Settlement the 14 apportionment of real estate

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Unformatted text preview: 14 Apportionment of Real Estate Apportionment Taxes Between Buyer & Seller Taxes EXAMPLE On 11/1/08 taxpayer Z prepaid $2,000 real estate taxes for the city fiscal year ending October 31. On 1/16/09, Z sold his property to A (exclude date of sale). Z owned the property 76 days (30+31+15), and A owned it 289 days (365-76). 76 Z may deduct × $2,000 = $416.44 365 289 A may deduct × $2,000 = $1,583.56 365 15 The Tax Benefit Rule Refunds or reimbursements of items deducted in an Refunds earlier year are subject to the “tax benefit rule” earlier The “Tax Benefit Rule” Include the refund in income to the extent of the lesser of the y Prior year’s deduction or y Amount by which the prior year’s itemized deduction exceeded the standard deduction or y Amount of the refund 16 The Tax Benefit Rule Example In 2008, John paid the following state taxes: $300 in In estimated taxes for 2008, $450 in taxes due on his 2007 return (paid 4/15/08), and had $1,500 taxes withheld. Assume John had itemized deductions $2,500 greater than the standard deduction in...
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This note was uploaded on 06/06/2011 for the course ACE 346 taught by Professor Peter during the Spring '11 term at University of Illinois, Urbana Champaign.

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