During 2014,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?

Question

Quizplus · Accepted Answer

State sales taxes ($1,750)are more than the state income tax ($1,700);so Hugh should choose to deduct the sales tax rather than the state income tax (assuming the option is available in 2014).The state occupational license fee ($300)and the tax on his business use auto ($475)are deductible for AGI as business expenses.The state sales tax ($1,750)and the real estate taxes ($3,800 + $1,100)are deductible as itemized deductions.The gift tax is not deductible.The total itemized deductions are $6,650 ($3,800 + $1,100 + $1,750).

During 2014,Hugh,a Self-Employed Individual,paid the Following Amounts: Real Estate Tax