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Publication 502
taxmap/pubs/p502-008.htm#en_us_publink1000179127

Sale of Medical Equipment or Property(p19)

For Use in Tax Year 2013
rule
If you deduct the cost of medical equipment or property in one year and sell it in a later year, you may have a taxable gain. The taxable gain is the amount of the selling price that is more than the adjusted basis of the equipment or property.
The adjusted basis is the portion of the cost of the equipment or property that you could not deduct because of the 10% limit (or 7.5% if either you or your spouse was born before January 2, 1949), used to compute the medical deduction. Use Worksheet D, later, to figure the adjusted basis of the equipment or property.
taxmap/pubs/p502-008.htm#en_us_publink1000179128
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Worksheet D. Adjusted Basis of Medical Equipment or Property Sold

Instructions: Use this worksheet if you deducted the cost of medical equipment or property in one year and sold the equipment or property in a later year. This worksheet will give you the adjusted basis of the equipment or property you sold.
1. Enter the cost of the equipment or property1.
2. Enter your total includible medical expenses for the year you included the cost in your medical expenses2.
3. Divide line 1 by line 23.
4. Enter 10% (or 7.5% if either you or your spouse was born before January 2, 1949), of your AGI for the year the cost was included in your medical expenses 4.
5. Multiply line 3 by line 4. If your allowable itemized deductions for the year you purchased the equipment or property were not more than your AGI for that year, stop here. This is the adjusted basis of the equipment or property. If your allowable itemized deductions for the year you purchased the equipment or property were more than your AGI for that year, complete lines 6 through 11 5.
6. Subtract line 5 from line 16.
7. Enter your total allowable itemized deductions for the year the cost was included in your medical expenses7.
8. Divide line 6 by line 78.
9. Enter your AGI for the year the cost was included in your medical expenses.9.
10. Subtract line 9 from line 710.
11. Multiply line 8 by line 10 11.
12. Add line 5 to line 11. If your allowable itemized deductions for the year you purchased the equipment or property were more than your AGI for that year, this is the adjusted basis of the equipment or property 12.
Next, use Worksheet E to figure the total gain or loss on the sale of the medical equipment or property. taxmap/pubs/p502-008.htm#en_us_publink1000179130
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Worksheet E. Gain or Loss On the Sale of Medical Equipment or Property

Instructions: Use the following worksheet to figure total gain or loss on the sale of medical equipment or property that you deducted in an earlier year.
1.Enter the amount that the medical equipment or property sold for 1.
2.Enter your selling expenses2.
3.Subtract line 2 from line 13.
4.Enter the adjusted basis of the equipment or property from Worksheet D, line 5, or line 12, if applicable4.
5.Subtract line 4 from line 3. This is the total gain or loss from the sale of the medical equipment or property 5.
If you have a loss, it is not deductible. If you have a gain, it is includible in your income. The part of the gain that is a recovery of an amount you previously deducted is taxable as ordinary income. Enter it on Form 1040. Any part of the gain that is more than the recovery of an amount you previously deducted is taxable as a capital gain. Enter it on Form 8949, Sales and Other Dispositions of Capital Assets, and Schedule D (Form 1040), Capital Gains and Losses.
For more information about the recovery of an amount that you claimed as an itemized deduction in an earlier year, see Recoveries in Publication 525.