1.Charlie is married and runs a software business. Charlies spouse is an elementary school bus driver. Charlie provides a $500 antique clock to one of his best married customers as a gift. As a result, Charlie and his wife may take how much of the $500 cost of the clock as a business (gift) deduction?

2. Charlie owns one house that he lives in. He bought the house in 2000 for $530,000, using a $390,000 loan. In 2005 when the loan balance was $190,000 (he had paid off $200,000 of the $390,000 loan) and the house was worth $600,000, he refinanced the loan with a new loan of $410,000. He used $150,000 of the extra cash (he obtained $220,000 in cash) to remodel the kitchen, bathrooms and build a pool. The rest of the money he used to pay for a vacation. In 2017 he obtained a second additional loan secured by the house of $60,000 (the house was still worth $600,000) and he used $40,000 of the money to redo his kitchen, the remainder of the money he used for a new car. If during the year Charlie paid $6,000 in interest on the $60,000 loan, how much of the $6,000 interest expense would you expect to be deductible? Assume none of the balance of the either outstanding loan was paid down