Rocco owns a piece of land as investment property. He acquired the land in 1994 for $18,000.

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Rocco owns a piece of land as investment property. He acquired the land in 1994 for $18,000. On June 1, 2017, he sells the land for $80,000. As part of the sale, the buyer agrees to pay all of the property taxes ($3,600) for the year.

a. What is Rocco’s gain on the sale of the land?

b. What amount of the property taxes can Rocco deduct? What amount can the buyer deduct?

c. What is the buyer’s basis in the land?

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Concepts In Federal Taxation 2018

ISBN: 9781337386074

25th Edition

Authors: Kevin E. Murphy, Mark Higgins

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Question Posted: Nov 14, 2018 09:42 AM

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Rocco owns a piece of land as investment property. He acquired the land in 1994 for $18,000.

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a Because the buyer paid the real estate tax the sale price is increased by the amount of Roccos sha...View the full answer

Concepts In Federal Taxation 2018

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