Answer:
Linda is entitled to a deduction of $14,300 in the year of installation of the pool
Explanation:
<em>Step 1: Determine total installation cost</em>
total installation cost=installation-insurance
where;
installation cost=$20,000
insurance cost=$5,000
replacing;
total installation cost=20,000-5,000=15,000
total installation cost=$15,000
<em>Step 2: Determine annual increase in house value</em>
annual increase in house value=increase in house value/useful life
where;
increase in house value=$7,000
useful life=10 years
replacing;
annual increase in house value=7,000/10=$700
<em>Step 3: Determine total deductions</em>
total deductions=installation cost-annual increase in house value
where;
installation cost=$15,000
annual increase in house value=$700
replacing;
total deductions=15,000-700=$14,300
Linda is entitled to a deduction of $14,300 in the year of installation of the pool
