Paul, a calendar year single taxpayer, has the following information for 2019: $\begin{array}{lr}
\text { AGI } & \$ 175,000 \
\text { State income taxes } & 13,500 \
\text { State sales tax } & 3,000 \
\text { Real estate taxes } & 18,900 \
\text { Gambling losses (gambling gains were } \$ 12,000 \text { ) } & 6,800
\end{array}$ Paul's allowable itemized deductions for 2019 are:
A) $10,000.
B) $16,800.
C) $39,200.
D) $42,200.
E) None of these.

Question

Quizplus · Accepted Answer

Itemized deductions are limited to the greater of $12,200 or 3% of AGI.  3% of AGI is $5,250 (0.03 x $175,000).  Therefore, Paul's allowable itemized deductions are $16,800 ($18,900 + $13,500 + $3,000 - $6,800).

Paul, a Calendar Year Single Taxpayer, Has the Following Information