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

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C)Both buyer and seller deduct their apportioned share of the property taxes for the year (Samuel is allocated taxes for January 1 -August 31,and Edward is allocated taxes for September 1 - December 31).Because Samuel paid Edward's share of the taxes,and this was not reflected in the sales agreement,Samuel will reduce his gain by $2,430.

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