LO.1 Ashley owns real property for which the annual property taxes are $7,300. He sells the property to Shelley on February 28, 2012, for $600,000. Shelley pays the real property taxes for the entire year on September 1.

a. How much of the property taxes can be deducted by Ashley and how much by Shelley?

b. What effect does the property tax apportionment have on Shelley’s adjusted basis in the property?

c. What effect does the apportionment have on Ashley’s amount realized from the sale?

d. How would the answers in

(b) and

(c) differ if the taxes were paid by Ashley?