[GNC] Recovery vs. reimbursement

[Adam H. Kerman]

I've got another recovery vs. reimbursement scenario.

Taxpayer died in 2026. She paid a premium each month for a Medicare 
supplemental. Her estate received a refund for a portion of her last month 
of life.

Thinking about it, her medical expenses paid during her lifetime, if they 
are itemized deductions to the extent they exceed 7.5% AGI threshold, would 
make the refund a recovery and possibly ordinary income to her estate as the 
estate is a separate taxpayer.

If she won't benefit from itemizing, the recovery won't be taxable, but it's 
still a recovery and not a reimbursement booked as a contra expense because 
it was received in the same tax year the expense was paid.