Colin Whipple wrote:
Colin, Thank you for the referenceAny further guidance? I would appreciate any codeThe following is from the regulations under Sec. 213:
references that you may have.
(v) The cost of in-patient hospital care (including the
cost of meals and lodging therein) is an expenditure forI would read this as meaning that an institution does NOT
medical care. The extent to which expenses for care in an
institution other than a hospital shall constitute medical
care is primarily a question of fact which depends upon the
condition of the individual and the nature of the services
he receives (rather than the nature of the institution). A
private establishment which is regularly engaged in
providing the types of care or services outlined in this
subdivision shall be considered an institution for purposes
of the rules provided herein.
have to be a skilled nursing facility, as one poster had
previously thought.
In general, the followingSNIP
rules will be applied: 1.213-1(e)(1)(v)(a) Where an
individual is in an institution because his condition is
such that the availability of medical care (as defined in
subdivisions (i) and (ii) of this subparagraph) in such
institution is a principal reason for his presence there,
and meals and lodging are furnished as a necessary incident
to such care, the entire cost of medical care and meals and
lodging at the institution, which are furnished while the
individual requires CONTINUAL MEDICAL CARE, shall constitute
an expense for medical care.
The upper case above is my alteration. This seems to be
indicating to me that "Assisted Living" services that do not
require CONTINUAL MEDICAL CARE such as the case with most
"Assisted Living" facilities would not qualify for meals and
lodging as a medical deduction. This particular facility
has only "medical assistants" that help administer
medication, make beds, help with cooking, etc as needed, and
not necessarily on a day to day basis. Only if the client
needs the help that day. It is very individualized. The
director told me there is no RN, LPN, or MD on the payroll.
Am I being too strict to quiz the deductibility of "Assisted
Living" expenses? There is no doubt that this client and
most all of the tenants at the Assisted Living facility need
help with some form(s) of daily living. Otherwise the great
majority of them would not be there. But the code seems to
be biased toward a "nursing home" situation. The fact that
many of the tenants need periodic rather than continual
medical care seems very gray to me. If a tenant needed help
every day with his medications, would that be continual
medical care? What if the client need help making bed or
cooking his own meals every day? Is that continual medical
care?
As Assisted Living Facilities are popping up everywhere, I
am sure this is going to become more and more of an issue
with the IRS. Is there any case law out there? What about
PLR's?
In searching the archives I found a post by MBakercpa
(01/20/99) stating that an individual would qualify, for
long term care expenses, if they were unable to perform
(without substantial assistance) at least 2 activities of
daily living for at least 90 days due to a loss of
functional capacity. The post went on to state the TRA of
97 clarifies this to mean two out of five daily living
activities.
Is this a PLR? What are the five daily living activities in
the IRS's eyes?
Marie L. Murrell, CPA
I assume only medical costs actually paid in 2022 can be deducted in 2022 and the calculated 35% allocated rate of medical costs is informational but does not allow her to automatically deduct 35% of her entry and monthly fees (35% x $245,000 = $85,750and 35% x $40,000 = $14,000)?
From https://www.irs.gov/publications/p502:
Does the unused portion of fees allocated to medical expenses in 2022 carry forward and remain available for deduction in future years or is it lost in its entirety?
In a private email, Michael pointed out this section of IRS Pub 502:The agreement must require that you pay a specific fee as a condition for the home's promise to provide lifetime care that includes medical care. You can use a statement from the retirement home to prove the amount properly allocable to medical care.
Lifetime Care—Advance Payments
You can include in medical expenses a part of a life-care fee or “founder's fee” you pay either monthly or as a lump sum under an agreement with a retirement home. The part of the payment you include is the amount properly allocable to medical care.
A few IRS Rev. Rulings exist on the point as well.Note that only the non-refundable component of a life care fee identified as medical care is deductible.
Hence for one, a tax preparer may see a client's statement from an assisted living facility that speaks of "life-care fees," paid either monthly or as part of the founder's fee, that may be deductible on Schedule A.
Sysop: | Keyop |
---|---|
Location: | Huddersfield, West Yorkshire, UK |
Users: | 300 |
Nodes: | 16 (2 / 14) |
Uptime: | 52:03:43 |
Calls: | 6,712 |
Calls today: | 5 |
Files: | 12,243 |
Messages: | 5,355,173 |
Posted today: | 1 |