Randy Is Advised by His Physician to Install an Elevator

question 95

Multiple Choice

Randy is advised by his physician to install an elevator in his residence, since he is afflicted with heart disease. The cost of installing the elevator is $10,000 and it has an estimated useful life of 10 years. He installs the elevator in January of 2014, and it increases the value of his residence by $8,000. Disregarding the limitation based on adjusted gross income, how much of the cost of the elevator may Randy take into account in determining his medical expense deduction for 2014?

• A)$0
• B)$750
• C)$2,000
• D)$10,000
• E)None of the above

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Definitions:

Disposable Income

represents the amount of money that households have available for spending and saving after income taxes have been accounted for.

Saving

The portion of income that is not spent on consumption but rather set aside for future use or emergencies, contributing to personal and national wealth.

Autonomous Consumption

The level of consumption that occurs when income is zero, reflecting expenses that are necessary or committed.

Induced Consumption

The portion of consumption that changes in response to changes in income, where higher income levels lead to higher consumption.