✏️+🎥State and Local Deductions SALT Schedule A (OBBBA)🟢

Responses

1. 

   Denise Feng 22 August 2024

   In the video, it was mentioned that taxpayers will cross state lines to purchase items such as cars, televisions, and among other items to avoid the sales tax in their home state. Is the tax deductible when they pay this tax in their home state? I am confused on when the tax is actually deductible.

   1. 

      Maroun, CPA 27 August 2024

      Hello Denise,

      Yes, if you pay sales tax in your home state after purchasing an item in another state, that tax can be deducted on your federal tax return. You have the option to deduct either state income taxes or state sales taxes, but not both. So, if you choose to deduct sales taxes, the tax you paid in your home state on those purchases would be deductible.

      I hope this helps!

2. 

   Seth Ponce 15 April 2025

   During the video, on the example of Stephanie and Jason, its mentioned if Jason had paid for the property taxes for the year, then we would “add the difference” to figure his basis. Considering this, which figure would we add to his basis and how would this reflect Stephanies proceeds?

   1. 

      Maroun, CPA 16 May 2025

      Hello Seth,

      If Jason ends up paying the entire $5,000 tax bill, the portion that really belongs to Stephanie (the days she owned the house—Jan 1 to Mar 15) is $1,014. Because Jason paid a cost that was Stephanie’s responsibility, that $1,014 is treated as an extra amount he effectively “paid” for the property. Therefore, Jason adds $1,014 to his basis ($500,000 + 1,014 = $501,014).
      From Stephanie’s angle, Jason just gave her an additional $1,014 of consideration (it went straight to the tax office instead of to her bank account).

      Stephanie’s amount realized = $500,000 + $1,014 = $501,014.

      Jason’s remaining $3,986 is simply his own property-tax expense for the part of the year he owns the house; it doesn’t affect basis or proceeds.

      Thus, the “figure you add” is $1,014, and it increases both Jason’s basis and Stephanie’s proceeds by that exact amount.

      Hope that clears it up!