b
RATIONALE: State sales taxes ($1,750) are more than the state income tax ($1,700); so Hugh should choose to deduct the sales tax rather than the state income tax. The state occupational license fee ($300) and the tax on his business use auto ($475) are deductible for AGI as business expenses. The state sales tax ($1,750) and the real estate taxes ($3,800 + $1,100) are deductible as itemized deductions. The gift tax is not deductible. The total itemized deductions are $6,650 ($3,800 + $1,100 + $1,750).