Pedro,a cash basis taxpayer,would like to sell ordinary income property that will result in an increase in his taxable income of $20,000.Pedro also owes $12,000 of property taxes that are deductible.He is flexible and can properly report either or both of the items on his 2015 or 2016 tax return.Pedro expects his marginal tax rate to be 25% for 2016 and 28% for 2017.If the applicable interest rate is 9% (.917 present value factor),when should Pedro report each item? Show your calculations and explain.

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The Answer of Pedro,a cash basis taxpayer,would like to sell ordinary income property that will result in an increase in his taxable income of $20,000.Pedro also owes $12,000 of property taxes that are deductible.He is flexible and can properly report either or both of the items on his 2015 or 2016 tax return.Pedro expects his marginal tax rate to be 25% for 2016 and 28% for 2017.If the applicable interest rate is 9% (.917 present value factor),when should Pedro report each item? Show your calculations and explain.

Pedro,a Cash Basis Taxpayer,would Like to Sell Ordinary Income Property