and the self-employment tax include an amount for hospital insurance, no part of either tax is deductible as a medical expense.210 Amounts paid for supplementary medical insurance for the aged under Medicare do qualify, however.211
210 Rev. Rul. 66-216, 1966-2 C.B. 100.
211 §213(d)(1)(D). See also Regs. §1.213-1(e)(4)(i)(a); Rev. Rul. 66-216, 1966-2 C.B. 100.
¶2840.04. Proper Year of Deduction
¶2840.04.A. "Paid During the Taxable Year"
The law by its terms grants a deduction for medical expenses "paid" during the taxable year.212 Accordingly, the taxpayer's method of accounting is irrelevant in determining the proper year of deduction.213 For purposes of the medical expense deduction, all taxpayers are effectively placed on the cash method.
212 §213(a).
213 Regs. §1.213-1(a)(1).
 Example—Accrual Method Taxpayers
T uses the accrual method of accounting, and the calendar year as his taxable year. In 2001, T undergoes an appendectomy. He pays the surgeon in 2002. The expense is deductible in 2002, the year of payment.
Medical expenses that are charged to a bank credit card are considered paid in the year the charge is made, regardless of when the taxpayer repays the bank.214 Similarly, expenses paid with borrowed funds are deductible when the medical expense is paid, not when the loan is repaid.215
214 Rev. Rul. 78-39, 1978-1 C.B. 73. The case in which payment is made with a credit card must be distinguished from one in which the credit is extended by the provider of the medical services. If the physician permits the patient to postpone payment for the services rendered, the patient does not have a deductible medical expense until actual payment is made. If the taxpayer's parent pays the doctor and the taxpayer gives his parent a negotiable promissory note, the payment by the parent is considered payment by the taxpayer because the transaction is substantially similar to one in which the taxpayer borrows money to pay the bill directly. Rev. Rul. 78-173, 1978-1 C.B. 73.
215 Granan v. Comr. 55 T.C. 753 (1971).
 Example—Credit Card Payment
T has his wisdom teeth pulled in 2001, charging the $500 bill to his credit card. He pays the credit card bill which includes the $500 charge in 2002. The expense is deductible in 2001, the year the charge was made.
In general, prepaid medical expenses are deductible only in the period when the services are actually rendered.216 This is analogous to the treatment of other prepaid expenses by cash basis taxpayers.
216 Rose v. Comr., 52 T.C. 521, 532 (1969), aff'd, 435 F.2d 149 (5th Cir. 1970); Zipkin v. U.S., 2000-2 USTC ¶50,863 (D. Minn. 2000) (Home construction costs related to special features required by taxpayer's medical condition were deductible in year home became habitable even though paid in earlier years); Bassett v. Comr., 26 T.C. 619 (1956).
 Example—Prepayment for Future Medical Services
T consults a psychiatrist once a week, at a cost of $100 per session. In the last week of 2001, anticipating that he will be in a lower tax bracket in the following year, T sends his psychiatrist a check for $2,500 as an advance payment for their first 25 sessions in 2002. The $2,500 is deductible in 2002, when the services are rendered.
In some situations dealing with lifetime care being obtained from retirement homes or institutions, a portion of prepaid expenses attributable to medical care in connection with "life-care" fees are deductible in the year of payment; however, any portion not attributable to medical care is not deductible.217
217 Rev. Rul. 76-481, 1976-2 C.B. 82; Rev. Rul. 75-302, 1975-2 C.B. 86; Rev. Rul. 75-303, 1975-2 C.B. 86; Rev. Rul. 68-525, 1968-2 C.B. 112. Note, however, that these rulings should not be interpreted to allow current deductibility of payments for future medical care that extends substantially beyond the close of the taxable year in situations where the future care is not purchased in connection with obtaining lifetime care of the type described in the rulings. Rev. Rul. 93-72, 1993-2 C.B. 77. Rev. Rul. 93-72 does not apply to amounts paid before Oct. 14, 1993, or to amounts paid on or after Oct. 14, 1993, pursuant to terms of a binding contract entered into before that date if such terms were in effect on that date.
No deduction is allowed for medical expenses that are merely anticipated as a result of an accident,218 or for gifts to physicians as a token of appreciation for their services rather than as payment for them.219
218 Andrews v. Comr., T.C. Memo 1978-174.
219 O'Hare v. Comr., 54 T.C. 874 (1970).
¶2840.04.B. Special Rule for Insurance Premiums
The payment of certain health insurance premiums are deductible in advance of the related coverage.220 This rule concerns premiums paid before the taxpayer reaches age 65 for coverage after he or she reaches that age. See ¶2840.03.E.3 for a discussion of this rule.
220 §213(d)(7); Regs. §1.213-1(e)(4)(i)(b).
¶2840.05. Reimbursements
¶2840.05.A. General
Medical expenses are deductible only to the extent that they are not reimbursed "by insurance or otherwise."221 The "or otherwise" language that appears in the Code is a catchall that requires reimbursement received in any form to be offset against medical expense payments.222 The reimbursement may come, for example, from other members of the taxpayer's family,223 in the form of a judgment, or settlement of a claim against a party whose conduct caused the injury that made the medical expense necessary.224 Medical expenses are also nondeductible if reimbursed by Social Security,225 by the Crime Victims Compensation Board of New York,226 by the New York State Teachers' Retirement System,227 or under the Disaster Relief Act of 1974.228 Reimbursements received by one spouse under the insurance policy of the other also reduce the amount of the deductible expense.229
221 §213(a).
222 Litchfield v. Comr., 40 T.C. 967 (1963), aff'd, 330 F.2d 509 (1st Cir. 1964) (Taxpayer's deduction based on payment of his mother's medical expenses must be reduced by amount of reimbursement received from his brothers). Where, however, the taxpayer paid his parents' medical expenses with his own money, his deduction was not denied or reduced merely because funds of his parent were held in a joint account with the taxpayer. Under state law, the taxpayer did not have the right to use the funds for his own benefit, so such access as he had to them did not amount to a right of reimbursement. Jewell v. Comr., 69 T.C. 791 (1978), acq. Further, a taxpayer who paid his mother's medical expenses with funds taxpayer withdrew from his mother's account under a general power of attorney, was allowed to claim the medical expense deduction, on the theory that the funds had been given to taxpayer by his mother when she created the power. Therefore, when the taxpayer withdrew the money, he was not withdrawing his mother's funds to reimburse himself, but instead withdrawing his own money. Ruch v. Comr., 718 F.2d 719 (5th Cir. 1983).
223 Litchfield v. Comr., above.
224 Morgan v. Comr., 55 T.C. 376 (1970); Cooney v. Comr., T.C. Memo 1971-201.
225 Hodge v. Comr., 44 T.C. 186 (1965) (Where son received his mother's social security benefits as her guardian, only expenses paid by him in excess of benefits were deductible: "Section 213(a) reasonably cannot be construed as allowing petitioners a deduction for medical expenses which they did not themselves pay").
226 Rev. Rul. 74-74, 1974-1 C.B. 18.
227 McDermid v. Comr., 54 T.C. 1727 (1970).
228 Rev. Rul. 76-144, 1976-1 C.B. 17 (Relief was grant, not loan, and was in nature of insurance). But cf. CCA 200114045 (Payment authorized by the Stafford Disaster and Emergency Relief Act or the Cerro Grande Fire Assistance Act that were made to individuals who suffered losses as a result of the Cerro Grande fire, to the extent they compensated recipients specifically for medical expenses, do not affect the deductability of such medical expenses even if the payments are excluded from income).
229 Marlett v. Comr., T.C. Memo 1976-105.
Reimbursements are usually retrospective, but prospective reimbursements must also be offset against the taxpayer's expenses as they occur.230
230 Rev. Rul. 77-230, 1977-2 C.B. 214 obsoleted by T.D. 9249, 71 Fed. Reg. 6197 (2/7/06), as of 2/3/06; Rev. Rul. 75-232, 1975-2 C.B. 94.
 Example—Prospective Reimbursement
T sues the U.S. for injuries suffered in the course of an examination at a federal medical facility. As part of the settlement, the U.S. establishes a trust funded with $100,000 to pay T's future medical expenses. At T's death, the trust corpus will revert to the U.S. T will not be entitled to a medical expense deduction as medical expenses are paid out of the trust in subsequent years.
Before a deduction can be claimed, the aggregate expenses must be reduced by the aggregate reimbursements received, irrespective of the fact that certain expenses are not covered by the reimbursements.231
231 Rev. Rul. 56-18, 1956-1 C.B. 135.
 Example—Reimbursements Must Be Aggregated (1)
T has several health insurance policies that cover doctors' bills and hospital costs but not nursing fees. During the year, T received $5,000 under all the policies for doctors' bills and hospital costs, although his actual expenses for those items amounted to only $4,500. T also paid $1,000 of nursing fees, which was not reimbursed by his insurance carriers. T's unreimbursed medical expenses amount to $500. The excess reimbursements of hospital and doctors' fees must be offset against the nursing fees, even though T's policies exclude such fees from coverage.
 Example—Reimbursements Must Be Aggregated (2)
During the year, T has AGI of $20,000. He has two operations, incurring medical expenses of $8,000, which he pays. His insurance company reimburses him only $2,500. His sister reimburses him another $1,000. Total expenses of $8,000 are offset by total reimbursements of $3,500, leaving an unreimbursed expense of $4,500. This expense is further reduced by $1,500 (7.5% of AGI), leaving a medical expense deduction of $3,000.
If, in the above example, the $1,000 received from the sister had been intended as a general gift rather than specifically as a reimbursement of the taxpayer's medical expense, then it would not have reduced the deduction.232
232 Ruch v. U.S., 718 F.2d 719 (5th Cir. 1983), rev'g T.C. Memo 1982-493.
The IRS has advised that the medical expense deduction must be reduced by the amount that could be recovered from the insurance company even when the taxpayer elects not to file a claim.233
233 TAM 8102010. In the ruling, the IRS reasoned by analogy to  Bartlett v. U.S., 397 F. Supp. 216 (D. Md. 1975), in which a casualty loss deduction under §165 was denied because the taxpayer voluntarily declined to file a claim with his insurance company.
In some cases, the taxpayer may be required to reimburse his or her insurance company. In these circumstances, the taxpayer's payment to the insurance company is not a deductible medical expense payment.
 Example—Taxpayer Reimburses Insurance Company
T was waiting for a red light when he was "rear ended" by another driver. T incurred $3,000 of medical expenses, which his insurance company paid. The payment caused the insurance company to be subrogated to T's claim against the negligent driver, and when T sued and recovered $10,000 he reimbursed his insurance company with $3,000 of the award. T has no medical expense deduction, because he is not out of pocket any amount as a result of medical treatment arising out of the accident.
¶2840.05.B. Apportionment of Reimbursements
Because reimbursed medical expenses are not deductible, it is necessary to apportion the reimbursements between medical expenses and non-medical expenses. If the reimbursement is not related to medical expenses, then the deduction is not reduced. For example, amounts received under an accident policy to indemnify the insured against total and partial disability do not reduce the medical expense deduction; amounts which reimburse him for his or her medical expenses do reduce the deduction.234
234 Deming v. Comr., 9 T.C. 383, (1947), acq., 1948-1 C.B. 1.
The IRS has stated that it will respect the parties' express allocation to the plaintiff's previously deducted medical expenses of an amount paid in settlement of a personal injury suit, unless that allocation is unreasonable in light of all the facts.235 If no allocation is made by the parties, however, the IRS will presume that the settlement proceeds should be allocated first to previously deducted medical expenses.236
235 Rev. Rul. 75-230, 1975-2 C.B. 93.
236 Id. The IRS's reasoning is that "the amount of previously paid medical expenses is a sum certain, while the damages sought for [the taxpayer's] pain and suffering are speculative." Retroactive application of Rev. Rul. 75-230 was held not to be an abuse of discretion on the part of the IRS in Murray v. U.S., 81-2 USTC ¶9497 (S.D.N.Y. 1981).
Amounts specifically allocated by the settlement to future medical expenses are similarly required to be offset against those expenses as they are paid.237 Where, however, no allocation to future medical expenses is made, the determination of the amount, if any, that offsets the expenses has proved controversial. In a ruling clearly designed as a weapon in a then pending case, the IRS ruled that, where none of the award was specifically allocated to future medical expenses, an allocation might nevertheless be made on the best evidence under the circumstances, with future medical expense deductions reduced accordingly.238 The court, however, stated that it "[could not] allow the IRS to take advantage of a self-serving ruling," and held that none of the award was allocable to the plaintiff's future medical expenses.239 The IRS, in its argument, failed to convince the court that the jury intended any reimbursement of medical expenses when it made an unallocated lump sum award.240
237 Rev. Rul. 75-232, 1975-2 C.B. 94.
238 Rev. Rul. 79-427, 1979-2 C.B. 120.
239 In Niles v. U.S., 710 F.2d 1391 (9th Cir. 1983), the taxpayer had been awarded $4,025,000 in a medical malpractice suit. The verdict was attacked as excessive on appeal but was sustained. At the appeal the taxpayer had defended the amount of the award by presenting a hypothetical itemization of it, in which $1,588,176 was allocated to future medical expenses. The Ninth Circuit, in the appeal of the tax case, was unwilling to reduce the medical expense deduction by any part of the award. It held that the issue was whether the jury had intended such an allocation, and found that it had not. Cf. Rev. Rul. 79-427, 1979-2 C.B. 120. The holding in Niles is analyzed critically in Hicks, "Niles v. U.S.: Double Tax Benefits Arise from the Ninth Circuit's Questionable Interpretation of Section 213," 4 Va. Tax Rev. 427 (Winter 1985).
240 The taxpayer in Niles was a quadriplegic as a result of the medical malpractice which gave rise to the award, and it is possible that sympathy for his position influenced the holding of the Ninth Circuit on the tax issue.
Tax consequences should be considered in settling personal injury claims. To the extent possible, the plaintiff should allocate the settlement away from a reimbursement of his or her medical expenses, and toward some other area, such as compensation for pain and suffering, that will not reduce a tax deduction.241
241 The plaintiff should be aware, however, of the rules concerning the inclusion of settlements and judgments in income. See ¶1340.
¶2840.06. Reimbursements of Previously Deducted Expenses
If a previously deducted medical expense is reimbursed in a later year, the reimbursement is income when received.242 If, however, the expense was not deducted when it was paid, then the reimbursement in the later year is not income.243
242 Regs. §1.213-1(g)(1).
243 Regs. §1.213-1(g)(2).
 Example—Deducted Expenses Reimbursed Later
In 2001, T had AGI of $30,000 and unreimbursed medical expenses of $5,000. Accordingly, $2,750 of the expenses were deducted ($5,000 minus 7.5% of $30,000) on his 2001 tax return. In 2002, T received $2,000 in reimbursement of the 2001 expenses. The $2,000 is income in 2002.
If the amount of the reimbursement received in 2002 had been $4,000, only $2,750 of it would have been income because the original deduction was limited to that amount due to the 7.5% of AGI floor.
If T's AGI for 2001 had been $80,000, none of the $5,000 of medical expenses for that year would have been deductible, because the 7.5% of AGI floor would not have been exceeded. In that case, the $2,000 reimbursement received in 2002 would not be income.
If the total of T's itemized deductions, including his medical expense deduction, had been less than the standard deduction for 2001, T would have taken the standard deduction and the $2,000 reimbursement received in 2002 would not be income.
Reimbursements that are owed to a decedent at his or her death for previously deducted medical expenses and that are subsequently received by his or her estate constitute income in respect of a decedent.244
244 Rev. Rul. 78-292, 1978-2 C.B. 233. See ¶6150 for the discussion of income in respect of a decedent.
¶2840.07. Medical Expenses of Decedents
Expenses for the medical care of a decedent that are paid out of his or her estate during the one-year period beginning with the day after his or her date of death are treated as paid by the decedent at the time the expenses were incurred.245 Therefore, these expenses are deductible on the decedent's income tax return for the year the expenses were incurred. If the return for that year has been filed, a refund can be claimed, subject to the usual rules regarding the statute of limitations.246
245 §213(c), Regs. §1.213-1(d).
246 Regs. §1.213-1(d) provides that "no credit or refund of tax shall be allowed for any taxable year for which the statutory period for filing a claim has expired."
This special rule for decedents does not apply with respect to an amount paid that is deductible for estate tax purposes as a claim against the decedent's estate unless the estate files a statement that it has not deducted, and will not deduct, the expense for estate tax purposes.247
247 §213(c)(2); Regs. §1.213-1(d)(2). See §642(g).
The IRS has ruled that the portion of the decedent's medical expenses that does not exceed the percentage of AGI limitation for income tax purposes is also not deductible for estate tax purposes.248
248 Rev. Rul. 77-357, 1977-2 C.B. 328. The ruling has been criticized as based on "weak support." Stephens, Maxfield & Lind, Federal Estate and Gift Taxation, Warren, Gorham & Lamont, 5th edition, ¶5.03 (5)(d), n.124.
Comment: The logic of the ruling apparently is that the tax benefit should not be increased by the election to use the expense as a deduction against the estate tax rather than the income tax.
 Example—Expenses Must Exceed AGI Percentage
Decedent became seriously ill during 2001 and died on Dec. 31, 2001, with unpaid medical bills of $20,000. His executor paid the bills out of his estate in 2002. Decedent's AGI for 2001 was $100,000. The ruling cited above indicates that only $12,500 of the expenses may be deducted for estate tax purposes as a claim against the estate ($20,000 minus (.075 times $100,000)). If the executor elected to use the expense as an income tax deduction it would be similarly limited to $12,500.
¶2840.08. Relation of Medical Expense Deduction to the Dependent Care Credit
If the taxpayer's spouse or dependent is unable to care for himself, the taxpayer may claim a dependent care credit based on the expenses of having him cared for while the taxpayer works.249 To the extent that these expenses are taken into account in computing the dependent care credit, they may not be deducted as medical expenses, even though they might otherwise qualify.250
249 §21(a). This credit is sometimes referred to as the "Child Care Credit" although it is also available for adults incapable of self-care. See ¶3120 for a discussion of this credit.
250 §213(e); Regs. §1.213-1(f) (referring to former §44A, which is now §21. Neither the Code nor the regulations make it clear that the taxpayer may elect whether to use the expenses for purposes of the §21 credit or as an itemized deduction under §213. This is the approach that has been taken administratively by the IRS.
 Example—Deduction Not Allowed Where Credit Taken
T's father lives with her and qualifies as her dependent. The father is incapable of caring for himself and requires the attention of a nurse at all times. T pays a nurse to care for her father while she works. T may not use the expense of her father's nursing care both in computing the dependent care credit and as an itemized deduction.
¶2840.09. Special Rule for Self-Employed Taxpayers
Self-employed individuals are allowed to claim a percentage of the amount paid during the taxable year for insurance that constitutes medical care for themselves, their spouses and dependents as an above-the-line deduction, without regard to the 7.5% of AGI floor.251 Certain long-term care insurance premiums are eligible for above-the-line insurance deductions.252
251 §162(l). For taxable years before 2003, the allowable deduction for health insurance of self-employed individuals was limited as follows: 70% for 2002; 60% for 1999 through 2001; 45% for 1998; and 40% for 1997. §162(l)(1)(B). 
252 §162(l)(2)(C) See §§213(d)(10), 7702B(b).
[Footnote 253 reserved.]
 Example—Self-Employed Taxpayers
T is a self-employed individual. For 2004, his adjusted gross income and net earnings from self employment amount to $40,000. He spent $3,000 on medical insurance for himself, his wife and children. Without the special rule for self-employed taxpayers, he would have no tax benefit of his medical expenses, because they do not exceed 7.5% of his AGI. Under the special rule for self-employed individuals, however, he may deduct $3,000 above the line.
The deduction, however, may not exceed the taxpayer's earned income derived from the trade or business with respect to which the plan providing the medical care is established.254
254 §162(l)(2)(A).
 Example—Deduction Cannot Exceed Earned Income
T is a self-employed accountant with 5 employees. He also sells life insurance. For 2004, he has earned income of $60,000 from his accounting practice and $500 from his insurance business, before taking health insurance costs into account. T sets up a health care plan for his insurance business covering only himself and his family at a cost of $5,000. Although the cost of the coverage is $5,000, T's above-the-line deduction is limited to $500, his earned income from the business with respect to which the plan was established. The remaining $4,500 of expense may be claimed as an itemized deduction, subject to the usual limitations.
Furthermore, the deduction is not available to taxpayers who are eligible to participate in subsidized health plans maintained by their employers or their spouses' employers.255 A self-employed individual eligible for an employer-subsidized health insurance plan can deduct the amounts paid for long-term care insurance premiums so long as such employee is not eligible for employer-subsidized long-term care insurance.256 Amounts deductible above the line by self-employed taxpayers are not deductible against the self-employment tax,257 nor can they be claimed a second time as an itemized deduction under the general rules.258 The excess of the actual expense over the amount that can be claimed above the line, however, may be claimed as an itemized deduction.
255 The determination of whether an individual is eligible to participate in an employer-sponsored plan is to be made on a monthly basis. See §162(l)(2)(B).
256 §162(l)(2)(B).
257 §162(l)(4).
258 §162(l)(3).
 Example—Excess Claimed as Itemized Deduction
T was a self-employed individual with adjusted gross income and net earnings from self-employment for 1997 of $30,000. He spent $4,000 during the year for medical insurance for himself, his wife, and his children. T could deduct $1,600 (40% of $4,000) above the line under the special rule for self-employed individuals. The remaining $2,400 of medical expense paid had to be claimed as an itemized deduction, but had to be reduced by 7.5% of AGI. The below the line deduction for medical expenses was, therefore, $270 ($2,400 minus (.075 x $28,400)).
The base for computing T's self-employment tax is $30,000, unreduced by the $1,600 claimed as an above-the-line deduction for purposes of the income tax.259
259 See §162(l)(4).
¶2840.10. Overlap Between Business and Medical Expenses
The expenses paid by a handicapped taxpayer to have someone assist him or her on a business trip or otherwise in relation to his or her job may be deductible as business expenses rather than as medical expenses. Treatment as a business expense is generally more favorable to the taxpayer, because the 7.5% of AGI limitation does not apply to business expenses.260 The IRS has ruled that, when it is uncertain whether an expense is a medical or a business expense, treatment as a business expense is allowed if: 
• the expense is clearly required for the taxpayer to perform his or her work satisfactorily;
• the expense is for goods or services which are clearly not used, other than incidentally, for the taxpayer's personal activities; and
• the Code and regulations are otherwise silent as to how the expense should be treated.261
260 If the taxpayer is an employee, however, the business expense will probably be a miscellaneous itemized deduction, subject to the 2% of AGI limitation. §67(a), (b). If the taxpayer has sufficient medical expenses to exceed the 7.5% of AGI limitation, but not enough miscellaneous itemized deductions to exceed the 2% of AGI limitation, then treatment of an additional expense as a medical expense will be more favorable.
261 Rev. Rul. 75-317, 1975-2 C.B. 57; Rev. Rul. 75-316, 1975-2 C.B. 54.
 Example—Deductible Business Expenses (1)
T is a blind business executive. She employs another individual to read memoranda and reports pertaining to her job. The expense of the reader is deductible as a business expense.262
262 Rev. Rul. 76-316, 1975-2 C.B. 54.
 Example—Deductible Business Expenses (2)
T is confined to a wheelchair, but his home and office are accessible to him, and he does not usually require an attendant to assist him. When he travels, however, he needs an attendant to help him over architectural barriers, carry his luggage, and act as his attendant on airlines that will not accept a person in a wheelchair as a passenger unless there is an attendant accompanying him. The expenses of the attendant are business expenses.263
263 Rev. Rul. 75-317, 1975-2 C.B. 57 (Situation 1).
If the services performed by the assistant are in the nature of nursing services which are required by the taxpayer even when he or she is not traveling, the expenses are medical expenses.264
264 Rev. Rul. 75-317, 1975-2 C.B. 57 (Situation 2).
 Example—Medical, Rather Than Business, Expenses
T has problems with his mobility due to the amputation of his legs. In addition, he has other ailments for which he must take medication several times daily. When T goes on business trips, a neighbor accompanies him to help him get around and to administer his medication. These services are required by T generally, not just when he travels. T pays for his neighbor's travel, meals, and lodging costs. These expenses are in the nature of payments for nursing care and are deductible as medical expenses, but not as business expenses.265
265 Id. See also Rev. Rul. 57-461, 1957-2 C.B. 116 (Guide dog expenses are medical, not business); Rev. Rul. 71-45, 1971-1 C.B. 51 (Throat treatments expenses for professional singer are medical, not business).
Expenses for medical services have also been allowed as a business deduction in the cases of pilots who needed frequent medical examinations to stay certified,266 and of an actor whose teeth were knocked out while filming.267
266 Rev. Rul. 58-382, 1958-2 C.B. 59.
267 Denny v. Comr., 33 B.T.A. 738 (1935), nonacq., 1936-1 C.B. 30.
¶2840.11. Proving Medical Expenses
The taxpayer has the burden to show that he or she is entitled to a medical expense deduction upon dispute by the IRS.268 The courts have held that the rule allowing a deduction for medical expenses is to be narrowly construed, because it is an exception to the general rule that personal expenses are not deductible.269 When, however, the taxpayer shows that some expense was paid but is unable to establish that it was in the amount claimed, the Tax Court is often willing to apply the Cohan rule to estimate the amount,270 but the court's practice of bearing against the inexact taxpayer means that the estimated expense will usually be lower than the actual, but unproved one.
268 Crowther v. Comr., 28 T.C. 1293 (1957), rev'd on another issue, 269 F.2d 292 (9th Cir. 1959).
269 Atkinson v. Comr., 44 T.C. 39 (1965).
270 See, e.g., Stringham v. Comr., 12 T.C. 580 (1949); Cherry v. Comr., T.C. Memo 1983-470; Bye v. Comr., T.C. Memo 1972-57, citing Cohan v. Comr., 39 F.2d 540 (2d Cir. 1930).
¶2840.12. Compliance
Medical expenses are claimed as an itemized deduction on Schedule A of Form 1040, to the extent the expenses exceed 7.5% of adjusted gross income.271 They are not classified as "miscellaneous itemized deductions," so they are not subject to the 2% floor on miscellaneous itemized deductions.272
271 §211; §213. See IRS Pub. 17, Your Federal Income Tax.
272 §67(b)(5).
Self-employed taxpayers claim the allowable percentage of the cost of health insurance for themselves, their spouses, and dependents as an above-the-line deduction.273
273 See Form 1040, U.S. Individual Income Tax Return.
For alternative minimum tax purposes, the reduced deduction is computed on Form 6251, Alternative Minimum Tax — Individuals. See ¶2840.13 for a discussion of the medical expense deduction and alternative minimum tax.
¶2840.13. Alternative Minimum Tax
For purposes of the regular income tax, unreimbursed medical expenses are deductible to the extent that they exceed 7.5% of the taxpayer's adjusted gross income.274 For alternative minimum tax purposes, the floor is raised from 7.5% to 10% of adjusted gross income.275 Thus, it is harder to secure a tax benefit through medical expenses.
274 §213(a).
275 §56(b)(1)(B).
 Example—10% Floor for AMT Purposes
T has adjusted gross income of $40,000. He pays $7,000 of medical expenses for himself, his spouse, and his dependents, and receives insurance reimbursements of $3,000. His unreimbursed expenses of $4,000 are deductible for regular income tax purposes only to the extent that they exceed $3,000 (7.5% times; $40,000). Therefore, his expenses of $4,000 produce a deduction of $1,000.
For alternative minimum tax purposes, T has no medical expense deduction because his unreimbursed expenses do not exceed the AMT floor of $4,000 (10% of $40,000).
PRACTICE AIDS
¶2840.100. Client Letter 
Medical Expenses
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Based on the facts you provided about your wife's medical condition, I have reviewed the relevant tax law and concluded that you should be able to deduct, as medical expenses, many of the costs you plan to incur to accommodate her disabled condition. Certain expenses incurred in adapting both your home and car are deductible, but each planned expenditure must be reviewed individually to determine whether all, or part, of it is deductible.
First, to be deductible, qualifying medical expenses must exceed 7.5% of your joint adjusted gross income. Given the high cost of the adaptations you are considering, the medical bills already incurred during her hospitalization, and your lower adjusted gross income with your wife unable to work at this time, your expenses should easily exceed the 7.5% floor. It is important to group your expenses in this tax year since you will meet the 7.5% floor and the additional expenses will be fully deductible. Next year, when your wife may return to work, it will be harder to meet the 7.5% floor and you may lose the deductions; in any event, you will not be able to deduct any expenses until they exceed 7.5% of your joint adjusted gross income.
Modifications to your home to accommodate your wife's wheelchair, such as widening doorways, constructing ramps, installing support bars and handrails, and making electric outlets and switches more accessible, should be fully deductible in the year you pay for them. If, however, a modification also is a permanent improvement to your home that increases the fair market value of your property, only a portion of the expense is deductible. For example, if you install an elevator that costs $1,000 and the elevator increases the value of your house by $700, you may deduct only $300. To be deductible, the improvements must be made for medical not architectural or aesthetic reasons.
Because the doctors have recommended aquatic exercise as the best exercise for your wife, certain expenses to build and maintain a pool will be deductible. The deduction is limited to the cost of the least expensive pool adequate to produce the medical benefits, and again, you can deduct only that portion of the expense that exceeds the increase in the value of your home. The costs of maintaining the pool, once built, will be deductible only as long as the medical condition that required it persists.
Modifications to your car to accommodate your wife's wheelchair, such as special equipment to accommodate a wheelchair driver or passenger, or equipment to lift a person into a car, are generally deductible. Note also that the cost of purchasing, operating, and maintaining a wheelchair to accommodate your wife's condition is deductible.
Also, certain maintenance or personal care expenses for your wife specified in her prescribed plan of care will also be deductible as she will be unable to perform at least two activities of daily living (in her case, transferring and bathing) without substantial assistance for a period of at least 90 days, making her what is termed a "chronically ill individual," and her doctor has so certified.
You must carefully document all expenditures; save all receipts and work orders. In addition, it is necessary to document the medical reasons for the expenditures, especially the expenditures to modify your home and automobile. Also keep careful records of your transportation expenses incurred in seeking medical care and physical therapy, as such transportation expenses are deductible as medical expenses.
Once your wife returns to work, it may be possible to deduct some expenses as business, rather than medical, expenses. For example, the cost of an attendant on business trips to aid her over architectural barriers and accompany her on airlines may be deductible. The advantage is that the expenses will not have to meet the 7.5% floor to be deductible. If your wife maintains her self-employed status, the expenses should be fully deductible, but if she works for someone else, the 2% floor for miscellaneous business expenses must be exceeded before any expenses are deductible. It will be advisable to explore these matters more fully when your wife makes the decision to return to work.
¶2840.200. Sample Document 
Sample §7702B Certification
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SAMPLE CERTIFICATION OF CHRONICALLY ILL INDIVIDUAL PURSUANT TO INTERNAL REVENUE CODE 213(d)(1)(C) and 7702B 
[Editor's Note: Qualified long-term care services may be deductible under §213(d)(1)(C) as medical expenses provided an individual is certified as "chronically ill" within the preceding 12-month period as set forth in §7702B. This sample certification is based on the statute, Notice 97-31, 1997-1 C.B. 417, the Conference Committee Report on the Health Insurance Portability and Accountability Act, P.L. 104-191, and the General Explanation (Blue Book) of Tax Legislation Enacted in the 104th Congress, prepared by the Staff of the Joint Committee on Taxation (1996). Regulations under §§213(d)(1)(C) and 7702B have not yet been issued.]
I hereby certify that as of ____________, _____ [need not be earlier than 1/1/97] ______________________ is a chronically ill individual because [circle 1 or 2]:
1. He/she is unable to perform the following activities of daily living (ADLs): [check at least two]
	
	______ eating	______ 
transferring	
______dressing

	______ 
toileting	______ bathing	
______continence

without substantial assistance1 from another individual and has or will be unable to perform such ADLs without such assistance for a period of at least 90 days due to a loss of functional capacity.
1 Notice 97-31 defines substantial assistance as hands on assistance (which means physical assistance of another person without which the ill individual would be unable to perform the ADL) and standby assistance (which means the presence of another person within arm's reach of the ill individual that is necessary to prevent, by physical intervention, injury to the ill individual while the ill individual is performing the ADL (such as being ready to catch the ill individual if he or she falls while getting in or out of the bathtub or shower as part of bathing or being ready to remove food from the ill individual's throat if the ill individual chokes while eating).
2. He/she requires substantial supervision2 to protect himself/herself from threats to health and safety due to severe cognitive impairment.3 He/she has suffered a deterioration or loss in intellectual capacity that has been measured by [both must be checked]:4 ___ clinical evidence and ___ standardized tests that reliably measure impairment in his or her (i) short- or long-term memory, (ii) orientation as to people, places or time, and (iii) deductive or abstract reasoning.5
2 Notice 97-31 defines substantial supervision as continual supervision (which may include cueing by verbal prompting, gestures, or other demonstrations) by another person that is necessary to protect the severely cognitively impaired individual from threats to his or her health or safety (such as may result from wandering).
3 Notice 97-31 defines severe cognitive impairment as a loss or deterioration in intellectual capacity that is (A) comparable to and includes Alzheimer's Disease and similar forms of irreversible dementia, and (B) measured by clinical evidence and standardized tests which reliably measure impairment in the ill individual's (i) short-term or long-term memory, (ii) orientation to people, places or time, and (iii) deductive or abstract reasoning.
4 Note that Notice 97-31 appears to indicate that both clinical evidence and standardized tests are required.
5 Note that Notice 97-31 appears to indicate that the clinical evidence and standardized tests must reliably measure all three impairments in the ill individual's (i) short-term or long-term memory, (ii) orientation to people, places or time, and (iii) deductive or abstract reasoning.
I further certify that I am [check one] ___ a physician (as defined in §1861(r) of the Social Security Act), ___ a registered professional nurse, or ___ a licensed social worker in the state of ______________________.
____________________________________
Signature
Date:
Print Name:
Address: 
NOTE THAT NECESSARY DIAGNOSTIC, PREVENTIVE, THERAPEUTIC, TREATING, MITIGATING AND REHABILITATIVE SERVICES AND MAINTENANCE AND PERSONAL CARE SERVICES MUST BE REQUIRED BY THE CHRONICALLY ILL INDIVIDUAL AND BE PROVIDED PURSUANT TO A PLAN OF CARE PRESCRIBED BY A PHYSICIAN (AS DEFINED IN §1861(r) OF THE SOCIAL SECURITY ACT), A REGISTERED NURSE OR A LICENSED SOCIAL WORKER.