[GNC] Fwd: Recovery vs. reimbursement

[Steve Butler]

Shouldn't this be a question for the state's CPA?

Not sure how this pertains to setting up the transaction in GnC.

---------- Forwarded message ---------
From: Adam H. Kerman <ahk at chinet.com>
Date: Sat, May 30, 2026, 13:47
Subject: Re: [GNC] Recovery vs. reimbursement
To: <gnucash-user at gnucash.org>


1:48pm -0000 05/30/26 Adam H. Kerman <ahk at chinet.com> wrote:

>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.

Here's another wrinkle. There is an election on the taxpayer's final tax
return that medical expenses paid by the estate within a year may be
deducted on the final tax return instead.

The reimbursement, though, is still a recovery, and not a contra expense.
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