Detailed Answer
(b) The requirement is to determine Carroll’s maximum
medical expense deduction after the applicable threshold limitation
2012. An individual taxpayer’s unreimbursed medical expenses
are deductible to the extent in excess of 7.5% (10% for
2013) of the taxpayer’s adjusted gross income. Although the cost
of cosmetic surgery is generally not deductible, the cost is deductible
if the cosmetic surgery or procedure is necessary to
ameliorate a deformity related to a congenital abnormality or
personal injury resulting from an accident, trauma, or disfiguring
disease. Here, Carroll’s deduction is ($5,000 + $15,000) –
($100,000 × 7.5%) = $12,500.