Question

George was in a huge car accident one year ago and has significant issues as a result of the severe back injury that he suffered in the accident. Dr. House prescribed physical therapy in a pool to treat George’s ailing back. In response to this advice (and for no other reason), George built a swimming pool in his backyard. George paid $40,000 to build the pool, but he wondered if any amount of this expenditure could be deducted as a medical expense. George has a wife and 4 kids and they always wanted a swimming pool and therefore use the swimming pool extensively. Determine if a capital expenditure such as the cost of a swimming pool qualifies for the medical expense deduction.

Prepare a memo to the file communicating your tax research results.

Answer 1

Yes, a capital expenditure like cost of a swimming pool can be claimed as a medical expense deduction. The IRS allows the deduction of a specific amount of medical expenses by way of itemized deduction. Qualified medical expenses refer to the costs associated with the diagnosis, cure, mitigation, treatment or prevention of any disease as recognized by the medical community. It also include the treatment costs affecting any function or area of the body. It also cover capital expenses, home improvements, home care etc. However, the limit for deductible medical expenses is 10% of the Adjusted Gross Income in 2019. Considering the above, in the given case, George was given the prescription of physical therapy by his doctor to help him recover from an ailing back, arising from the car accident he suffered one year ago. Consequently, George built a swimming pool for the same and therefore, can claim the cost of the swimming pool as a medical expense deduction even though it was used extensively by his family members also including his wife and 4 kids. The reason behind this is that it is as per the prescription of the doctor and George also took the benefits of physical therapy by constructing such swimming pool, however, such deduction should be within the limit discussed above.