20. A taxpayer sells a piece of real property in year 1. The amount of year 1...
Question:
20. A taxpayer sells a piece of real property in year 1. The amount of year 1 real property taxes is estimated at the closing of the sale and the amounts are allocated between the buyer and the taxpayer. At the end of year 1, the buyer receives a property tax bill that is higher than the estimate. After paying the tax bill, the buyer contacts the taxpayer at the beginning of year 2 and asks the taxpayer to pay the taxpayer’s share of the shortfall. The taxpayer sends a check to the buyer. Should the taxpayer be concerned that she won’t get to deduct the extra tax payment because it was paid to the buyer and not to the taxing jurisdiction?
Explain.
Step by Step Answer:
Taxation Of Individuals And Business Entities 2020
ISBN: 9781259969614
11th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver