During 2015,Hugh,a self-employed individual,paid the following amounts: Real estate tax on Iowa residence $3,800 State income tax 1,700 Real estate taxes on land in Puerto Rico (held as an investment) 1,100 Gift tax paid on gift to daughter 1,200 State sales taxes 1,750 State occupational license fee 300 Property tax on value of his automobile (used 100% for business) 475 What is the maximum amount Hugh can claim as taxes in itemizing deductions from AGI?
A)$6,600
B)$6,650
C)$7,850
D)$8,625
E)None of the above

Question

During 2015,Hugh,a self-employed individual,paid the following amounts: Real estate tax on Iowa residence $3,800 State income tax 1,700 Real estate taxes on land in Puerto Rico (held as an investment) 1,100 Gift tax paid on gift to daughter 1,200 State sales taxes 1,750 State occupational license fee 300 Property tax on value of his automobile (used 100% for business) 475 ​ What is the maximum amount Hugh can claim as taxes in itemizing deductions from AGI?
A)$6,600
B)$6,650
C)$7,850
D)$8,625
E)None of the above

Quizplus · Accepted Answer

Hugh can deduct the real estate tax on his Iowa residence ($3,800), state income tax ($1,700), real estate taxes on land in Puerto Rico ($1,100), and state sales taxes ($1,750). The gift tax and occupational license fee are not deductible, and the property tax on the business automobile is a business expense, not an itemized deduction. Total deductible taxes are $3,800 + $1,700 + $1,100 + $1,750 = $8,350. However, since the state income tax and state sales tax are subject to a $10,000 cap for state and local taxes, the total is $6,650.

During 2015,Hugh,a Self-Employed Individual,paid the Following Amounts: Real Estate Tax