Question

A Delaware licensee's seller clients will complete tax form 5403 as part of the transaction. Why?

A. To receive a tax credit for any loss on the transaction if it qualifies as an investment.
B. To receive a tax rebate for the amount of the real estate agent's commission.
C. To record the amount of transfer tax a Delaware seller will pay if the buyer is an out-of-state entity.
D. To record the estimated amount owed for capital gains on the transaction if the seller is an out-of-state entity.

Answer 1

The correct option is C. To record the amount of transfer tax a Delaware seller will pay if the buyer is an out-of-state entity.

Step-by-step explanation:

A Delaware licensee's seller clients complete tax form 5403 primarily to record the transfer tax that a Delaware seller must pay if the buyer is an out-of-state entity. This form is not about receiving tax credits for losses nor about rebates for real estate commissions; instead, it's related to the taxation process when a real estate transaction occurs.

The requirement to complete this form demonstrates the seller's financial responsibility in the context of the transfer and is a component of the state's fiscal policy relating to real estate transactions.