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Chapter I:7
Itemized Deductions
Discussion Questions
I:7-1 a. A taxpayer may deduct medical expenses incurred on behalf of the taxpayer, the
taxpayer's spouse, the taxpayer's dependents, and the taxpayer’s children. The taxpayer may also
deduct medical expenses paid for an individual who would otherwise qualify as a dependent
except for the fact that the gross income test is not met, even though the taxpayer may not take
an exemption for the individual.
b. No. Medical expenses incurred by the divorced parents of a child are deductible
by whichever parent incurs the expenses, even though the parent incurring the expenses is not
entitled to the dependency exemption for the child. p. I:7-2.
c. The taxpayer who is the subject of a multiple support agreement is treated as the
dependent of the taxpayer who is entitled to take the dependency exemption. Since a taxpayer
may deduct medical expenses (subject to the 7.5% of AGI limit) incurred for a dependent, the
taxpayer entitled to the dependency exemption under the multiple support agreement should be
the one who pays the medical expenses.
I:7-2 Medical care is defined as amounts paid for:
1. The diagnosis, cure, mitigation, treatment, or prevention of disease.

2. The purpose of affecting any structure or function of the body. (Medical expenses
incurred for cosmetic surgery are not deductible).
3. Transportation primarily for and essential to the first two items listed above.
4. Long-term care services for the chronically ill. Chronically ill generally is
defined as the loss of certain daily living activities such as eating, toileting,
bathing, dressing, and continence.
5. Insurance covering all of the items above. However, the deductibility of long-term
care insurance premiums is subject to a dollar ceiling based on age. pp. I:7-2
through I:7-6.
I:7-3 a. The Internal Revenue Code defines cosmetic surgery as any procedure that is
directed at improving the patient's appearance and does not meaningfully promote the proper
function of the body or prevent or treat illness or disease.
b. In general, the cost of cosmetic surgery is not deductible unless it is necessary to
ameliorate a deformity arising from or directly related to, a congenital abnormality, a personal
injury resulting from an accident or trauma, or a disfiguring disease. p. I:7-4.
I:7-4 a. In 2018, the deductible mileage rate for miles driven to receive medical care is
18 cents per mile. In addition, the cost of lodging and 50% of the cost of meals incurred en route
to obtain medical treatment generally is deductible as a medical expense. En route transportation,
50% of meals and lodging costs for a nurse, parent, or spouse are also deductible if the sick or
Copyright © 2019 Pearson Education, Inc.

I:7-1
injured individual is unable to travel alone. Note, however, that the IRS’s position is that the
cost of meals en route generally is not deductible for trips too short to warrant a stop for meals.
b. If the trip for medical purposes is long enough to warrant the deductibility of
meals, the meals are still subject to the 50% limit. Additionally, the lodging costs are limited to
$50 per person, per night. pp. I:7-4 and I:7-5.
I:7-5 Generally the cost of meals is not deductible for an individual receiving treatment as an
outpatient while away from home. The cost of lodging for an outpatient is deductible if (1) the
travel is undertaken primarily for medical care, (2) the medical care is provided by a physician in
a licensed hospital (or a facility that is related or equivalent to a licensed hospital), and (3) there
is no significant element of personal pleasure or recreation. Furthermore, the deduction for
lodging is limited to $50 per night, per person. These rules also apply to a nurse, parent, or
spouse if the sick or injured individual is unable to be alone. The cost of meals and lodging
received by an individual as an inpatient are considered part of the treatment received and are,
therefore, deductible as medical expenses. p. I:7-4.
I:7-6 a. Capital expenditures qualify for a current deduction if incurred as a medical

necessity for primary use by the taxpayer, taxpayer's spouse, or dependents in need of medical
treatment. There are three types of capital expenditures that qualify for a deduction.
1. Expenditures that relate only to the sick person and not to the permanent
improvement of the taxpayer's property. These include expenditures for items
such as wheelchairs, eyeglasses, etc.
2. Expenditures that permanently improve the taxpayer's property as well as provide
medical care.
3. Expenditures incurred in removing physical barriers in the home of a physically
handicapped individual.
b. Capital expenditures in the first and third categories are fully deductible.
However, capital expenditures in the second category are deductible only to the extent the
expenditure exceeds the increase in fair market value of the residence. p. I:7-5.
I:7-7 The cost of the trip most likely would not be deductible because of the personal
enjoyment factor. Because Bill's doctor recommended the trip specifically as treatment for his
ulcer, an argument could be made to deduct the cost of the trip as treatment for a specific
ailment. Before taking such a position, however, the taxpayer and his/her tax return preparer
should evaluate whether or not the position has a “reasonable” or “more likely than not” chance
of winning upon audit. pp. I:7-3 and I:7-4.
I:7-8 If the premiums cover more than just health care or long-term care for the chronically ill,
(i.e. coverage for loss of income or life) and the cost of the separate items are not identified as a
component of the total premium, then none of the premiums are deductible. p. I:7-6.

I:7-2
I:7-9 Medical expenses that exceed 7.5% are deductible from AGI, if the sum of this excess
and all other deductions from AGI exceeds the standard deduction. A deduction can be taken in
the year that the care is paid for; although, if the care is prepaid, the amount is deductible only
after the services are performed unless the prepayment is required by the provider of the services
or there is a legal obligation to pay. Furthermore, under certain conditions, the prepayment of
certain long-term care treatments may also be deductible when paid. pp. I:7-6 and I:7-7.
I:7-10 a. The following taxes are specifically identified as deductible under Sec. 164:
• State, local, and foreign real property taxes

• State and local personal property taxes if the tax is ad valorem
• State, local, and foreign income, war profits, and excess profits tax
• State and local sales taxes if the taxpayer makes an election to deduct
them instead of state and local income taxes.
• The federal generation-skipping transfer tax on income distributions
• Other state, local, and foreign taxes, which are paid or incurred in either a
trade or business or an income-producing activity.
• One-half of the self-employment taxes imposed on a self-employed
individual.
b. Certain taxes not specifically listed in Sec. 164 are still deductible as ordinary and
necessary expenses if incurred in the taxpayer's business or income-producing activity. Taxes
paid in connection with the acquisition of property (such as a sales tax) are treated as part of the
cost of the property and are capitalized accordingly. pp. I:7-9 and I:7-10.
I:7-11 Cash method taxpayers deduct all state taxes in the year paid or withheld. A refund of
state taxes must be included in gross income in the year of the refund to the extent a tax benefit
was received in the year the deduction was taken. p. I:7-10.
I:7-12 An ad valorem tax is a tax determined by the value of the property being taxed. A
personal property tax that is not an ad valorem tax is still deductible as an ordinary business
expense if the property is used in a trade or business. If the tax is not an ad valorem tax and the
property is not used in a trade or business or income-producing activity, the tax imposed is on
personal property and is not deductible. p. I:7-10.
I:7-13 When real estate is sold during a year, the real estate taxes on the property must be
apportioned between the buyer and seller in order to properly determine the amount of gain or
loss to the seller and the basis of the property in the hands of the buyer as well as the amount of
deduction for the property tax that the seller and buyer each may deduct. The seller of real estate
is treated as having paid the proportionate share of the real estate taxes up to the date of the sale
and the allocation of the taxes is generally properly accounted for at the closing, regardless of
who actually pays the tax. If the closing agreement does not allocate and account for the real
estate taxes and the seller does not actually pay his or her share of the taxes, the selling price of
the property will increase by the amount of the tax and the buyer's basis will increase by the
same amount. If the closing agreement does not allocate and account for the real estate taxes and
the buyer does not actually pay his or her share of the taxes, the selling price will be decreased
by the amount of the tax and the buyer's basis will decrease by the same amount. p. I:7-11.
I:7-3
I:7-14 a. For tax purposes, interest expense of an individual is divided into the following
categories: personal interest, active trade or business interest, passive activity interest,
investment interest, qualified residence interest, and student loan interest. In general, the
classification of interest is determined by the use of the borrowed money, not the nature of
the property used to secure the loan.
b. Personal interest is not deductible. Active trade or business interest is deductible
as a for AGI deduction on Schedule C. Passive activity interest is deductible against passive
income and is deductible either for or from AGI, depending on the activity in which the interest
is incurred. For example, interest incurred in a passive rental activity is a deduction for AGI.
Investment interest is deductible as a from AGI deduction, up to the amount of the taxpayer’s net
investment income for the year. Qualified residence interest is deductible as a from AGI
deduction on Schedule A. Student loan interest is a for AGI deduction. pp. I:7-12 through I:7-
20.
I:7-15 A point is equal to one percent of the loan amount. Points may represent an additional
interest expense, or a service charge. If the points represent additional interest, they are
deductible as interest. Points that represent a service fee are amortized and deducted only if
incurred in a business or for investment. pp. I:7-17 and I:7-18.
I:7-16 Points representing prepaid interest on a loan are deductible in the year that they are paid
if the loan is obtained to purchase or improve the taxpayer's principal residence. If not, the
points must be capitalized and amortized over the period to which the interest relates. pp. I:7-17
and I:7-18.
I:7-17 Section 267 requires related cash-method lenders and accrual-method borrowers to report
the results of the transactions in the same year. The restrictions imposed by Sec. 267 serve to
prevent a related accrual-method taxpayer from taking a deduction in a year earlier than the year
in which the related cash-method taxpayer reports the income. p. I:7-20.
I:7-18 a. The deduction for investment interest expense is limited to the taxpayer's net
investment income for the year.
b. Net investment income is the excess of investment income over the investment
expenses (excluding the investment interest expense) that are directly connected with the
production of investment income. Investment income is gross income from property held for
investment including items such as dividends, interest, annuities, and royalties (if not earned in a
trade or business). Investment income also includes net gain (all gains minus all losses) on the
sale of investment property, but only to the extent the net gain exceeds the net capital gain (net
long-term gains in excess of net short-term losses) on such property. Thus, a net short-term
capital gain is included. If the taxpayer elects to subject them to the regular tax rates, net capital
gains (net long-term gains in excess of short-term losses) are included in the definition to the
extent the taxpayer elects to subject them to the regular tax rates. Gains on business or personal-
use property are not included in the calculation of investment income.
c. Disallowed investment interest expense may be carried over and deducted in a
subsequent year. The carryover amount is treated as paid or accrued in the subsequent year and
is subject to the disallowance rules that pertain to the subsequent year. pp. I:7-15 and I:7-16.

I:7-4
I:7-19 Acquisition indebtedness is debt that is secured by the taxpayer's residence and is
incurred in acquiring, constructing, or substantially improving the qualified residence of the
taxpayer. For debt incurred on December 15, 2017 or later, acquisition indebtedness is limited to
$750,000. Acquisition debt incurred prior to that date is limited to $1,000,000. Home equity
indebtedness is any debt (other than acquisition indebtedness) that is secured by the taxpayer's
qualified residence. Beginning in 2018, the interest on home equity indebtedness is not
deductible. pp. I:7-17 and I:7-18.
I:7-20 For any taxable year, a taxpayer may have two qualified residences: (1) the taxpayer's
principal residence, and (2) one other residence selected by the taxpayer which the taxpayer
personally uses more than the greater of (1) 14 days or (2) 10% of the rental days during the
year. If the residence has not been rented by the taxpayer during the year, it may be selected by
the taxpayer as the second residence with respect to which qualified residence interest may be
deducted even though the taxpayer does not meet the 14-day or 10% test. p. I:7-18.
I:7-21 The interest is disallowed as a deduction because the taxpayer would realize a double tax
benefit if allowed to have the proceeds from the tax-exempt securities not taxed and also deduct
the interest for the debt to purchase or hold the tax-exempt securities. If the interest was allowed
to be deducted, a taxpayer could, under certain circumstances borrow money at a higher rate of
interest than the rate at which it is invested, while still generating a positive net cash flow.
p. I:7-14.
I:7-22 The cash method taxpayer normally deducts the interest expense in the year paid.
Prepaid interest relating to a period that extends beyond the end of the tax year must be
capitalized and amortized over the life of the loan. If points paid on a loan incurred to purchase
or substantially improve the taxpayer's principal residence represent prepaid interest, the
deduction can be taken in the year paid.
If a new loan with a third party is entered into to pay an existing loan, the amount of the
payment which represents interest is deductible in the year paid. If the funds used to pay the first
loan are borrowed from the same party and the purpose of the second loan is to pay the interest
on the first loan, no interest deduction is available.
A cash-method taxpayer may deduct interest on a discounted note when the note is
repaid. Personal interest, however, is not deductible. pp. I:7-19 and I:7-20.
I:7-23 a. Capital gain property is property held over one year upon which a long-term
capital gain would be recognized if it were sold at its FMV on the date of contribution. If a
capital loss or a short-term capital gain would be recognized, the property is considered ordinary
income property for purposes of the charitable contribution deduction. Ordinary income
property also includes property that would result in the recognition of ordinary income if the
property were sold.
b. It is important to make the distinction between capital gain property and ordinary
income property because of the different rules that apply in determining the amount of the
charitable contribution deduction. If capital gain property is donated to a public charity,
I:7-5
generally the amount of the contribution is its FMV except for special rules relating to tangible
personal property. Ordinary income property contributed to a public charity generally results in
a contribution amount equal to the FMV less the gain that would have been recognized if the
property had been sold. pp. I:7-22 and I:7-23.
I:7-24 In general, the amount of the charitable contribution of capital gain property donated to a
private nonoperating foundation is equal to the FMV of the property reduced by the gain that
would be recognized if the property were sold at its FMV. In the case of capital gain property
donated to a public charity, the charitable contribution is equal to the FMV of the property. In
this case, the limit on the charitable deduction is 30% of AGI. An individual may, however,
elect to have the amount of the contribution become the property's FMV reduced by the gain that
would be recognized. In this case, the limit is increased to 50% of AGI. If tangible personal
property (not realty) is donated to a public charity and is used by the charity for purposes
unrelated to the charity’s purposes, or if the property consists of certain intangibles, the amount
of the contribution equals the property’s FMV reduced by the gain which would have been
realized if the property had been sold. Special rules apply to certain types of inventory donated
by a corporation. pp. I:7-22 and I:7-23.
I:7-25 No charitable contribution deduction is available. In 2018, a married taxpayer filing a

joint return is allowed the greater of the standard deduction of $24,000 or itemized deductions.
In this situation, the itemized deductions total only $7,000 and the taxpayer would use the
standard deduction. p. I:7-2.
I:7-26 The overall deduction limitation on charitable contributions for individuals is 60% of the
taxpayer's AGI for the year (50% of AGI for property). The limitation for corporations is 10%
of taxable income computed without regard to the dividends received deduction, the charitable
contribution deduction, or any NOL or capital loss carrybacks. pp. I:7-24 and I:7-25.
I:7-27 Charitable contributions that exceed the deduction limitation may be carried over and
deducted in the subsequent five years. The carryovers are still subject to the limitations that
apply in the subsequent years. pp. I:7-25 and I:7-26.
I:7-28 Charitable contribution deductions are reported on Schedule A of the individual's tax
return. If contributions of property exceed $500, Form 8283 must also be submitted. This form
requires information about the type, location, holding period, basis, and FMV of the property.
Additionally, if contributions of $250 are made, no deduction is allowed unless the taxpayer
obtains and retains a contemporaneous, written acknowledgment by the donee organization.
This acknowledgement must include whether or not the organization provided any goods or
services in consideration for the cash or property received, including a description and good faith
estimate of the value of any goods or services provided by the organization.
Separate payments generally are treated as separate contributions for purposes of

applying the $250 threshold. Charitable contributions made in cash after August 17, 2006 are
not deductible unless the donor can show a cancelled check or credit card statement or has a
written statement from a charity verifying the contribution. pp. I:7-32 through I:7-34.

I:7-6
Issue Identification Questions
I:7-29 The primary tax issue is how Wayne and Maria can maximize their medical expense
deductions by engaging in tax planning. A secondary issue is whether the proposed medical
services (e.g., the orthodontic work) may be deducted despite the fact that the services may be
performed, in part, in a subsequent year. Because of the 7.5% of AGI limitation, it is preferable
to "bunch" the medical expenses into one year. pp. I:7-29 and I:7-30.
I:7-30 The primary tax issue is whether Chuck can use the current interest expense incurred on
his investment property to offset current year ordinary income. Chuck will not have income
from his investment in the land for at least five years and when Chuck recognizes the capital gain
it will be taxed at either 15% or 20%, depending upon Chuck’s taxable income in that year.
Without any restriction or limitation, he can currently deduct the interest against his ordinary
income, which is taxed in the current year at 24%. Thus, Chuck should take into consideration
the amount of his current year net investment income in order to determine the amount of the
current investment interest expense he can deduct. p. I:7-14.
I:7-31 The primary tax issue is whether the contribution is made to a qualified charitable
organization. The payments to a political candidate indicate that the organization may not
qualify. If the contribution is qualified, George needs to consider contribution limits and the
character of the contribution (i.e., LTCG or ordinary income property). p. I:7-22.
I:7-32 The primary tax issue is whether the charitable contribution limits (i.e., 30% of AGI for
contributions of LTCG property) will apply and whether an election should be made to reduce
the amount of the contribution to the property's basis so that the 50% limit is applied. A
secondary issue is the application of the contribution carryover rules and their effect upon the
deductibility of contributions in the current year. pp. I:7-24 and I:7-25.

I:7-7
Problems
I:7-33
Angela’s 2018 taxable income is $43,900, computed as follows:
AGI $58,000
Less itemized deductions:
Medical*: Doctor bills $11,700
Hospital bills 9,400
Health premiums 600
Total $21,700
Less: Reimbursement ( 10,000)
Less: 7.5% AGI ( 4,350)
Deductible medical expenses $ 7,350
Mortgage interest** 6,750
Total itemized deductions $14,100
Compare to standard deduction 12,000
Deduction (itemized deduction > standard deduction) ( 14,100)
Taxable income $43,900
*The legal fees do not meet the definition of medical expenses in Sec. 213 of the IRC.
**The car loan interest is considered to be personal interest and not deductible.
pp. I:7-3 through I:7-6.
I:7-34 Angela must include $2,100 in her 2019 income because of the reimbursement. In the
calculation, Angela must compute the amount of tax benefit from the medical expense deduction
for the prior year. She must compare the actual taxable income for 2018 with what the 2018
taxable income would have been if the $4,000 additional reimbursement for her medical
expenses had been received in 2018.
AGI $58,000
Medical: Doctor bills $11,700
Hospital bills 9,400
Health premiums 600
Total $21,700
Less: Reimbursement ($10,000 + $4,000) ( 14,000)
Less: 7.5% AGI ( 4,350)
Deductible medical expenses $ 3,350
Mortgage interest 6,750
Deduction ( 12,000)
Actual 2018 taxable income $43,900
Tax benefit $ 2,100

I:7-8
Thus, Angela must include $2,100 in her gross income in 2019 because of the reimbursement.
The reimbursement for the legal fees is not income to Angela because she did not originally
deduct the legal fees when they were expended in 2018. p. I:7-7.
I:7-35 Dan can deduct $1,514 as medical expenses.

Mileage (12 trips x 400 miles x 0.18 per mile) $864
Lodging (12 trips x $85 per night limited
to $50 per night) 600
Meals ($100 en route x 0.50) 50*
Dan's qualified medical expense for the year $1,514
* Note that the IRS's position is that the meals en route are not deductible but the Tax Court and
the Sixth Circuit Court of Appeals have ruled that the meals are deductible.
p. I:7-4.
I:7-36 Chad’s deductible medical expenses are $3,400.

Orthodontic work for Sara $3,000
Broken leg for Brett 2,000
Health insurance premium for Chad, Brett, Sara (not deductible) 0*
Prescription drugs for Chad 400
Doctor bills for Chad 1,000
$6,400
Minus: 7.5% of $40,000 AGI (3,000)
Medical expense deduction $3,400
* Health insurance premiums paid on a pre-tax basis have already been deducted for tax
purposes from Chad’s salary.
I:7-37 a. Charla’s 2018 taxable income is $19,420, computed as follows:
AGI $38,000
Medical: Hospital bills $14,000
Excess cost of pool over increased
value of home ($25,000 - $22,000) 3,000
Maintenance of pool 930
Medical premiums 1,200
Wheelchair 2,300
Total expenses $21,430
Less: 7.5% AGI ( 2,850)
$18,580
Total deduction ( 18,580)
Net taxable income $19,420

I:7-9
b. In 2019, Charla must include the $6,580 reimbursement in her taxable income to
the extent that it provided tax benefit in 2018.
Amount Reported Amount if Reimbursement
In 2018 Were Received in 2018
$38,000 $38,000
Total AGI
Medical expenses $21,430 $21,430
Less: Reimbursement --- ( 9,000)
Less: 7.5% of AGI ( 2,850) ( 2,850)
Total medical $18,580 $ 9,580
Compare to standard deduction 12,000 12,000
Total Itemized deductions (18,580) ( 12,000)
Net Taxable income $19,420 $26,000
Increase in taxable income from reimbursement ($26,000 – 19,420) = $6,580 (included in

income in 2019).
In 2019, Charla’s AGI is $49,580 ($43,000 + $6,580) and her medical expense deduction
is $5,102, computed as follows:
Fees paid to physical therapist $ 4,000
Hospital bed 3,800
Medical premiums 1,200
Pool maintenance 1,060
Total Expenses $10,060
Minus: 10% AGI ( 4,958)
Qualified medical expense deduction in 2019: $ 5,102
pp. I:7-3 through I:7-6
I:7-38 a. In 2017, Joyce may deduct $1,720 in state income tax, the $120 she paid with her
2016 state tax return and the $1,600 withheld from her paychecks during 2017.
b. In 2018, Joyce may deduct $2,300 in state income tax, the $200 she paid with her
2017 state tax return and the $2,100 withheld from her paychecks during 2018.
c. Joyce’s taxable income for 2018 is $38,200, computed as follows:
AGI $51,000
State tax deduction $2,300
Mortgage interest
10,500
Total itemized deductions 12,800
Deduction for 2018 ( 12,800)

I:7-10
I:7-39 a. Dawn’s available deduction for her taxes is $2,927, computed as follows:
State income taxes $2,000
Ad valorem property tax on the car ($20,000 x 0.02) 400
Dawn’s portion of the house property taxes (104/365 x $1,850) 527
Total $2,927
b. Dawn will report this deduction on Form 1040 Schedule A. pp. I:7-9 through I: 7-11.
I:7-40 July 1 of the prior year through April 30 of the current year equals 304 days. Thus,
$4,997 ($6,000 x 304/365) of the taxes are apportioned to Tara, even though Janet (the buyer)
pays the full $6,000 in property taxes on September 1. The remainder of the taxes of $1,003
($6,000 - $4,997) are apportioned to Janet.
a. Janet may deduct $1,003 in the current year.

b. Tara may deduct $4,997 in the current year.
c. The total selling price of the building and the cost basis to Janet (the buyer) is
$504,997 ($500,000 + $4,997). This increase in the selling price occurs because (1) no
apportionment of the real property taxes is made in the sales agreement in order to withhold the
$4,997 in property taxes that are apportioned to Tara, and (2) Janet is the one who pays all
$6,000 of the property taxes (including the $4,997 that is apportioned to Tara). Thus, in essence,
Janet is actually paying $4,997 more for the building. p. I:7-10.
I:7-41 Scott's interest expense for the year is classified as follows:
Jan. 1 - Mar. 31 100% investment interest

Apr. 1 - Jun. 30 93.75% passive interest ($75,000/$80,000)
6.25% investment interest ($5,000/$80,000)
Jul. 1 - Nov. 30 93.75% passive interest
6.25% personal interest
Dec. 1 - Dec. 31 100% passive interest


I:7-11
I:7-42 Travis’ taxable income for the current year is $139,400, computed as follows:
AGI before investments $130,000

Long-term capital gains 8,600
Short-term capital gains 7,300
Dividends 10,000
Interest Income 2,100
AGI $158,000
Qualified Residence Interest $7,800

Investment Interest expense: ($30,000/40,000 x $3,200) $2,400
Possible limitation:
Net Investment Inc. ($7,300 + 2,100) 9,400
Invest. Interest exp. Deduction (lesser amount) 2,400
State Income Taxes 8,400
Total Itemized deductions (18,600)
Taxable Income $139,400
*Because the long-term capital gains and the dividends are subject to the 15% preferential tax
rate, Travis should not make the election to include them as investment income in calculating the
deduction limit for investment interest expense. Thus, Travis has $9,400 of investment income
($7,300 short-term capital gains and $2,100 of interest income). As the investment expenses of
$8,000 are not deductible in 2018, they are not considered when calculating net investment
income. Travis’ net investment income is greater than his investment interest expense of $2,400,
so the deduction for the investment interest expense is not limited. pp. I:7-14 and I:7-15.
I:7-43 Tina may deduct interest on a total indebtedness of $750,000, based on the following:
Tina is limited to interest expense deductions on a total of $750,000 acquisition indebtedness
incurred on December 15. 2017 or thereafter. Thus, Tina may deduct interest paid on the
$700,000 acquisition debt secured by the principal residence, and $50,000 of the acquisition debt
secured by the condominium. pp. I:7-16 through I:7-18.

I:7-12
I:7-44
Brett Jeremy
Susie
55%
40% 60%
45%
Crown
BJ
a. Crown can deduct the entire interest accrued because it and BJ Partnership are not
related parties. The same person does not own over 50% of both the partnership and corporation.
b. Crown cannot deduct any of the interest in the current year. If Jeremy were
Brett’s brother, Brett would constructively own 100% of BJ Partnership. Thus, Brett would own
over 50% of both Crown Corp. and BJ Partnership. Crown could only deduct the interest in the
period in which BJ Partnership would recognize the interest income, which would be the next
year. p.I:7-20.
I:7-45 a. Henry can deduct $900 of interest in the current year. Since Henry is a cash
method taxpayer, he must deduct the interest expense as the loan is repaid. Thus, the total
amount of the interest expense of $1,800 ($12,000 - $10,200) is deductible as the loan is repaid.
Four payments are to be made. Henry makes two payments in the current year (on July 1 and
October 1). Thus, $900 (0.50 x $1,800) of the interest expense is deductible in the current year.
b. Henry can’t deduct any of the interest in the current year. Since none of the loan
is repaid during the current year, none of the interest is deductible during the current year. It will
all be deductible by Henry when the loan is paid off in subsequent years.
c. Henry can deduct $1,350 of interest in the current year. Since Henry is an accrual
method taxpayer, he may deduct the interest as it accrues. The loan is to be outstanding for one year.
Three-fourths of the loan period occurs during the current year. Thus, $1,350 (0.75 x $1,800) of the
interest expense is deductible during the current year. p. I:7-19.
I:7-46 Doug’s 2018 taxable income is $23,000, computed as follows:
AGI $35,000
Itemized Deductions:
Medical expenses $ 800
Minus: 7.5% of AGI (2,625) $ -0-
State income taxes 2,300
Local property taxes 3,000
Charitable contributions 2,000
Minus: Greater of itemized deductions ($7,300) or
standard deduction ($12,000) ( 12,000)
I:7-13
I:7-47
a. James’ 2018 taxable income is $43,375, computed as follows:
Income:
Salary $70,000
Interest 7,000
Net capital gain ($23,000 - $15,000) 8,000
AGI $85,000
Deductions:
Medical $ 8,000
Minus: ($85,000 x 0.075) ( 6,375) $ 1,625
Taxes: Lesser of:
a. $7,000 + $4,000
b. $10,000 10,000
Qualified residence interest 12,000
Investment interest (limited to net investment
income of $15,000*) 15,000
Charitable contributions 3,000
Total itemized deductions ($41,625)

*$7,000 interest + $8,000 net capital gain.
b. James can carry over $1,000 of excess investment interest expense. James’ excess
investment interest expense of $1,000 ($16,000 - $15,000) is carried over to the next year. pp. I:7-
2 through I:7-30.

I:7-14
I:7-48 James’ 2018 taxable income is $113,000, computed as follows:
Income:
Salary $130,000
Interest 7,000
Net capital gain ($23,000 - $15,000) 8,000
AGI $145,000
Deductions:
Medical $ 8,000
Minus: 7.5% AGI ($145,000 x 0.075) ( 10,875) $ -0-
Taxes: Lesser of:
a. ($7,000 + $4,000)
b. $10,000 10,000
Qualified residence 12,000
Investment interest (limited to net
investment income of $7,000 7,000*
Charitable contributions
3,000
Total itemized deductions (32,000)
Taxable income $ 113,000
*The net LTCG is not included in investment income.
The excess investment interest of $9,000 ($16,000 - $7,000) is carried over to next year. pp. I:7-
2 through I:7-34.
I:7-49 Donna’s charitable contribution deduction for the year is $800. When services are
rendered to a qualified charitable organization only the unreimbursed expenses incurred while
performing the services are deductible. p. I:7-24.
I:7-50 a. The charitable contribution is $40,000, subject to a limitation of 30% of AGI.

b. The charitable contribution is $10,000, subject to a limitation of 50% of AGI.
c. The charitable contribution is $100,000, subject to a limitation of 30% of AGI.
d. The charitable contribution is $50,000, subject to a limitation of 50% of AGI.
e. The charitable contribution is $500, subject to a limitation of 50% of AGI.
pp. I:7-24 and I:7-25.
I:7-51 a. The charitable contribution is $10,000 limited to the lesser of (1) 20% of the
taxpayer's AGI or (2) 30% of AGI, reduced by any contributions of capital gain property donated
to a public charity.
b. The charitable contribution is still $10,000 subject to a limitation of 30% of AGI.
c. The charitable contribution is $50,000 limited to the lesser of (1) 20% of AGI or
(2) 30% of AGI, reduced by capital gain property donated to a public charity.
I:7-15
d. Same as (c) above.
e. The charitable contribution is $500 limited to 30% of AGI.
I:7-52 The maximum charitable contribution deduction Helen can take for this year is $40,000.
Under the regular rules, the charitable contribution is $50,000, subject to an overall 30% of AGI
limit. Therefore, the charitable contribution would be $30,000 (0.30 x $100,000 AGI). Helen
would have a $20,000 carryover of excess contributions under the general rule. If she elects to
reduce the amount of the contribution by the long-term capital gain, the charitable contribution is
$40,000 [$50,000 - ($50,000 - $40,000)] subject to an overall 50% of AGI limit. The amount of
the charitable contribution deduction would be $40,000 for this year (50% of AGI limit is
$50,000). If the election is made, there will be no carryover of unused contributions since all of
the contribution is deductible in the current year. pp. I:7-24 and I:7-25.
I:7-53 a. Although she has contributed a total of $95,000, Melissa’s charitable contribution
deduction for the year is $60,000 ($30,000 to Middle State University and $30,000 to the private
nonoperating foundation) because of the limitations imposed on the deductibility of these
contributions. The first limit imposed is the 60% of AGI overall limit (60% x $200,000 =
$120,000) imposed on the donation to Middle State Univ. Thus, this donation is fully
deductible. The deduction for the donation to the private nonoperating foundation is limited to
the lesser of three amounts:
The remaining 60% limit: ($120,000 - $30,000) $90,000

The actual contribution $65,000
The 30% limit on contributions to
private nonoperating foundations ($200,000 x 30%) $60,000
Reduced by cash contribution ( 30,000)
Deductible contribution $30,000
Thus, her charitable deduction for the current year is limited to $60,000 ($30,000 +
$30,000) and she has a $35,000 ($65,000 - $30,000) charitable contribution carryover. The
carryover will be limited to 30% of AGI in the future years.
b. Melissa’s charitable contribution deduction for the year is $60,000, computed as

follows:
Contribution to Middle State (limited to 60% of AGI) $ 45,000
Contribution to private nonoperation foundation 65,000
30% limit: $ 60,000
Reduced by cash contribution $ 45,000
Deductible contribution 15,000
Total contribution $60,000
Melissa will have a $50,000 ($65,000 - $15,000) charitable contribution carryover. As

above in a., the carryover will be limited to 30% of AGI in the future years. pp. I:7-24 and
I:7-25.

I:7-16
I:7-54 Circle’s total charitable contribution deduction is $575,000. Because Circle
(1) manufactured the computer and the computer is included in Circle’s inventory, (2) the
computer is donated to a higher education institution that will use the computer for research, and
(3) City College certifies that it will use the computer in its research, Circle can deduct the
computer’s basis plus ½ of the gain it would have recognized if it had sold the computer (not to
exceed twice the computer’s basis). Thus,
a. Circle's contribution for the current year is as follows:
Donation of main-frame $475,000 ($650,000 - [$350,000 x 0.50])

Donation of stock 100,000
Total charitable contribution $575,000
b. Circle may deduct $400,000 ($4,000,000 x 0.10) and $175,000 may be carried
forward for five years. p. I:7-24.
I:7-55
2018 2019 2020 2021

Amount of deduction $30,000 $36,000 $34,800 $13,200
Amount of carryover
from 2019 10,000 10,000 200 -0-
from 2020 3,000 3,000 -0-
pp. I:7-25 and I:7-26.

I:7-17
Comprehensive Problem
I:7-56
The Nelsons’ taxable income for 2018 is $97,427, computed as follows:
Wages ($150,000 + 3,888) $153,888
Capital Gains/Losses: Cabinets, Inc. ( 2,700)

The Outdoor Corporation 3,900
1,200
Total AGI $155,088
Medical expenses $ 4,900
Reduced by 7.5% AGI ( 11,632) -0-
State income taxes

Withheld from Tim 8,500
Withheld from Monica 85
Paid with 2017 return 250
$ 8,835
Charitable contribution
FMV donated asset $ 96,000
Limited to 30% AGI $ 46,526
Allowed deduction $46,526
Mortgage interest
Paid on original loan $ 2,300
($57,661)
Net taxable income $ 97,427

I:7-18
Tax Strategy Problems
I:7-57 If the stock is donated directly, the contribution deduction would be the $30,000 FMV of
the stock. The tax benefit would be $10,500 (0.35 x $30,000), for a net positive cash
flow of $10,500. If the stock is sold and the $30,000 proceeds are donated, the following
would result:
Selling price $30,000 Contribution deduction $ 30,000

Minus: Basis 10,000 Times: rate x 0.35
Gain $20,000 Tax savings $ 10,500
Times: rate x 0.15
Increase in taxes $ 3,000
Net tax benefit $10,500 - $3,000 = $7,500
The direct contribution would result in positive cash flow of $10,500. If the stock is sold
and the proceeds are donated to the college, the positive cash flow is only $7,500. This is due to
the fact that Dean must report the gain on the sale of the stock in his income tax return. pp. I:7-31
and I:7-32.
I:7-58 Rebecca should donate part of the Sycamore stock to charity. If she donates the
Redwood stock, she would only be allowed to deduct the adjusted basis, $4,900, in the stock
because she held the stock for less than one year. She should not donate the Oak stock because
she would permanently lose the tax benefit of a capital loss.
FMV on Adjusted Date Unrealized

Corporation Dec. 1 Basis Purchased Gain/Loss Character
Sycamore 9,600 7,800 5/22/13 1,800 LTCG
Oak 2,900 3,800 9/10/14 ( 900) LTCL
Redwood 5,400 4,900 6/15/18 500 STCG
Rebecca should also consider bunching her donations into one year. Her present habit of making
an annual $5,000 donation provides no tax benefit in the form of a deduction because the
standard deduction for a single individual is greater than $5,000. If she combines three
donations in one year, the $15,000 total would exceed the standard deduction for the year of
donation and provide tax savings. p. I:7-32.
Tax Form/Return Preparation Problems
I:7-59 (See Instructor’s Resource Manual)
I:7-60 (See Instructor’s Resource Manual)

I:7-19
Case Study Problems
I:7-61 Mr. Brian Brown
100 East Rosebrook
Mesa, Arizona 85203
Dear Mr. Brown:
Pursuant to your request, we have determined the tax consequences of your donation of
land to the Rosepark Community College. As we understand them, the facts are as
follows:
1. Your estimated adjusted gross income for the current year is $100,000. Since you
plan on retiring next year, you anticipate that your adjusted gross income will be
$35,000 for all future years.
2. For federal income tax purposes, you file a joint return with your wife.
3. You purchased the land 14 months ago for $50,000. The land's current appraised
value is $58,000.
4. Selling the land and donating the cash is not an alternative.
5. You do not anticipate making any additional large charitable contributions in the
future.
6. You feel that an appropriate discount rate is 10%.
Because the results of our analysis are based upon these facts as we understand them, if
the facts are not as stated, please notify us immediately.
In general, the amount of a contribution of long-term capital property is the fair market
value of the property. Thus, under the general rule, the amount of your contribution is
$58,000. However, such deductions are subject to an annual limitation of 30% of your
adjusted gross income. Any excess is carried over and deducted in subsequent years.

I:7-20
If you choose this general rule, your discounted tax savings are as follows (assuming the
current year is 2018):
Deduction Marginal
Year Limited: 30% AGI X Tax Rate X Discount = Savings
2018 $ 30,000 .22 1.00 $ 6,600

2019 10,500 .12* 0.91 1,147
2020 10,500 .12* 0.83 1,046
2021 7,000 .12* 0.75 630
Total $ 58,000 $ 9,423
*Depending on other itemized deductions, this rate could be 10%. You may receive no
benefit if your itemized deductions do not exceed the $24,000 standard deduction.
Alternatively, you may make an election to reduce the amount of the contribution from
the property's fair market value to your cost in the property. If you make the election, the
amount of your contribution would be reduced from $58,000 to $50,000. However, if
this election is made, the annual limitation increases to 50% of your adjusted gross
income.
If you choose this alternative, your discounted tax savings are as follows (assuming the
current year is 2018):
Deduction Marginal
Year Limited: 50% AGI X Tax Rate X Discount = Savings
2018 $50,000 .22 1.00 $11,000
By making the election, your discounted tax savings are $1,577 higher than if you were
to use the general rule. Thus, our recommendation is that you make the election.
We will be happy to help you make this election, as well as help you in any other tax
matter or question you may have. If you have any questions, please feel free to call.
Sincerely,
p. I:7-32 and I:7-33.
I:7-62 You know that an accrual-method corporation can take a charitable contribution in the
year the contribution is pledged as long as the amount is actually paid within two and one-half
months from the end of the tax year.
The circumstances, however, indicate that the pledge probably was not actually
authorized until after the year's end, thus, requiring the deduction to be taken in the subsequent
year. Statement on Standards for Tax Services (SSTS) No. 3, states:
I:7-21
In preparing or signing a return, a member may in good faith rely, without
verification, on information furnished by the taxpayer or by third parties.
However, a member should not ignore the implications of information furnished
and should make reasonable inquiries if the information furnished appears to be
incorrect, incomplete, or inconsistent either on its face or on the basis of other
facts known to a member. (Emphasis added.)
This is a difficult situation. You don't want to offend or possibly lose a valuable client. At the
same time, however, you recognize your ethical obligations and responsibilities. One possible
action you could take is to request a conference with Bill in order to explain your position. In
this conference, you could outline the risks (penalties) to both him and you that taking such a
position would create. You might also do some forecasting of next year's income in order to
demonstrate that the difference between taking the deduction this year or next is merely the
difference in the present values of the tax savings (next year's being discounted only one year).
At a constant 0.35 tax rate and a discount rate of 10%, the present value of next year's tax
savings is $6,365 ($20,000 x 0.35 x 0.909) while trying to rationalize taking the deduction this
year would result in present value savings of $7,000 ($20,000 x 0.35). Thus, the difference
amounts to only $637 ($7,000 - $6,363).
If Bill continues to insist on taking the deduction this year, and if you know that the
authorization for the pledge was backdated, you should resign from the engagement.
p. I:7-26.
Tax Research Problems

I:7-63 A taxpayer can deduct ordinary business expenditures, but cannot deduct personal
interest (§162,163(h)(1)). Personal interest includes interest paid on “underpayments of
individual Federal, State, or local income taxes” (Reg. §1.163-9T(b)(2)(i)(A)). Such an
underpayment does not constitute a business expense, even when the “income underlying the
deficiency originates from the taxpayer’s business” (Kikalos v. Comm., 84 AFTR 2d 99-5933).
Thus, Mr. Hancock’s $18,000 interest payment is non-deductible personal interest, even though
the interest related to his business as a lawyer.
I:7-64 The total amount of medical expenses that Smith may claim in the current year is 0
([$1,800 + $500] - [$60,000 X 0.075]). The $500 spent for pool maintenance and the $1,800 of
other medical expenses qualify as medical expenses, but they do not exceed the 7.5% of AGI
floor. The $8,000 (the increase in the value of the home due to the pool) does not qualify as a
medical expense.
The Regulations under Sec. 213 state that a capital expenditure for a permanent
improvement or betterment of property may "qualify as a medical expense to the extent that the
expenditure exceeds the increase in the value of the related property, if the particular expenditure
is related directly to medical care" [Reg. Sec. 1.213-1(e)(1)(iii)]. In other words, a deduction is
allowed for capital expenditures only if the taxpayer pays more than the increase in FMV. In the
case at hand, it must be determined if Smith paid more than the FMV of the property.
I:7-22
In P.A. Lerew [1982 PH T.C. Memo ¶82,483, 44 TCM 918] and J.H. Robbins [1982 PH
T.C. Memo ¶82,565, 44 TCM 1254], the taxpayers were denied medical deductions for existing
pools in homes they had purchased. The courts held that the actual price paid for the home and
pool (assuming an arm's length transaction) should be exactly equal to its FMV. Based on these
and other discussions and the income tax regulations, it appears that Mr. Smith may deduct the
$12,000 ($20,000 - $8,000) only if he can show that he paid $12,000 more than the increase in
the FMV of the property.
“What Would You Do In This Situation?” Solution
Ch. I:7, p. I:7-36.
According to the AICPA SSTS and Treasury Department Circular 230, you should only
take a position on the return, which has a reasonable possibility of being sustained on its merits if
it is challenged administratively or judicially. This is particularly true on so-called "hot-button"
issues like charitable donations of goods, which are subject to intense scrutiny by the IRS
because of widespread valuation abuses in the past. Furthermore, under current law, a taxpayer
can only take a deduction for clothing and household items that are in “good” condition.
Assuming these items are considered in good condition, several valuation and compliance
procedures must be met in order for you to qualify Mr. and Mrs. Nice's donations to Goodwill as
a charitable deduction on their tax return. First you must show that the donee is a qualified
organization.
Second, you must identify the type of property donated and how it is to be used by the
qualified organization. Here the reasonable assumption is that Goodwill will resell the goods in
one of its thrift stores in the U.S. Your clients’ records already indicate the listing of goods
contributed, original purchase prices, and condition of the goods at the time of contribution made
in the current tax year. Because the total original cost basis in the goods was approximately
$15,000, you will most likely use Form 8283 in conjunction with Mr. and Mrs. Nice's Schedule
A on their joint 1040 return.
The real issue, which remains, is valuation. Most accountants use a rule of thumb, which
says to claim ten percent of the original value of the items being donated. But does this rule best
serve your client's interest? And would it be ethical to claim a higher value? According to the
IRS publication 561 Determining the Value of Donated Property, certain guidelines may be
used. First, if the total value of the donation claim is over $5,000, an independent outside
appraisal will be required to be submitted with the return. In addition, comparable sales may be
used to find out what the donated goods will sell for in the Goodwill Thrift Shops. For example,
the average price of jeans sold is $7 while bridal gowns sell for $25. In addition, you might
consult valuation guides such as Cash for Your Used Clothing, by William R. Lewis or other
valuation texts.

I:7-23
Another random document with
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the mean time she (a point on which John was more anxious than he
allowed to appear) would be secure from public observation, and from the
remarks, ill-natured or otherwise, of the curious. The idea that his wife’s
close relationship to the man lying in danger of death so very near to them
might by some possibility transpire was very painful to the former. In that
relationship he saw nothing but disgrace both to Honor and to himself, and
he was, therefore, almost morbidly desirous of removing her from the spot
where at any moment observation might be turned towards her, and she
might be spoken of, ex hypothesi at least, if not openly and decidedly, as the
illegitimate daughter of a gambler and a reprobate.
That there were reasons which John could not well bring to bear on his
wife’s powers of comprehension, the reader will readily understand. Setting
aside the fact that he was not the man to throw a stone at his prostrate
enemy, there was the wholesome old-fashioned faith in the divine right of
parents to be set aside; a faith in which John Beacham, and his fathers
before him, had been born and bred. Disowned and deserted—unrecognised
as well by the laws of the land as by the man to whom she owed her birth,
owing him nothing save the inheritance of shame—John would yet have
shrunk, now that excitement had subsided and his blood was cooled, from
saying aught to Honor that could lessen either her respect or her newly-born
affection for her father.
“It’s only natural, my dear,” he said, “that you should be uneasy; and it
isn’t for me to say ‘do this,’ or ‘don’t do it.’ Hush, mother, please; it’s a
trying time for Honor, and—”
But before he could descant further—either on the nature of, or the
palliations for, his young wife’s trials—a loud tap was heard at the door, a
tap which was immediately followed up by the intrusion of a waiter’s head,
the said waiter being the bearer, as speedily became apparent, of a note.
“From Mrs. Baker, sir,” the man said, presenting it to Mr. Beacham on a
japanned waiter, “and the favour of an answer is requested.”
It was a small unportentous-looking missive, directed in an uncertain
feminine hand. Yet John opened it with strong forebodings of evil,
forebodings which were to a certain extent justified, since the writer—one
of the gentlest and most charitable, by the way, of Christian matrons—
imparted to him, in a few agitated lines, the fact that her son, believing
himself to be lying on his bed of death, had disclosed to her one of the
heaviest of his past offences against his God, and had declared himself to be
the penitent father of John Beacham’s wife.
“The most earnest wish of my poor guilty son,” wrote the unhappy
mother, “appears to be that he may see again the child whom he has so long
neglected and forsaken. May God forgive me if I am doing wrong in urging
you to grant this prayer. At the eleventh hour there was forgiveness for even
one of the worst of sinners. May I not hope that, as a sign and hope of that
forgiveness, you may be led to grant the prayer not only of my son, but of
one whom the judgments of God have followed all the days of her life.”
John laid down the letter with something very like despair tugging at his
heartstrings. The worst that he had, as regarded Honor, ventured to
anticipate, had come to pass. To refuse the entreaty of the aged lady, so
soon perhaps, by his act and deed, to be bereaved of her only son, was
simply impossible, but that prayer granted, and Honor permitted to take her
place by her father’s dying pillow, all hope of concealing the terrible secret
—which John would have willingly given all that he possessed to hide—
was at an end.
With a heavy heart he made the contents of the missive known to his
womankind.
“You see, Honey,” he said, as his wife’s eyes glanced, almost without
taking in their sense, over the hurriedly-written lines, “you see, Honey, we
might have saved ourselves all this bother. Here’s Mrs. Baker, poor soul,
knows all about it, and wants to see you, child. It isn’t what I should have
wished; but what is to be must be; and so I suppose I must just send word
that you’ll wait on Mrs. Baker in the room she has to sit in. Ah me, it’s a
great change! And who’d a thought, when we left home only so late as
yesterday, that such things would come about!”
The revolution that was taking place seemed indeed a startling one to
that quiet stay-at-home family. To Honor, now that her vague wishes
seemed on the point of being gratified, now that she was not to return to her
tranquil home at the Paddocks, but, instead, was to be suddenly thrown into
the presence and society of strangers, the variety in her life did not appear
in quite so attractive a light as she had anticipated. She knew nothing
whatever of Mrs. Baker; nothing, that is to say, beyond the fact that she was
old, religious, and a lady; none of which qualities tended, it must be
confessed, to render the prospect of the approaching, and now not to be
evaded, meeting particularly agreeable in Honor’s sight. To make matters
worse, Mrs. Beacham—her short-lived compassion for her daughter-in-law
being brought to a sudden conclusion—took it into her head to be more than
usually jealous and hard to manage on the occasion. Now that Honor was
about to be “taken up,” as the cantankerous old lady phrased it, “by the
grandees,” all the milk of human kindness in Mrs. Beacham’s breast seemed
turned to gall; and very short and snappish were the only replies that either
her son or Honor could extract from her.
“Well, mother,” John said, with a poor attempt at sportiveness, “here we
are together again!” He had just returned from leaving his agitated wife at
the door of Mrs. Baker’s sitting-room; and—it was morbid, foolish,
perhaps, on his part—he could not wholly divest himself of a very
miserable, but quite undefinable, sensation that the curtain had fallen on the
first act of his married life, and that the happiest portion of it was at an end
for ever.
Leaving him to bear as best he could both his own sorrowful reflections
and the perpetual nagging of the old lady, one of whose weaknesses it was
never to endure patiently what she in her jealous susceptibility denominated
being “kept out” of what was going on, we will follow Honor to her
interview with Colonel Norcott’s long-suffering mother. Mrs. Baker was
one of those women—and they are not a few—who seem from their earliest
girlhood marked out for suffering. Her home-life—owing to circumstances
needless here to mention—had been so wearying and unendurable, that she
had at eighteen married a man for whom she entertained no stronger feeling
than an absence of dislike. Mr. Norcott, who, as we already know, was a
country squire of good estate, had endeared himself to her by his sterling
qualities, and by his unfailing affection for herself. During his lifetime they
were, however, rendered for many years unhappy by the illness and deaths
of five children successively born to them. In early infancy the little
Norcotts were much, as other beings of their age, subject to occasional
illnesses, but not apparently deficient in vigour and stamina. To what the
mysterious ailment was owing that, one after the other, as they attained the
age of twelve or thereabouts, cut off those till then seemingly healthy
children, and condemned them to an early tomb, the doctors found it hard to
say. It had been very hard to see them die; very, very grievous to watch the
fading of the healthy colour, the weakening of the vigorous limbs, the slow
and stealthy, but too sure, advance of death. As each of her beloved ones
was removed from the little place that it had filled on earth to a happier
home above, Mrs. Norcott—weeping as one that would not be comforted—
had complained in bitterness of spirit that there was no sorrow like unto her
sorrow, and that the burden that had been laid upon her was greater than she
could bear. And yet she lived through it—lived through it to the wonder of
those who, not having so suffered, are ignorant how much the human heart
can endure, and yet exist—lived also to confess, in the solitude of her own
chamber, where no eye but God’s could look into her heart, that death was
not the bitterest of mortal woes; for that a wounded spirit—a spirit crushed
by a sense of shame, and bowed down by the burden of a loved one’s sin—
is of all earthly evils the most difficult of endurance.
Mrs. Norcott had been five years a widow, and her only surviving child
was eighteen when she decided—chiefly that he might have the advantage
of a stepfather’s counsel and control—to marry again. The step,
unfortunately, did not prove a successful one. Frederick Norcott from the
first “set himself,” as the nurses say, against his medicine; and Mr. Baker—
a sensible, unassuming, but quietly proud man—did not persevere in the up-
hill work imposed upon him. Happily Mrs. Baker’s jointure, with the
addition of the small but comfortable patrimony, on the strength of which
the retired solicitor had ventured on aspiring to the hand of the still
handsome Mrs. Norcott, were safe from the all-devouring maw of her
reckless and selfish son. To what extent he had in secret, and without even
the knowledge of her less-easy-to-be-persuaded husband, mulcted the
anxious woman of her little-prized gold, no one but the greedy spendthrift
and his unselfish parent could have told. For years, whether at home or
abroad, in the army or out of it, in youth and in middle-age, this only son of
one of the best of women had never ceased being to her a source of trouble
and of trial. Her most peaceful days concerning him had been those which
had elapsed since his marriage, since for more than twelve months there had
been no call upon her purse, no appeal to her motherly sympathy for
distresses which she had at last begun to believe were frequently fictitious.
On Fred’s return to England, which event occurred about a year before his
introduction to the reader, Mrs. Baker had made, with some satisfaction, the
acquaintance of her son’s wife. The colonial so-called heiress, was a fade,
sentimental, well-meaning woman; very much inclined to worship the
husband who in birth and breeding was so greatly her superior, and little
disposed to regret the loss through advancing years of such small claims to
beauty as nature had endowed her with.
Colonel Norcott’s first visit (since his return) to his stepfather’s house
had not been hailed with much satisfaction by that gentleman. Mr. Baker’s
habits, despite his twenty-seven years or so of married life, were decidedly
those of an old bachelor; his hours for meals and family prayers, his times
for rising up and lying down, were fixed and immutable; and the erratic
proceedings of his stepson, though they were not allowed to actually
interfere with those arrangements, did decidedly prevent their being carried
through with that staid decorum which was so precious in the sight of the
ci-devant solicitor. The principles too, or rather the lack of principles,
evidenced by the gallant Colonel were very obnoxious to Mr. Baker. He
was a man utterly without toleration for the weaknesses of others; and, the
power of self-command being inherent in his own nature, he could not
understand that power being either impossible or even difficult of
attainment in others. To do right was so entirely his intention, that he was
misled by that very sincerity of desire into the belief that he was doing
right. His leanings were also so completely towards the proper behaved and
virtuous, that, while he would have been a pattern stepfather to a prudent,
sensible young man, “who needed no repentance,” he turned with feelings
of absolute dislike and repulsion from the sinner whom a more forbearing,
or rather a more judiciously controlling, course of conduct might possibly
have assisted in turning from the error of his ways.
The intelligence that Colonel Norcott had met with an accident that
would probably end fatally flew on the wings of rumour to Lingfield
Cottage, preceding by half an hour, at the least, the judicious message sent
by kind-hearted Lady Guernsey to the mother of the injured man. Mrs.
Baker, notwithstanding her many trials, was still for her age, which was
under seventy, an active and a healthy woman. Habit had likewise, to a
certain degree, hardened her to suffering; and moreover, that unlucky Fred
—who, as a pretty blue-eyed boy, used to keep “her heart in her mouth,” to
use a simple mother’s phrase, with his daring tricks and perilous escapades
—was probably not quite so dear to her, when a hardened, battered roué of
forty-five, as he had been in his days of comparative, but still highly
troublesome, innocence.
There was of course no choice, as even Mr. Baker was obliged to allow,
but to go at once to Gawthorpe. It was intensely annoying, and that he was
seriously displeased was made manifest by Mr. Baker, after the fashion of
gentlemen of his stamp and principles. It was an opportunity, however, to
make his light—the light of a self-denying, right-minded, God-fearing man
—shine before the world; the world, that is, of his well-ordered home; the
home where Godfrey Baker, Esq., whilom of New-square, Lincoln’s-Inn,
and now churchwarden of the parish of Bigglesworth, and one of its most
respected and influential inhabitants, reigned in calm and undisputed
authority.
“A most unpleasant and troublesome affair indeed,” remarked Mr.
Baker, as, with his sorrowing wife seated beside him in their little pony-
carriage, he drove with an air of especial dignity through the well-painted
iron gates that guarded his trim, citizen, box-like “front garden” from the
incursions of the profane.
“A most unpleasant and troublesome affair, but one for which I cannot
say that I at least was not prepared. A disreputable life is very likely—ve-ry
likely, indeed—as I have often noticed, to end in a violent death, and—”
“But, Mr. Baker,” began the unhappy mother, whose affection for her
only child no amount of misconduct on his part had ever been able to
succeed in effectually alienating; “but, Mr. Baker, there is no reason yet,
thank God! to imagine that anything—anything dreadful—has happened to
Frederick. Lady Guernsey mentioned an accident—a fall—an injury to the
head; but nothing serious, at least nothing to make one fear that—”
“One should always fear the worst, my dear Mary, when the person so
situated has led the life, and tempted Providence to the extent, that Colonel
Norcott has. I do not wish to be severe, and, above all, I do not desire at
such a time to aggravate your sufferings; but Frederick Norcott has—as we
all unfortunately know—been a thoroughly bad man. God grant that, even
at the eleventh hour, he may be brought to a sense of his misconduct, and
may repent, before it is too late, of his many and grievous sins!”
He whipped the pony up vigorously after this conventional prayer;
suggestive strokes they were, as though to imply that, according to his
belief, a good and efficient scourging would be aptly bestowed on the
recreant body of his guilty son-in-law. Mrs. Baker, to whom prayers for her
erring son—heartfelt and sincere—had been familiar from the hour when
the reprobate Fred first began to break the laws both of God and man, sat
very still and silent by the side of her respected helpmate. She had nothing
—could have nothing—to say for Fred; and, moreover, her spirit was
terribly sore and sad within her at the thought of his sickness and his
danger. Sickness to which he was so unused; danger which he was so ill-
prepared to meet.
At last—the way seemed a long one, and the pony, always slow and
measured in his movements, appeared more than usually addicted to his
besetting sin of taking his own time upon the road—at last the houses of
Gawthorpe came in sight, the High-street was gained, and the Bell Inn, a
flat-faced red-bricked building of imposing dimensions, rose up before the
elderly pair of anxious and troubled visitors, in all the busy dulness of a
county town’s best inn.
It was long past eight o’clock—a soft sweet summer’s evening—the
daylight fading gradually away, and the sounds of active life dying on the
ear as the solemn shades of night crept slowly onward. There were but few
persons in the street, or crowding (as they had done an hour before) round
the entrance of the hotel. For the present, at least, there seemed nothing new
to learn concerning the great and absorbing topic of the day—namely, the
mysterious “accident” which had happened to Colonel Frederick Norcott.
The public—that very curious as well as impertinent many-headed monster
—had already begun to put forth certain likely as well as unlikely surmises
on the occasion; and in those surmises, had not the owner of Updown
Paddocks been the respected John Beacham that he was, he would probably
have played a somewhat conspicuous part. There were not a few (their
remarks, however, as not likely to be received in good part, were made sotto
voce) who considered it as a suggestive circumstance that Mr. John
Beacham, though the first to give the alarm, had never either to man,
woman or child—so far at least as was generally known—mentioned any
particulars of the accident; or, which was still more remarkable, seeing that
the said John was very far from being of an uncommunicative temperament,
had he given utterance to any surmises, any suggestive hints, which might
have guided the gossip-lovers to a discovery of the truth. For a long period
—a period lengthened into hours through the undisguised curiosity of the
neighbourhood—the avenues to the hotel were thronged with persons
desirous of learning something “authentic” before their return to the quiet of
their respective homes. That there did remain behind something more to
learn, everyone seemed instinctively to feel; and the few persevering ones
that still lingered round the hotel-doors would probably have felt amply
rewarded for their pains could they have stood behind the dingy curtain of
the big inn-bed, and overheard a long and whispered converse which the
object of their curiosity, pale, excited, and contrary to the orders of Dr.
Kempshall, held soon after her arrival with his distressed and agitated
mother. In that interview—moved thereto chiefly by an unaccountable
desire (the offspring, probably, of a fevered imagination) to see by his
bedside the daughter of one whom for a brief season he had passionately
loved—Frederick Norcott revealed to his long-enduring parent the sad
episode of his life, which, by so exciting the wrath of John Beacham of
Updown Paddocks, had led to the calamitous blow from the effects of
which he (the delinquent) was now suffering. How far the guilty man was
justified in believing that his mother’s tender charity to sinners—a charity
born of Christian humility—would cause her to view not only his fault, but
the innocent victim of another’s sin, with eyes of compassion rather than
those of severity and wrath, the following chapter will tend to make
apparent.
CHAPTER X.
A GRANDMOTHER’S LOVE.
“Don’t be frightened, my dear; don’t tremble so. You are with a friend,
remember that; and with a relation too. Why, child,” and the eyes of the still
warm-hearted woman brimmed over with the gladdest tears that she had
known for years, “you are my grandchild!—my own, my only
granddaughter! God bless you, my poor child; and may you be the joy and
pride, instead of the grief and shame, of those who love you!”
Honor was sitting by her newly-found relation (the relation in love
though not in law, who had so generously opened to her her arms and heart)
on an old black horse-hair sofa, in a little sitting-room adjoining the bed-
chamber occupied by Colonel Norcott. The old lady—already predisposed
to like and admire her—had been greatly struck, not only with the rare
beauty, but with a certain shy and shrinking grace characteristic of her son’s
child. The touch of Honor’s small trembling hand, and the kiss of her fresh
girlish lips, had warmed Mrs. Baker’s heart to her at once. Yearningly, and
for a long while prayerfully, had she longed for a child who would, all the
days of her life, be unto her as a daughter. Her only child had never, from
the days of his boyhood, been as a son to this poor loving mother, who,
chancing to be one of the most weak and clinging of the daughters of Eve,
could not be content with such poor sympathy as the eminently trustworthy
but somewhat stern ex-lawyer was able to bestow.
“You will come and see my son, Honor? Honor! what a pretty name!”
and she stroked fondly the delicate fingers that lay within her own dry and
wrinkled palm. “He has had a bad night and is very feverish. Dr. Kempshall
says that he must be allowed to have his way, and—”
“Did he tell you everything, ma’am?” interrupted Honor; “everything
about—about—” and she hesitated painfully—“about my husband?”
Mrs. Baker both looked and felt distressed. John Beacham, whom she
knew well by repute, and partly, indeed, personally, was the one stumbling-
block, the single, but very discouraging hitch, in the new view of things
which had been opened out to her sight. Not—let me be thoroughly
understood—that this excellent matron looked with indulgent eyes upon her
prodigal’s offence; but the deed being done and ineffaceable, she trusted,
seeing that a tardy repentance had followed on the crime, that a merciful
forgiveness might be awarded to the penitent, and that Honor would
perhaps—But here the thought of John Beacham, his rights, and prejudices,
and claims, obtruded themselves, and checked the hopeful projects that
were rising up in her mind concerning her so-lately-discovered relative.
“Did he—did my father say anything about John?” Honor asked again
imploringly. She had more than reciprocated Mrs. Baker’s sudden
predilection, and the idea that more than probably, supposing that lady to be
ignorant of Mr. Beacham’s intemperance, she would withdraw her
countenance from herself, was terribly alarming. The pleasantest
peculiarities which Honor had as yet discovered in her father’s mother lay
in her extreme gentleness of manner, and the exceeding softness of her
voice. There was a refinement, too, in her manner and actions, which was
delightful to the foolish creature whose ambition not only to be that
mystical thing we call a lady, but to be able to choose her associates from
amongst the high-placed of the earth, had become, since her acquaintance
with Arthur Vavasour, almost a mania. Noticing her anxiety, Mrs. Baker
hastened, in the kindest imaginable fashion, to relieve it.
“My son,” she said with touching naïveté and simplicity, “has no secrets
from his mother now. His confession, poor fellow, has been a painful one;
but he has not now to learn that I—knowing myself to be a sinner, and
being humbly conscious of having fallen far short of the mercy of God—do
not dare to be severe and cruel upon those who have also need of pardon
from on high. It is wrong, dear child, we must acknowledge that, to lift the
hand in anger against our fellow-creatures; but”—smoothing Honor’s
golden hair tenderly—“Frederick does not deny that he gave your husband
provocation. It was a blow, too, of course—a heavy shock—to learn that his
young wife, his—but we will not revert to the painful past, my love. If—if
my poor son’s life is mercifully spared to us, we must try and make your
excellent husband think better of us all; while as for you, my dear, it will
not be hard, I hope, for you to give us a little of your love. You will be very
dear to me, Honor—”
She was interrupted by the sweetest and most welcome answer that the
girl for whose affection she was yearning could have made to her; for a pair
of loving arms were suddenly thrown around her aged neck, and Honor, in a
passion of grateful tears, exclaimed:
“How good you are to me! I shall love you very dearly—better than
anybody; and if my father lives, I think I shall be happier, far happier, than I
have ever been before.”
Mrs. Baker was too much engrossed with anxiety for her son’s health,
and with the thought of his approaching interview with Honor, to take much
notice of the latter’s slightly incongruous speech; incongruous, as
proceeding from the lips of a bride little more than three months old, and
whose apparent prospects in life were all that was bright and encouraging.
If, however, the idea struck her that there was perchance a skeleton in the
young wife’s closet, and that all things with her were not what they seemed,
the prudent old lady forbore making any inquiry, direct or indirect, into the
causes not only of Mrs. John Beacham’s burst of grateful sentiment, but of
the implied doubt thrown by that impulsive effusion upon the happiness of
her home. The time, too, which Mrs. Baker had allowed herself for this
trying conversation had more than expired; so, after a long and silent
embrace, the two women rose, and without further preparation on either
side walked slowly together—arm linked in arm, and one, the younger,
feeling very nervous, and not a little bewildered by her novel position—into
Colonel Norcott’s room.
Honor was not much accustomed to the sight of serious illness, so that
the first glimpse which she caught of her father’s face—disfigured as it was
by the blotches of fever, and surmounted by a linen bandage—filled her
with dismay. He was moaning wearily, and evidently wandering in his
mind. No revelations of tangible meaning flowed, (and experience tells us
that such secrets seldom are divulged by the delirious) from the parched lips
of Frederick Norcott. He was (in spirit) miles upon miles, and years upon
years, away from that silent bedroom where two women, one old and the
other young, watched him with anxious care. Away to the haunts of his
giddy desperate youth—away to the scenes in which his living had been
devoured—away to the distant lands where, till the wheel of Fortune turned
for him, he was well-nigh compelled to fill (figuratively speaking, of
course) his belly with the husks which the swine did eat.
For two hours and upwards he lay there tossing restlessly from side to
side, muttering incoherent sentences, and causing Honor more than once as
she bathed his fevered forehead, or held the cooling medicine to his lips, to
blush crimson for the only half-comprehended vileness of her perhaps
dying parent. At the end of those two hours a message—very softly
delivered—came to Honor, with a request from her husband to know what
she was going to do. Would Mrs. John Beacham come out into the passage
and speak to him? John asked; and thus entreated, Honor stole out on tiptoe
to meet the kind-hearted man who had in his feverish anxiety almost
counted the moments of her absence from his side.
CHAPTER XI.
HONOR SHOWS A LIKING FOR THE “BELL.”

Ten days—long and anxious ones—have elapsed since Honor’s instalment
by her father’s bed (for, as may already have been surmised, old Mrs.
Beacham and later John himself had been constrained, much against their
respective wills, to return to the Paddocks without her), and Colonel
Norcott, pronounced out of danger by Dr. Kempshall, has already partially
recovered his normal tone of mind. By that time the mystery of Honor’s
birth had ceased to exist, and all the little world of Gawthorpe, including the
equally important and more extended one of Switcham and the surrounding
farms, knew her for what she was—namely, the illegitimate daughter of
Colonel Frederick Norcott, formerly of West Lowe Court, Sandyshire. Very
little—nothing, it may almost be said—was ever addressed to John
Beacham on the subject of his wife’s parentage. Of comparatively humble
birth though they were, an instinctive delicacy warned the major part of his
friends, that to John any allusion to the subject would be distasteful at least,
if not positively offensive. The undefined suspicion also—strengthened by
the fact that, during all the days spent in attendance on her father, John
never was known to enter even for a single moment Colonel Norcott’s sick
room—that he, John Beacham, was no stranger to the accident from which
the gallant Fred was suffering, did not tend to render the shrewd Sandyshire
yeomen particularly desirous of probing any hidden mental wounds which
he might be desirous of concealing.
But in addition to all these causes for silence, there was a change—a
trifling one, perhaps, and an alteration more to be felt than explained—in
John himself. That he should have been preoccupied and taciturn whilst his
wife’s father was lying between life and death was easily to be understood;
but the dread of a fatal result was over now, and yet John’s brow was
moody, and his laugh was heard far less frequently, was likewise far less
hearty than of yore. The truth was that John Beacham, loving his wife with
an entire and all-absorbing devotion, was repining, not only at her absence,
but at the changes which, with the clear-sightedness of jealous affection, he
foresaw would take place in his relations with Honor. Other feelings too,
connected with his recent act, were perplexing, and rendering him ashamed.
In proportion as his deadly fear of being a self-condemned murderer
diminished, so did his softened feelings towards his late antagonist subside
likewise. With the conviction that Colonel Norcott was no longer a sufferer
from that burst of passion at first so truly repented of, there returned with
redoubled force John’s antipathy to the man whom he rightly believed to be
dead to every feeling of honour, every elevating sentiment of justice or of
pity. From the moment when Colonel Norcott was pronounced out of
danger, he had endeavoured, without exactly expressing his desire in words,
to make Honor understand his wish that she should return to the Paddocks.
“It’s lonely without you, my dear,” he said more than once, standing with
Honor in the summer twilight among the hollyhocks and scarlet-runners, in
the old-fashioned inn-garden. “It’s very lonely, especially in the evenings;
you know I’m not much of a reader, and I get very tired of the old lady’s
knitting-needles—click, click, click! by the hour together. O, Honor, it will
be very pleasant, dear, when you come home again!”
And Honor thought so too; at least, she comforted John by saying
something of the kind, sending that honest farmer home with a lightened
heart because of the awakened hope within him that very soon his wife
would be again under the shelter of his roof.
“She’ll be here to-morrow, mother, or at farthest next day,” he said
cheerily to the old lady on his return home, after the ninth day of Honor’s
absence. “The Colonel is going on all right, thank God! Ah, mother, if you
only knew what a relief that is! I never speak to Honor about what passed. I
couldn’t well, seeing that he’s her father, worse luck! But I can tell you that
I never slept—no, not a wink, that I can safely say—till he was out of
danger; and what would have become of me, if so be he’d died, the Lord in
heaven only knows!”
Mrs. Beacham laid down her knitting-needles, and looked at her son
with eyes full of loving pity. Her nature seemed to have undergone a change
since the eventful day of the Danescourt discovery. The mere fact of being
once more alone as of yore, with John, had a softening effect, not only on
her feelings towards him, but towards Honor. Her manner of speaking,
therefore, towards her daughter-in-law was far more pleasant and tolerant
than usual.
“It’s been a sore trial, John, I’m sure of that,” she said; “but Honor won’t
be the one, I’m sure, not to forget and forgive.”
“Forget and forgive!” John repeated warmly. “Why, in Heaven’s name,
what or who has she got, I should like to know, to forget and to forgive? Is
it the man who behaved like a brute and a scoundrel to the poor soul her
mother, or is it me, that gave him only what he deserved, the villain, that
Honor’s to be forgetting and forgiving?”
Poor Mrs. Beacham, completely taken aback by this unexpected
outburst, could, in the impossibility of excusing herself, only resume her
knitting in dignified silence. She had not the remotest idea how she had
offended John—John, whom she had never in her life before known to be
so cranky. If he could not talk to Honor about the “crack” on the head that
he had given her “papa,” why, surely, that was as much as to say she had a
right to be offended. So argued to herself this sensible old lady; nor were
her reasonings, all things considered, entirely without their modicum of
common sense.
Meanwhile, Honor herself, as we have just hinted, was by no means
fretting after a return to the Paddocks. She had been made a great deal of
during her absence; and Honor was a young lady to whom the process of
being made much of was especially agreeable. Perhaps the one of her new
connections by whom she had been the most petted was (and the
circumstance is very characteristic of the woman’s character) Colonel
Norcott’s colonial wife. It was through Mrs. Baker’s advice that the person
who was, next to herself, the most deeply interested in the Colonel’s
recovery, was, without loss of time, telegraphed to of his danger. Honor,
who, as the reader may already have perceived, was not remarkable for
moral courage, betrayed some faint symptoms of alarm at the measure. Her
grandmother, however (Mrs. Baker always insisted upon her rights of
relationship, and would be called grandmamma, however much shy Honor
endeavoured to escape the duty), her grandmother strove as best she might
to steady Mrs. John’s nerves on the occasion.
“You will find my son’s wife one of the best and unpretending of
women; but that, my dear, has nothing to do with the question. If she were
the least good-natured and the worst of human beings, our duty would
remain the same, and that duty would be to have no secrets from Mrs.
Norcott. Even if Fred were certain to recover, I should still repeat the same.
Let everything be above-board and open. I don’t know whether you
understand French. You do? So much the better, for there is a motto in that
language which, to my thinking, should be written in letters of gold on
ivory: Fais ce que dois, avenne que pourra. And now, my dear, be so good
as to ring the bell, and we will despatch the message without loss of time to
Mrs. Fred, who is staying with some friends at Ryde. On all accounts, it will
be better for her to be here, for Mr. Baker is very uncomfortable at the
cottage without me; and you, too, should your father give signs of
amendment, which, please God, may be the case, will not be sorry, I am
sure, to return to your husband and your home.”
To this very natural supposition Honor made no reply, save by a little
inward shiver, which was patent only to herself. At that moment, the
appalling fact that the home for life which she had made for herself was one
thoroughly unsuited to her tastes as well as feelings, broke with its fullest
force upon John Beacham’s wife. She felt—God forgive her for her
ingratitude!—that she positively loathed the idea of returning to the
companionship of her mother-in-law—to the mesquin, wearisome talk of
household economies, of the shortcomings of serving-maids, the failure of a
“baking,” or the “coming in two,” in careless Jane’s or Sally’s hands, of jug
or basin. How soon, or if ever, but for two adventitious contingencies (the
contingencies, namely, of her mother-in-law’s disagreeableness, and the
converse as regarded her friend Arthur Vavasour), Honor would have made
the discovery that her life was a spoiled and miserable one, it would be hard
to say. Not for any imaginable consideration would she have been willing
that the dear old lady, whose kindness and gentleness and refinement had so
won upon her heart and fancy, should obtain any, even the faintest, inkling
of her state of mind. It was bad enough to be discontented, vile enough to
wish the past undone, her marriage with that devoted and excellent John a
dream of the past, and herself free to love and wed in a sphere more
congenial to her tastes—the sphere, in short, to which she was in a manner
born. All this, I repeat, was odious and wicked enough; and Honor, feeling
it to be thus wicked and odious, was naturally desirous of being herself the
only confidante of the sad secrets of her untamed and inexperienced heart.
CHAPTER XII.
“THERE’S GOOD, AFTER ALL, IN HER.”

John Beacham tried very hard to believe that he rejoiced in his wife’s
pleasure in the society of her new connections. Again and again he told
himself how well and delightful it was that not only the Bakers, above him
in position as they were, but Mrs. Colonel Norcott herself, a personage and
an heiress—one, too, who might very naturally have looked coldly upon
poor Honor—had treated her from the first with a consideration and regard
as sincere as they were flattering. John was well aware that the converse of
this state of things would have surprised no one; and often, reflecting on the
mortification that might have been his wife’s portion, he endeavoured to
reconcile himself to the deplorable fact that she had been removed, fatally,
as he felt, removed, from his sphere into another, and that from being the
light and joy of his fireside, Honor had been virtually translated to a world
in which he had neither part nor interest. That the anxious man was to a
certain degree justified in this suspicion, no judge of character who
carefully watched that pretty Honor on her return to what John had, alas!
begun to call her duties, could have doubted; for, when she did return, it
was not very difficult to perceive that she was not the same Honor who had
left the Paddocks only eight short days before. In what the change
consisted, however, it would have been difficult to say. She was as willing
to oblige, as anxious to please, and as sweet-tempered as before; but there
could be traced a languor in her movements, an occasional absence of mind
from things present, and a decided want of the zest—the spring of life and
energy—which, previous to the fatal gala-day, had been conspicuous in the
girl’s half Celtic character. All this John, to whom she was far dearer than
his own life, noticed with a jealous and ever-growing irritation. With the
dangerous faith possessed by many of his sex in their own perceptive
powers, this man, so utterly in the dark regarding the complex machinery of
a woman’s nature, decided at once that he knew what was the matter with
Honor. During that week—that long miserable week—that she had been
away from him, her father (how hard it was for John even in thought to call
the Colonel by that tender name!) had amused himself, the farmer feared,
by initiating Honor into some of the wicked doings of the bad world in
which he lived. Of what should, or indeed could, such a man talk, John
Beacham said to himself, but of things of which a pure-minded young
woman had best know nothing about? What are people the better, he went
on to ask himself, for hearing what fashionable people are about in London
or in foreign parts? He was no Methodist, not he, and was all for a little
pleasure at odd times for everybody; but if Honor were to grow
discontented because she couldn’t go about like a lady, and have a lodging
up in town sometimes, like Mrs. Kempshall, and go to the theatres to learn
all sorts of wickedness, why, he and Honor had better come to an
understanding. It was an awful threat, certainly, but one which, perhaps
unfortunately for Honor, was never carried into execution. I say
unfortunately, for at that time a little stir, even the commonplace stir of an
actual scolding, would have done Honor good. She was suffering from the
natural consequences of reaction after an excitement which had told heavily
on her nervous system. Now, neither John nor his mother understood
anything about nerves. They had heard of such things, to be sure, but they
had about as much faith in their actual existence as they had in that of the
king of the cannibals, or the great sea-serpent himself. Had Honor, however,
been questioned on the subject of her malaise, she would have found it no
easy matter to account for her sensations. She felt wearied, listless, and
depressed. There was no actual wearying in her mind for change, and yet
there was within her a latent conviction that only in change would she find
comfort and improvement.
How heavily hung at that trying period of this young woman’s life the
time that God had given her to improve, she alone could tell. If they—her
husband and her husband’s mother—would only have talked to her about
the late transactions, all might have been better. There are seasons when
there is a positive craving after conversation on self—a craving which is in
itself a token of an unhealthy and morbid condition of mind; and Honor
Beacham, seated dejectedly at her work during those long summer evenings
—evenings whose silence oppressed her like the lowering of a heavy
thunder-cloud—would have been thankful for any discussion that might
break the dull monotony of that weary time.
If Honor believed that lack of interest in her concerns was at the bottom
of this reserve, she was greatly mistaken. She would, perhaps, have found it
hard to imagine that an innate delicacy was the cause of this singular
retenue; yet so in fact it was. On John Beacham’s side especially, there
existed a very natural shrinking from to any allusion to the past. The blow
struck by him in a moment of wild and unpardonable passion was ever
present to him as an offence alike against the laws of God and the
enactments of man. Had Honor not been, unfortunately, deeply interested in
the victim of his ungovernable fury, John would still have felt considerable
repugnance to speaking of the man whom he had wounded. But things
standing as they were, and, above all, with Honor looking so changed, so
quiet, so grand, as Mrs. Beacham was once heard to say of her, what
wonder that honest John, far from coming to what he called an
“understanding” with the wife of his bosom, should, by his hourly-
increasing reserve, have opened the gulf between them, which day by day
grew wider and more difficult to leap over?
Nor were matters much better as regarded the relations between Mrs.
Beacham and her silent daughter-in-law. The old lady, whose heart had
begun to warm towards John’s well-descended wife, was not well pleased
to find that Honor scarcely seemed aware of the change of manner adopted
in her favour. Always courteous, but never familiar, Mrs. John Beacham
(and the result was scarcely to be wondered at) conveyed the impression
that she was proud; and this conviction hardened more than one heart
against the suffering girl. Proud! What was there, in very truth, in her birth
to excite sensations of arrogance and self-esteem in even the weakest of
human hearts? Could Honor have been able to answer this question as it
should have been answered, there would have been a better chance of safety
for this poor, ignorant, and ambitious girl. As it was, however, the senseless
idea that she was a lady, and the memories of those superior refinements in
habits, manners, and entourage which (in connection with her father and his
belongings) clung around her, were fatal to Honor’s happiness and peace of
mind. If she only, in those miserable days, when everyone—when even
John himself—seemed estranged from her, could have been blessed with
that chiefest of blessings, the blessing of hope—hope in the shape of a
tenderly longed-for maternity—all might, in spite of the past, have been
well with poor little Honor Beacham; but of that—the commonest of earthly
boons—there appeared to be no immediate prospect. By one of those
strange caprices of Nature, which we find it so hard to understand, this
woman, with the large tender heart, whose love for children, and indeed all
helpless things, was almost intense, seemed destined (as the months wore
on, and still there was no call for the pretty preparations which so delight
the heart of a young, expectant mother) to be childless.
That this seemed not unlikely to be the case, was a constant source of
aggravation to old Mrs. Beacham; and in moments of strong irritation
against Honor, she would even go so far as to endeavour to make John share
her feelings on the subject.
“It all comes of marrying a fine lady,” she said one day, as her son, with
the look of care that had grown habitual to his honest face, was taking what
he called a “snack,” previous to a hurried journey up to London on
business. “In my time, married women had children, and plenty of ’em, if
so be they kep their healths. There’d have been four of you, John, as you
know, if I hadn’t buried three, bless ’em! before they—”
“But, mother,” said John, ruthlessly cutting short these maternal
reminiscences, “Honor hasn’t what you call her health; and what’s more, no
one can say with justice that I married a fine lady. Why, she was ready
enough—too ready I might say—to work, a year agone. You just ask the
Clays about her. Never sparing herself, and singing about the house like a
bird. But that’s all over now,” he went on sadly. “She’s so changed, Honor
is, poor child!” and the rough, kind-hearted man gulped down a sigh as he
looked back upon his vanished hopes, and on the fading vision of the wife
who was so different, he told himself, from the languid girl who shared his
home.
“It’s my belief,” said Mrs. Beacham bluntly, “that she’s pining for the
Colonel.”
“For the Colonel? D—n him!” burst forth John in one of those sudden
passions that surprised as well as half-frightened those about him, “it’s too
bad, it’s a deal too bad, to have that man for ever coming up between me
and Honor! And yet I don’t believe it; upon my soul, I don’t believe it! It
isn’t likely that just the name of being her father—for it’s nothing more—
should make her think so much of him. Sometimes it comes into my head,”
he went on meditatingly, and cutting a huge slice off the brown loaf as he
spoke, “sometimes I think that it would be better to break the ice, and talk
to her about him. Of course, it’s only right to honour one’s parents; and I
should be the last man, I hope, to backbite and to speak ill of another; but I
think—God forgive me if I’m wrong, mother!—that it might be as well just
to open Honor’s eyes a little about that same father of hers. If she knew—”

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I:7-2 Medical care is defined as amounts paid for:

1. The diagnosis, cure, mitigation, treatment, or prevention of disease.

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I:7-6 a. Capital expenditures qualify for a current deduction if incurred as a medical

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• State, local, and foreign real property taxes

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I:7-25 No charitable contribution deduction is available. In 2018, a married taxpayer filing a

Separate payments generally are treated as separate contributions for purposes of

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Copyright © 2019 Pearson Education, Inc.

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I:7-35 Dan can deduct $1,514 as medical expenses.

I:7-36 Chad’s deductible medical expenses are $3,400.

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Increase in taxable income from reimbursement ($26,000 – 19,420) = $6,580 (included in

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a. Janet may deduct $1,003 in the current year.

I:7-41 Scott's interest expense for the year is classified as follows:

Jan. 1 - Mar. 31 100% investment interest

Dec. 1 - Dec. 31 100% passive interest

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AGI before investments $130,000

Qualified Residence Interest $7,800

Taxable Income $139,400

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I:7-46 Doug’s 2018 taxable income is $23,000, computed as follows:

Total itemized deductions ($41,625)

Taxable income $43,375

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Taxable income $ 113,000

*The net LTCG is not included in investment income.

I:7-50 a. The charitable contribution is $40,000, subject to a limitation of 30% of AGI.

The remaining 60% limit: ($120,000 - $30,000) $90,000

b. Melissa’s charitable contribution deduction for the year is $60,000, computed as

Melissa will have a $50,000 ($65,000 - $15,000) charitable contribution carryover. As

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Donation of main-frame $475,000 ($650,000 - [$350,000 x 0.50])

2018 2019 2020 2021

pp. I:7-25 and I:7-26.

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Capital Gains/Losses: Cabinets, Inc. ( 2,700)

State income taxes

Net taxable income $ 97,427

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Selling price $30,000 Contribution deduction $ 30,000

FMV on Adjusted Date Unrealized

Tax Form/Return Preparation Problems

I:7-59 (See Instructor’s Resource Manual)