Question

Sally owns real property for which the annual property taxes are$13,030. She sells the property to Kate on April 2, 2017, for$651,500. Kate pays the real property taxes for the entire year onOctober 1, 2017. Assume a 365-day year. Round any division to fourdecimal places. Round your final answers to the nearest dollar.

a. How much of the property taxes can be deducted by Sally andhow much by Kate? Sally can deduct $ ------------- and Kate candeduct $ -------------- of the property taxes.

b What effect does the property tax apportionment have on Kate'sadjusted basis in the property? Kate's adjusted basis for theproperty is increased by the $ --------------- she paid that isapportioned to Sally.

c.What effect does the apportionment have on Sally's amountrealized from the sale? Sally paid none of the real property taxesand is permitted to deduct the apportioned share of$--------------- . Her amount realized is increased by thisamount.

d. How would the answers in parts (b) and (c) differ if thetaxes were paid by Sally? If the taxes were paid by Sally, Sally'samount realized would be $---------- . Kate's adjusted basis wouldbe $ .------------