Question

Linda installed a special pool for the hydrotherapeutic treatment of severe arthritis, as prescribed by her doctor. The cost of installing the pool was $20,000, and her insurance company paid $5,000 toward its cost. The pool increased the value of Linda's house by $7,000, and it has a useful life of 10 years.

How much of a deduction (before any AGI limitations) is Linda entitled to in the year of installation of the pool?

Answer 1

$8,000

Step-by-step explanation:

To calculate the total deduction that Linda can make for the installation of her pool we start with the cost of the pool $20,000 and we subtract the amount the insurance company paid ($5,000) and the amount by which it increased the value of Linda's house ($7,000).

total deduction = $20,000 - $5,000 - $7,000 = $8,000