This deduction is allowed in 2007, but not in 2008.
Any excess over 0 in 2007 is a 2% miscellaneous itemized deduction, as are all educator expenses in 2008 Itemized deductions I. Personal Itemized Deductions – Medical Expenses Care, prevention, cure, or treatment of disease or bodily function.
Accrual Method: unearned income: received service income: provided advance payments: can be deferred accrued expenses: claimed when liability becomes certain B.
Donee Basis – Gain basis = Depreciable basis = adjusted basis of the donor. Taxpayer Purchased Policies: Health and disability insurance proceeds are excluded even if payments are a substitute for lost wages B.
– Loss basis = lower of FMV at date of gift and adjusted basis of the donor (a built-in gain can be transferred, but not a built-in loss) – increased for the portion of any gift tax paid by the donor due to appreciation in the property D. Damages received for emotional distress, employment or age discrimination, or injury to reputation: taxable; Attorney’s fees and other suit: deductible, limited to the income included. Employer Purchased Policies Medical expense reimbursements and workman’s compensation payments are excluded Reimbursement for loss of wages: taxable Disability insurance benefits: taxable III.
TP received an additional 10 shares as a stock dividend. He sold the policy for 0 to B, an unrelated individual.
He has realized no income and his shares now have a basis of each (0 divided by 50 shares). Upon the death of TP’s spouse, B received 0 from the life insurance company.