The air conditioner would be functional far longer

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The air conditioner would be functional far longer than one year, and it made Gerard's house worth more, so it is a classic example of a capital expenditure . The Tax Court split the difference. o The Tax Court found that the air conditioner was an expenditure for medical care, and so was covered within the scope of §213 . o However, the Court also found that 26 U.S.C. §263(a)(1) does not allow deductions for any amount paid for permanent improvements or betterments made to increase the value of any property. o In this case, the Court found that the air conditioner increased the value of Gerard's property by $800. Therefore, Gerard was only allowed to deduct $1300-$800 = $500. Btw, in the rare case that an expense causes the property value to decrease , the property owner is not allowed to deduct that loss as a medical expense . o So if for some medical reason Gerard had to paint his house an ugly color, and that lowered the value by $1000. The most he could still have deducted was $1300, even though he technically lost $1300+$1000=$2300. 7
PAGE 553: REVENUE RULING 2002-19 - In Revenue Ruling 2002-19, the IRS concluded that you can deduct the cost of participating in a weight-loss program provided the program is treatment for a specific disease or diseases diagnosed by a physician. The Service reasoned that because obesity is a disease, a diagnosis of obesity is sufficient to allow the deduction of the costs of the weight-loss program. Deductible expenses include the initial fee to join the weight-loss program and additional fees to attend meetings." Revenue Ruling 2002-19 revolutionizes the U.S. Treasury’s philosophy on a critical health issue in the United States. According to April 16, 2002, statistics of the U.S. National Institute of Diabetes & Digestive & Kidney Diseases (NIDDK) of the National Institutes of Health, 59.4% of all U.S. adult men age 20 and older are overweight, and 19.5% are classified as obese. According to the NIDDK, obesity for adults is defined as a body mass index (BMI) of 30 or greater. (An individual’s BMI is calculated by dividing weight in kilograms by height in meters squared.) In addition, 50.7% of U.S. adult women age 20 and older are overweight, and 25% are obese. To emphasize the seriousness of the epidemic proportions of the malady, 97.1 million U.S. adults—or 54.9%—are overweight or obese. Even more alarming is the number of U.S. children who are overweight and on their way toward obesity. According to the American Obesity Association, from 1976 to 1980, only 7% of children age 6 to 11 were obese. In 1999, 13% were obese. In a very short time, the problem has almost doubled. The economic and social implications of these trends are staggering. Obesity can lead to severe medical challenges and complications, including diabetes, heart disease, hypertension, and stroke, as well as cancers of the colon, rectum, prostate, breast, gallbladder, uterus, cervix, and ovaries. With those factors in mind, the U.S. Treasury Department has changed its policy in Revenue Ruling 2002- 19 and will now allow deductions for this malady in certain instances.

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