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Research sale of residence and medical expense deductions June Goetz is a successful fashion consultant. She lives

in a nice home in Lakeside, Ohio. Her husband, Gabe, is a high-level executive with a major bank. As a result of a torn rotator cuff, June has ongoing arthritis in her left arm. Her physician has advised her that daily swimming can do much to both relieve the pain, and, also, to help repair the arm; it will be a major factor in her treatment. So, she and Gabe decided to put their home on the market and sold it for $300,000. They bought it 8 years ago for $250,000.00 and have lived in it since. They then purchased a new home for $400,000, which has a built-in indoor swimming pool. If she and Gabe had instead constructed a pool at their old residence, instead of selling their old house, it would have cost them $75,000 to build the pool, and their realtor tells them that would have increased the value of their old home by $50,000.


To do: There seem to be two key issues: (a) is there any chance that a part of the money they spent to buy the new home could be deductible as a medical expense; and (b) will they have any taxable gain from the sale of their old home? Per your employer's instructions, research these issues using the internet and the below sources:

IRS Code Section 213

Search irs.gov, including "Publications"

http://www.journalofaccountancy.com/issues

https://www.law.cornell.edu

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