I sold my rental property and notice property tax is included as one of the expenses of the settlement costs. I already deducted property taxes in my filing of schedule E. What's to prevent someone from accidentally claiming this expense on both Form 4797 and Schedule E ? How does the IRS check this?
There's any 89 year old gentleman in the IRS Center in Fresno, CA who refuses to retire. Every 1040 with a 4797 and a Schedule E gets forwarded to him for review. I just heard that he finished auditing
1994 and is now starting on 1995.*LOL* Is that the definition of someone living in the past?
How could this possibly work? I assume that the property tax that's part of the closing costs gets added to the cost basis. So someone looking at form 4797 only sees numbers -- cost basis, selling price, accumulated depreciation. They don't know what went into the cost basis , which have many parts: price actually paid for home, certain closing costs (such as title insurance, back taxes, etc), improvements, subtract tax credits received, and maybe others.
Never-mind, ignore my question. I forgot property tax is paid for the prior year. I thought it was paid for the following year.
You assume incorrectly.
If this is sarcasm or humor I missed the smiley. If not, to what purpose would he audit a 1994 return?
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