Payment of Convelescent bill

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  • Jeter2016
    Junior Member
    • Apr 2016
    • 27

    #1

    Payment of Convelescent bill

    Client is in a convalescent and is on direct pay.
    Her sister paid 46,000 towards the bill in 2017.
    The total bill from the convalescent home is 110,000.00. My question is do I deduct the 46,000.00 that the sister paid or can I deduct the full amount
    in the amount of 110.000.00 seeing that the bill was paid in full even though a portion was paid by someone else.
    Also does the sister have to do a gift tax return on the 46,000.00?
  • Anarchrist
    Senior Member
    • Oct 2006
    • 353

    #2
    If the bill wasn't paid by insurance, your client can deduct the full $110k.

    If the sister paid the $46k directly to the medical provider, no gift tax return required.
    "Taxation is the price we pay for failing to build a civilized society." ~ Mark Skousen

    Comment

    • taxea
      Senior Member
      • Nov 2005
      • 4292

      #3
      Is TP dependent of sister?
      Believe nothing you have not personally researched and verified.

      Comment

      • TAXNJ
        Senior Member
        • Jan 2007
        • 2106

        #4
        You may want to consider....

        Originally posted by Jeter2016
        Client is in a convalescent and is on direct pay.
        Her sister paid 46,000 towards the bill in 2017.
        The total bill from the convalescent home is 110,000.00. My question is do I deduct the 46,000.00 that the sister paid or can I deduct the full amount
        in the amount of 110.000.00 seeing that the bill was paid in full even though a portion was paid by someone else.
        Also does the sister have to do a gift tax return on the 46,000.00?
        to review TTB page 4-5 to see how it may or may not apply to your scenario since you are in the position to make the decision if applicable.

        In part:
        ....Payments made by others. Taxpayers may be able to deduct medical
        expenses paid for on their behalf by someone else.
        Court Case: The IRS denied the deduction for medical expenses paid
        for by the taxpayer’s mother directly to the medical providers. The
        court allowed the deduction, stating the payments by the mother were
        made with donative intent. The court stated income tax treatment is not
        controlled by gift tax consequences. (Lang, 147 T.C. Memo 2010-286).
        Always cite your source for support to defend your opinion

        Comment

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