Client lives on the mainland. Client has had this rental in Maui since 1973 and now has sold this rental. I have the Seller's Final Settlement Statement and on their is listed the HARPTA - Withholding to Hawaii Department of Taxation. This is the 5% of the sales price.

My question is....

How is this handled when we file the Nonresident Hawaii return?

And is this 5% HARPTA tax added to the basis on the Federal return?

Any help would be appreciated. Also, When I bought this tax business this was a long time client and the basis for the house is only $37,000. I was told back then that the people did not own the land, they leased it from Hawaii for 99 yrs. NOW talking with the client, they say they do own the land. Iam confused and what to do??