Sally owns real property for which the annual property taxes are $15,480. She sells the property to Kate on April 2, 2019, for $774,000. Kate pays the real property taxes for the entire year on October 1, 2019.

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?

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 (insert amount here) she paid that is apportioned to Sally.

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

Sally paid none of the real property taxes and (is) permitted to deduct the apportioned share of $(insert amount here). Her amount realized is

(increased)by this amount.

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 $(insert amount here). Kate's adjusted basis would be $(insert amount here).