Florian Owns a Life Estate in Blackacre and Walter Owns

question 5

Multiple Choice

Florian owns a life estate in Blackacre and Walter owns a remainder interest.

• A)Walter must pay the annual taxes and Florian the interest on any debts on Blackacre.
• B)if the county charges Blackacre a curb and sidewalk assessment, only Walter would have to pay it.
• C)Florian, since he presently occupies Blackacre, must by law pay the insurance on any buildings.
• D)Florian would have to pay for ordinary repairs, such as painting or window replacements and Walter would have to pay for extraordinary repairs such as replacing a furnace.

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Definitions:

Gain Recognize

Gain Recognize refers to the process of reporting the profit earned from the sale of an asset for tax purposes.

Installment Sale

A sale of property where the buyer pays the price in periodic installments and the seller recognizes income for tax purposes with each payment.

Form 6252

An IRS form used to report income from the sale of property under an installment sale agreement.

Schedule D

A form used with a tax return to report capital gains and losses incurred during the reporting period.