1. Al is single, age 60, and has gross income of $140,000. His deductible expenses are as follows: $20,000 4,000 5,500 Alimony(divorce finalized in 2017) Charitable contributions Contribution to a traditional IRA Expenses paid on rental property Interest on home mortgage and property taxes on personal residence State income tax 7,500 7,200 2.200 What is Al's AGI? 4. Under Section 183, if an activity is not engaged in for profit, deductions related to the activity will be limited. Which of the following is likely to be deemed a hobby by the IRS? 1 A CPA in private practice b. A ranch owned by an executive that has shown a profit for four of the last five years c. An individual borrowing money to open a gift shop d. A physician who operates a photography studio at a loss for five consecutive years During the current year, Lee pays 55,000 to an attorney to obtain a divorce. Of this amount, $2,000 is for tax advice about the divorce settlement. How much, if any, of the $5,000 is deductible before con sidering any limitation based on AGI? b. $2,000 c. $3,000 d. $5,000 David made illegal business kickbacks of $10,000 and paid fines of $8,000 during the current year How much of the expenses can be deducted on his tax return before considering any limitation based on AGI? b. 58,000