A-6 Real Estate Investment and Taxation Flashcards
Long term capital gain treatment applies if the property has been held more than: A. 6 months B. 12 months C. 18 months D. 24 months
B - 12 months
To qualify for installment gain reporting, the seller must: A. carry some or all of the financing B. carry all of the financing C. discount the note D. take cash or demand notes only
A - carry some or all of the financing
To qualify for deferring gain on real property exchange, property must be “like kind.” Which of the following trades could not qualify?
A. an apartment building for a ranch
B. vacant land for an 8 plex
C. an office building for a shopping center
D. GM common stock for AT&T common stock
D - GM common stock for AT&T common stock
If an owner sells one rental property and the sale results in a loss, the maximum reportable short term loss not offset by other gains will be: A. ordinary loss B. capital loss C. $3,000 per year D. .5 the true loss
C - $3,000 per year
All of the following statements are true regarding depreciation EXCEPT:
A. real estate tax depreciation must relate to an economic life
B. when real estate is fully depreciated the major tax benefit is lost
C. all income property must be depreciated for tax purposes
D. a building can only be depreciated once
D - a building can only be depreciated once
What is not an advantage of a corporation?
A. limited liability
B. officers appointed by a board of directors
C. double taxation
D. living in perpetuity
C - double taxation.
In a general partnership:
A. Only the limited partners are responsible
B. Only the general partners are responsible
C. the general partner can only lose the amount invested
D. both 1&2 are correct
B - only the general partners are responsible
To negotiate a “tax deferred exchange” without the payment of any tax at the time of the exchange, an apartment house owner could trade for:
A. an apartment and $2,000 boot
B. an apartment house and assume a smaller loan than the loan on his property
C. a residence of equal value and no boot
D. an apartment house, and assume a loan equal to or greater than the loan on his property, and no boot
D - an apartment house, and assume a loan equal to or greater than the loan on his property, and no boot
You purchase an office building for $500,000. The land is valued at 25%. How much depreciation is subject to recapture if you sell the office building in 5 years? A. $9,615.38 B. $13,636.36 C. $48,076.92 D. $68,181.82
C - $48,076.92
Long term capital gains are taxed at: A. maximum of 15% B. maximum of 20% C. maximum of 28% D. ordinary income tax rates
B - maximum 20%
At least 100 people are required by law to participate in order to form a: A. syndicate B. Corporation C. Limited partnership D. Real estate investment fund
D - real estate investment fund
What is the advantage of a REIT? A. avoidance of corporate taxes B. continuity of operation C. diversification of investment D. all of these
D - all of these
How many times in 10 years could a single person sell their personal home and receive, tax-free, a gain of $250,000? A. once B. twice C. 5 times D. Not available to single taxpayers
C - 5 times
A man may take depreciation for income tax purposes on all of the following EXCEPT: A. a home rented to friends B. an apartment building C. a vacant duplex D. Land held for future profit
D - land held for future profit
if a partnership does not pay its debts, the creditors may collect from the personal assets of:
A. limited partners
B. General partners
C. Stockholders of an incorporated company
D. None of the above
B - general partners
Short term capital gains are taxed at: A. maximum of 15% B. maximum of 20% C. maximum of 28% D. ordinary income tax rates
D - ordinary income tax rates
All of the following relate to a limited liability companies EXCEPT: A. members B. limited liability C. article of incorporation D. articles of organization
C - article of incorporation
Which of the following relate to residential investment depreciation? A. land value of 27.5% B. economic life of 27.5 years C. economic life of 39 years D. recapture the value of the land
B - economic life of 27.5 years
Which of the following relate to "joint and several" liability: A. limited partnership B. general partnership C. corporation D. REIT
B - general partnership
All of the following relate to commercial real estate depreciation EXCEPT: A. economic life B. straight line C. 39 years D. land value
D - land value
The maximum amount of gain that would be tax-free to a married homeowner who sells their personal residence would be: A. $125,000 B. $250,000 C. $500,000 D. unlimited
C - $500,000
Evans wanted to trade his $160,000 property for Cains $155,000 property. In order to consummate the exchange; Can paid $5,000 cash to cover the difference. Taxes would be assessed on:
A. neither party, because it is a tax deferred exchange
B. Evans would pay on the $5,000 cash received
C. Cain would pay on the $5,000 cash paid
D. Both will pay on the $5,000 cash paid
B - Evans would pay on the $5,000 cash paid
To receive a tax-free sale of your principal residence, the homeowner must live in the property as their principal residence for at least: A. 6 months B. 12 months C. 18 months D. 2 years
D - 2 years
