Tax Apportionment for Alicia and Rick in Real Estate Sale

When Alicia sold her personal residence to Rick for $310,000 on June 30, they had to account for the real estate tax she paid for the calendar year, which amounted to $4,650. In the process of allocating this deduction for income tax purposes, Alicia allocated $930 to herself and $3,720 to Rick.

It is important to note that Rick's basis in the residence is affected by how the real estate tax deduction is apportioned between him and Alicia. In this case, Rick's share of the real estate tax is $3,720.

To determine Rick's basis in the residence, we need to subtract Rick's portion of the real estate tax from the purchase price. Therefore, Rick's basis in the residence can be calculated as follows:

Rick's Basis = Purchase Price - Rick's Share of Real Estate Tax

Rick's Basis = $310,000 - $3,720

Rick's Basis = $306,280

Therefore, Rick's basis in the residence is $306,280 after taking into consideration the apportionment of the real estate tax deduction between him and Alicia.