Medical Lodging

[Karen Lee]

First one:

Client has AML (Luekemia)has done some rounds of chemo and was on the bone marrow transplant list and moved up for transplant. Acquired a lung infection and was removed from transplant list. Now is better and back on for transplant.

He is required to be within a short distance of the hospital after release from the hospital for transplant. He cannot be alone after transplant so his wife is with him for this three month stay in a very expensive apartment. So now he is on the hook for 2 stays in this very expensive apt (6 months). Does it all qualify as deductible med expense?

Second one:

Client had on the job injury. Received a $5 million settlement. She was hurt very badly. She wants to snowbird to Arizona, buy a house and use it as medical expense. She can get a statement from doctor as to being medically necessary to live in a warmer climate. (For some reason the bigger the settlement the less compassion I have) Need some guidance here.

Thanks

Karen

[Pacun]

First one:

Client has AML (Luekemia)has done some rounds of chemo and was on the bone marrow transplant list and moved up for transplant. Acquired a lung infection and was removed from transplant list. Now is better and back on for transplant.

He is required to be within a short distance of the hospital after release from the hospital for transplant. He cannot be alone after transplant so his wife is with him for this three month stay in a very expensive apartment. So now he is on the hook for 2 stays in this very expensive apt (6 months). Does it all qualify as deductible med expense?

Second one:

Client had on the job injury. Received a $5 million settlement. She was hurt very badly. She wants to snowbird to Arizona, buy a house and use it as medical expense. She can get a statement from doctor as to being medically necessary to live in a warmer climate. (For some reason the bigger the settlement the less compassion I have) Need some guidance here.

Thanks

Karen

On the first one, I think it qualifies for medical expenses but there is a limit (I think) of $50 per night for patient and $50 for wife. As you will understand "very expensive apt." means nothing in this context and maybe the limit in this case. This is from the top of my head.

On the second question, you need to see the court document when he was awarded the $5 million dollar. Maybe it included monies for the contruction of a house in the middle of the Arizona desert so he could stay away from cold weather.

Very good question but I don't have an answer.

[jainen]

>>required to be within a short distance of the hospital.... statement from doctor as to being medically necessary to live in a warmer climate<<

This is one of those ancient theories that is so attractive it will never die. It is based on a loophole in the 1939 version of the tax code, long since closed.

In the first scenario, lodging is not deductible because it was not primarily for the purpose of receiving treatment in a hospital or convalescent facility. It was only speculative that such treatment might even be needed--and in fact it apparently was not needed! Skillful research and excellent documentation might possibly come up with some minimal support for the deduction in a specific case, but it's a real long shot. Don't bother unless there are some very unusual facts and circumstances.

In the second scenario, there will never be any chance at all. The proposed lodging is for general comfort and well-being, not medical treatment. She wasn't the first to think of this scheme, so be sure to bill your wealthy client for wasting your time.

[OldJack]

I agree with Jainen. No allowable deduction in either case.