Nancy paid the following taxes during the year:
Nancy sold her personal residence on June 30 of this year 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 Nancy?
A) $9,180
B) $9,130
C) $7,382
D) $5,382
E) None of the above

Question

Nancy paid the following taxes during the year: 
Nancy sold her personal residence on June 30 of this year 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 Nancy?
A) $9,180 
B) $9,130 
C) $7,382 
D) $5,382 
E) None of the above

Quizplus · Accepted Answer

Since the real estate taxes were not prorated between the buyer and the seller, Nancy is only able to deduct the portion of the taxes she paid for the portion of the year during which she owned the property. As she sold the property on June 30, she owned the property for 181 days. To calculate the deduction, we need to divide the total taxes paid during the year by the total number of days in the year and multiply by the number of days Nancy owned the property:

($11,310 + $870) ÷ 365 days/year = $32.66/day

$32.66/day x 181 days = $5,923.46

Therefore, $5,923.46 is the amount that qualifies as a deduction for Nancy. However, since this is a question asking for a deduction from AGI, we also need to consider whether Nancy itemizes her deductions or takes the standard deduction. If she takes the standard deduction, then she would not be able to deduct the real estate taxes.

Nancy Paid the Following Taxes During the Year