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Carol sold her personal residence to Mike for $300,000. Before the sale, Carol paid the real...

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Finance

  1. Carol sold her personal residence to Mike for $300,000. Beforethe sale, Carol paid the real estate taxes of $8,000 for thecalendar year. For income tax purposes, the deduction isapportioned as follows: $5,000 to Carol and $3,000 toMike.

a. What is Mike’s basis in theresidence?

b. What is Carol’s amount realized from the sale of theresidence?

c. What amount of real estate taxes can Mike deduct?

d. What amount of real estate taxescan Carol deduct?

Answer & Explanation Solved by verified expert
3.8 Ratings (553 Votes)
a First of all the starting point for determining Mikes basis in the residence is the amount he has paid while purchasing This is called its cost basis So Mikes basis is 300000 Here Carol has already paid the real estate taxes for the    See Answer
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