On February 1, Karin purchases real estate for $375,000. The annual property taxes of $5,040 are payable on December 31. Realizing that she will pay the property taxes for the entire year, Karin remits $374,580 to the seller at closing. Karin's adjusted basis for the real estate is:
A) $374,580.
B) $375,000.
C) $375,420.
D) $379,620.
E) None of the above.

Question

Quizplus · Accepted Answer

Karin's adjusted basis for the real estate is the purchase price of $375,000. The property tax adjustment does not affect the basis of the property.

On February 1, Karin Purchases Real Estate for $375,000