Answer Happy

Morris is a single individual who has total tentative itemized deductions in 2020 of $6,300, which includes $2,000 for state income taxes. Shorty after filing his 2020 state income tax return on April 15, 2021 he receives a refund of $275. What action must Morris take to account for the refund? a. Morris must include $275 as income on his 2021 federal income tax return. O b. Morris must amend his 2020 federal tax return to reflect state income taxes of $1,725 ($2,000 - $275). c. If Morris itemizes his tax return in 2021 he must reduce his state tax deduction by $275. d. Morris must include $200 as income on his 2021 federal income tax return. e. Morris excludes from his 2021 income the $275 state income tax refund received. QUESTION 8 Wayne, a single taxpayer, purchases a new home valued at $725,000, in 2021, borrowing $625,000 from Century National Bank. He also pays $7,250 in points and $4,500 in loan origination fees. During 2021 he pays interest of $71,000 on the loan. He also pays $32,000 in real estate taxes during 2021. Wayne pays state income taxes of $25,000. What is Wayne's allowable interest deduction on Schedule A in 2021? a. $-0- O b.$ 7,250 c. $71,000 d. $78,250 e. $82,750