Tabitha sells real estate on March 2 of the current year for $311,200. The buyer
ID: 2559285 • Letter: T
Question
Tabitha sells real estate on March 2 of the current year for $311,200. The buyer, Ramona, pays the real estate taxes of $15,560 for the calendar year, which is the real estate property tax year.
Round any division to four decimal places and use in subsequent calculations. Round your final answers to the nearest dollar. Assume a 365-day year.
$ of the real estate taxes is apportioned to and is deductible by the seller, Tabitha, and $ of the taxes is deductible by Ramona. Ramona's basis is in the property is $ and the amount realized by Tabitha from the sale is
$.
Explanation / Answer
Sale Price = $311,200
Date of Sale 2 March
Real Estate Taxes Paid For the Year - $15,560
Taxes to be apportioned to Seller is as under
No of Days for which property Held * Total Taxes / No of days in a year
61*15,560/365 = $2,600
(No of days for which property held by seller = 31 days of January + 28 days of February +2 days of March =61 Days)
Taxes deductible by Buyer Ramona = $15,560 - $2,600 = $12,960
Buyer Ramona’s Basis in the Property = $311,200(Purchase price) + $2,600(Property taxes of seller incurred by buyer) = $313,800
Amount Realized by Tabitha from sale of property
Sale Price of Property =$311,200
Add: Property Taxes incurred by Buyer = $2,600
Total Sale Consideration Received =$313,800
Assumption: - It has been assumed that $2,600 i.e. the portion of property tax apportioned and deductible by seller Tabitha has been incurred by the buyer.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.