Answer:
Linda is entitled to deduction (before any AGI limitations) of $896 in one year of installation of the pool.
Explanation:
Following is explained calculation for deduction (before any AGI limitations) that is Linda entitled to in the year of installation of the pool.
Given that:
Cost of Installing the pool = $22,400
Paid by insurance company = $5,600
So by deducting the price paid by insurance company from total cost the balance becomes:
Balance = $22,400 - $5,600 = $ 16,800
As the pool increased the value of house by $7,840 so we will deduct this amount from balance:
Balance = $ 16,800 - $7,840 = $8,960
As the useful life given for pool is 10 years so we will divide the balance with 10 to obtain the deduction amount for 1 year:
Deduction amount for one year = $8,960/10 = $8,96
Hence $8,96 will be deducted in one year installation.
i hope it will help you!
