According to the provided scenario, how does the Closing Statement reflect the Seller's tax liability?

In a real estate transaction, the Closing Statement provides a detailed account of all financial aspects, including debits and credits for both the seller and buyer. The correct answer indicates that the seller is debited $1,275, which means this amount is being subtracted from the seller’s proceeds at closing.

This debit reflects the seller's tax liability because it shows that the seller has a financial obligation that must be settled during the closing process. The credit to the buyer for the same amount signifies that the buyer is essentially covering this liability, perhaps as part of an agreement in which the seller's responsibility for certain costs is transferred to the buyer.

This interaction illustrates how taxes can be factored into the transaction costs at closing, affecting the final amount the seller receives and the financial obligations that the parties share. In this case, the amount directly ties to the seller's tax liability, ensuring that any owed tax is accounted for in the final settlement of the sale.