Cost of Sale paid in following year

[Bill Tubbs]

Client sold some property in 2004 and recognized gain. Then got billed for something related to that property in May 2005. Had he received the bill and paid it in 2004, it would have been a basis adjustment, but since he paid it in 2005, how do I report this? Just do a Sch D entry in 2005 with sale=0 and basis = this bill amount?

Thanks,
Bill

[Black Bart]

Bill,

That's what I do. I've done it three or four times and it's gone through okay without any kickbacks from IRS. I don't know where else you'd put it.