Question

Exercise 14-16 (Algorithmic) (LO. 1) Sally owns real property for which the annual property taxes are $18,530. She sells the property to Kate on April 2, 2019, for $926,500. Kate pays the real property taxes for the entire year on October 1, 2019. 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 $ 4,671 x and Kate can deduct $ 13,859 x of the property taxes. Feedback Check My Work 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 by the $ 4,671 x she paid that is apportioned to Sally. Feedback Check My Work c. What effect does the apportionment have on Sally's amount realized from the sale? permitted to deduct the apportioned share of $ 4,671 x. Her amount Sally paid none of the real property taxes and is realized is increased by this amount. Feedback Check My Work

Answer 1

Solutions Given datar Annual paupenty taxe SS 30 926 s00 Real poperty taxe pupeshy tares Can be deducted by allyand kate Cost af the poopexty dones per day 1853 0 365 -So.16 Tran to Apria 209 š qa dags. Sally So.76 x92 4670 Can deduct this amant 1ate = L8S30-4610 - $13860 can deduct thus amant

amount mid by sally and Kate adjust the -tax Kate did not paythat cnount and the popersty value tnceased b 4610(saly asdid not pay Cost 926 5004670 931110 adjusted paupesty value. selling price 931170 as Sally didnot pa ppettare s and she deducted d). Sally's amount realized wold her seling taxes puice minus real popesty 926 S00-13860 =912640 Kate's adjested papeaty lue wsd her cost minus the eol ppet 26500-3860 q12640