Question

Hugh, a self-employed individual, paid the following amounts during the year:Real estate tax on Iowa residence $3,800State income tax 1,700Real estate taxes on a vacation home 2,100Gift tax paid on gift to daughter 1,200State sales taxes 1,750State occupational license fee 300Property tax on value of his automobile (used 100% for business) 475What is the maximum amount Hugh can claim as taxes in itemizing deductions from AGI?a. $8,850b. $9,625c. $7,650d. $10,000e. None of these choices are correct.

Answer 1

Answer:

c. $7,650

Explanation:

The maximum amount Hugh can claim is the summation of real estate tax on Iowa residence, real estate taxes on a vacation home, and State sales taxes. This is calculated as follows:

The maximum amount to claim = $3,800 + $2,100 + $1,750 = $7,650

Therefore, the maximum amount Hugh can claim as taxes in itemizing deductions from AGI is $7,650.