Capital costs are finances utilized by a agency to acquire, upgrade, and hold bodily property consisting of belongings, plants, buildings, technology, or equipment. Answer (A) is correct.
The required details for capital expenditure in given paragraph
Home-associated capital costs incurred via way of means of a bodily handicapped person are deductible. An instance of such an expenditure is an elevator wished for a person with a coronary heart condition. However, the quantity of any growth in price of the prevailing belongings can't be deducted. Once a capital price qualifies as a scientific price, quantities paid for the operation and renovation additionally qualify as scientific expenses. This is actual even though the authentic capital expenditure become now no longer completely deductible (due to the fact it can have improved the honest marketplace price of the residence). Therefore, $2,000 of the price of the elevator is deductible as a scientific price ($7,000 price – $5,000 growth in price of home).
The upkeep and restore price of the elevator is deductible, despite the fact that a part of the price of the elevator become now no longer deductible (Publication 502).
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Complete question
John has a heart ailment. On his doctor’s advice, he installed an elevator in his home so that he would not have to climb stairs. The cost of the elevator was $7,000. An appraisal shows that the elevator increased the value of his home by $5,000. John can claim a medical deduction ofA.$2,000.B.$5,000.C.$7,000.D.None of the answers are correct.