Determine emily’s itemized deductions

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Reference no: EM13321870

Analyze the tax implications for the following case study. Apply the IRS codes to determine itemized deductions for individuals. Support your conclusions with reference to specific IRS codes and regulations. 
During 2011, Emily sustains serious injuries from a snow-skiing accident. She incurs the following expenses: 
Item Amount 
Doctor bills $11,700 
Hospital bills 9,400 
Hot and warm sauna 15,000 
Legal fees in suit against ski resort 3,000 
Emily is single and has no dependents. For the year, her AGI is $58,000. In 2011, she pays $600 in medical and dental insurance premiums, which are withheld from her paycheck on an after-tax basis, $2,750 in mortgage interest on her home, and $1,200 in interest on her car loan. Her health insurance provider reimburses her for $10,000 of the medical expenses. Based on her doctor’s recommendation and prescription, Emily had a contractor install a certified hot and warm sauna at a cost of $15,000 in the year. She paid all of it with her savings in 2011. The Fair Market Value of the property improved by $7,500. Emily had real estate taxes of $4,000 on her property. Emily had no other personal exemptions. Based on this case study information,

determine Emily’s itemized deductions. Which of these items can and cannot be listed as medical deductions? Why? What is her 2011 taxable income? 

Reference no: EM13321870

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