On September 1,of the Current Year,Samuel,a Cash-Basis Taxpayer,sells His Cottage

question 53

Multiple Choice

On September 1,of the current year,Samuel,a cash-basis taxpayer,sells his cottage to Edward,also a cash-basis taxpayer for $100,000.Samuel's basis in the cottage is $65,000.The real property tax year is the calendar year.Real estate taxes on the property for the year are $3,650 and are payable on April 1 of the following year.The sales agreement does not provide for apportionment of real estate taxes between the buyer and seller.Assume Samuel pays all of the real estate taxes prior to the sale.The effects of this sales structure will be

• A) \[\begin{array} {| l | l | l | }
• \hline \begin{array} { l }
• \text { Saxes allocated to } \\
• \text { Samuel }
• \end{array} & \begin{array} { l }
• \text { Taxes allocated to } \\
• \text { Edward }
• \end{array} & \text { Effect on Samuel's Gain } \\
• \hline \$ 1,220 & \$ 2,430 & \text { increase gain by } \$ 1,220 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { |l | l | l | }
• \hline \begin{array} { l }
• \text { Taxes allocated to } \\
• \text { Samuel }
• \end{array} & \begin{array} { l }
• \text { Taxes allocated to } \\
• \text { Edward }
• \end{array} & \text { Effect on Samuel's Gain } \\
• \hline \$ 2,430 & \$ 1,220 & \text { increase gain by } \$ 2,430 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { |l | l | l | }
• \hline \begin{array} { l }
• \text { Taxes allocated to } \\
• \text { Samuel }
• \end{array} & \begin{array} { l }
• \text { Taxes allocated to } \\
• \text { Edward }
• \end{array} & \text { Effect on Samuel's Gain }\\
• \hline \$ 2,430 & \$ 1,220 &\text { decrease gain by } \$ 1,220 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { |l | l | l | }
• \hline \begin{array} { l }
• \text { Taxes allocated to } \\
• \text { Samuel }
• \end{array} & \begin{array} { l }
• \text { Taxes allocated to } \\
• \text { Edward }
• \end{array} & \text { Effect on Samuel's Gain }\\
• \hline \$ 1,220 & \$ 2,430 &\text { decrease gain by } \$ 1,220 \\
• \hline
• \end{array}\]

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Definitions:

Glass Ceiling

An invisible barrier that prevents certain groups of people, particularly women and minorities, from advancing beyond a certain level in a hierarchy.

Qualified Women

Women who possess the necessary skills, education, and experience required for specific jobs or positions.

Minorities

Groups of individuals differentiated from the majority in a given society or community based on characteristics such as race, religion, language, or political beliefs.

Glass Ceiling

An invisible barrier that prevents minorities and women from rising to the highest ranks of power or success within a corporation or organization, despite qualifications or achievements.