Exercise $13-26($Algorithmic$)($LO$.1)$

Sally owns real property for which the annual property taxes are $$12,880.$ She sells the property to Kate on April $2,2023,$ for $$644,000.$ Kate

pays the real property taxes for the entire year on October $1,2023.$

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 $

and Kate can deduct $

of the property taxes.

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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 $

she paid that is apportioned to Sally.

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c$.$ What effect does the apportionment have on Sally's amount realized from the sale?

Sally paid none of the real property taxes and

$$ permitted to deduct the apportioned share of $

$.$ Her amount

realized is

$$ by this amount.

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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 $

$.$ Kate's adjusted basis would be $