as an expense the amount ... which exceeds X% of AGI." (paraphrase). This type of language is present in sections 67 (misc-2%), 165 (personal casualty loss - 10%), and 213 (medical expense - 7.5%). All three sections allow for an artificial number which is the difference between the respective percentage of AGI and the amount of the expense(s) incurred (for casualty, less an amount per incident). This isn't much of a problem when AGI is a positive number, but what about when it's negative?
A response I got from the IRS suggested that when AGI is negative, the medical and miscellaneous percentages become zero, but surprisingly enough, not the casualty loss figure. However, I cannot find any authority for treating AGI as if it were zero for percentage purposes. There's nothing in the code nor the regulations, and I have not found any revenue ruling, procedure, or court case that says such.
Does anyone know of any authority where a negative AGI is treated as zero for percentage-floor purposes of other deductions?
If there is no authority for such, then is there any reason why the statutory formulae should be disregarded?