Exercise 13-25 (Algorithmic) (LO. 1) Sally owns real property for which the annual property taxes are $16,030. She sells the property to Kate on April 2, 2021, for $801,500. Kate pays the real property taxes for the entire year on October 1, 2021. Assume a 365-day year. Round any division to four decimal places. Round your final answers to the nearest dollar. a. How much of the property taxes can be deducted by Sally and how much by Kate? Sally can deduct s 3,997 X and Kate can deduct Feedback b. What effect does the property tax apportionment have on Kate's adjusted basis in the property? Kate's adjusted basis for the property is increased Feedback 12,033 X of the property taxes. Feedback ✓by the s c. What effect does the apportionment have on Sally's amount realized from the sale? Sally paid none of the real property taxes and is ✔ permitted to deduct the apportioned share of s realized is increased ✓by this amount. she paid that is apportioned to Sally. d. How would the answers in parts (b) and (c) differ if Sally paid the taxes? If Sally paid the taxes, Sally's amount realized would be s Kate's adjusted basis would be s Her amount

Exercise 13-25 (Algorithmic) (LO. 1) Sally owns real property for which the annual property taxes are $16,030. She sells the property to Kate on April 2, 2021, for $801,500. Kate pays the real property taxes for the entire year on October 1, 2021. Assume a 365-day year. Round any division to four decimal places. Round your final answers to the nearest dollar. a. How much of the property taxes can be deducted by Sally and how much by Kate? Sally can deduct s 3,997 X and Kate can deduct Feedback b. What effect does the property tax apportionment have on Kate's adjusted basis in the property? Kate's adjusted basis for the property is increased Feedback 12,033 X of the property taxes. Feedback ✓by the s c. What effect does the apportionment have on Sally's amount realized from the sale? Sally paid none of the real property taxes and is ✔ permitted to deduct the apportioned share of s realized is increased ✓by this amount. she paid that is apportioned to Sally. d. How would the answers in parts (b) and (c) differ if Sally paid the taxes? If Sally paid the taxes, Sally's amount realized would be s Kate's adjusted basis would be s Her amount

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter10: Deductions And Losses: Certain Itemized Deductions

Section: Chapter Questions

Problem 16CE

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