1. Lin Lee, a single, self-employed investment counselor who also owns a rental property. This year, she collected $85,000 in fees and paid the following business and personal expenses

Expenses below: Health insurance premiums (not through an exchange) $4,200 Life insurance premiums (whole life) $1,900 Books on investing $200 Repairs of the rental property $450 Advertising for investment clients $1,770 State income taxes $4,300 Self-employment tax (hint: half is employer share) $11,732 Marketing Lunch and Dinners with potential clients $500

Home mortgage interest (acquisition debt of $300,000) $16,640 Real estate taxes $5,400 State income taxes paid $6,300 Medical expenses (unreimbursed) $1,800 Employee business expenses (unreimbursed) $450 Charitable contributions (cash to their church) $760

Calculate Lin Lee's taxable income.

2. This year, Micah Smith paid $20,000 of interest on a mortgage on his home (Micah borrowed $600,000 in 2015 to buy the residence and it is currently worth $1,000,000), $12,000 on a $150,000 home-equity loan on his home, and $10,000 of interest on a mortgage on his vacation home at ski resort (loan of $300,000; home purchased for $400,000 in 2016; home is not rented out at any time).

How much interest expense can Micah deduct as an itemized deduction? Do tax research, what primary source supports Micah interest deduction on his homes?