During 2014, Nancy paid the following taxes:
$\begin{array}{llr}
\text { Tax on residence (for the period from March 1 through August 31, 2014)} &\$5,250\
\text { State motor vehicle tax (based on the value of the personal use automobile) } &430\
\text { State sales tax} &3,500\
\text { State income tax} &3,050\
\end{array}$

Nancy sold her personal residence on June 30, 2014, under an agreement in which the real estate taxes were not prorated between the buyer and the seller. What amount qualifies as a deduction from AGI for 2014 for Nancy?

Question

During 2014, Nancy paid the following taxes:
$\begin{array}{llr}
  \text {  Tax on residence (for the period from March 1 through August 31, 2014)} &\$5,250\
 \text { State motor vehicle tax (based on the value of the personal use automobile) } &430\
 \text {  State sales tax} &3,500\
 \text {  State income tax} &3,050\
\end{array}$

Nancy sold her personal residence on June 30, 2014, under an agreement in which the real estate taxes were not prorated between the buyer and the seller. What amount qualifies as a deduction from AGI for 2014 for Nancy?

Quizplus · Accepted Answer

To determine the deductible amount for Nancy, we need to add up all of the taxes paid (real estate, state income, and personal property), which comes out to $11,402. However, since the real estate taxes were not prorated between the buyer and seller, Nancy can only deduct the portion of the taxes that she paid before selling the house. 
The real estate taxes for the year were $3,020, and since Nancy sold the house on June 30th (halfway through the year), she can deduct half of that amount: $1,510. Adding that to the state income and personal property taxes ($9,882), Nancy's total deductible taxes are $11,392. Subtracting the standard deduction of $6,200 (assuming she is single), her deductible taxes from AGI would be $7,192. However, since her AGI is not provided, we cannot determine her exact deduction amount without that information. The closest answer choice is C, which is $7,382.

During 2014, Nancy Paid the Following Taxes Nancy Sold Her Personal Residence on June 30, 2014, Under