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

Essay

Paul and Patty Black (both are age 66)are married and together have AGI of $140,000 in 2016.They have two dependents and file a joint return.During the year,they paid $8,000 for medical insurance,$15,000 in doctor bills and hospital expenses,and $1,000 for prescribed medicine and drugs.
a.In December 2016,the Blacks received an insurance reimbursement of $3,500 for hospitalization expenses.Determine the deduction allowable for medical expenses paid during the year.
b.Assume instead that the Blacks received the $3,500 insurance reimbursement in February 2017.Determine the deduction allowable for medical expenses incurred in 2016.
c.Assume that the Blacks received the $3,500 insurance reimbursement in February 2017.Discuss whether the reimbursement will be included in their gross income for 2017.