C1U11 Taxation of Real Estate

Question 1

Property taxes are ad valorem taxes, which means that they are:

a. charged in relation to the value of the property taxed
b. charged once at the time of a property transfer
c. use taxes
d. sales taxes

Answer 1

a. charged in relation to the value of the property taxed

Question 2

The Smiths’ sale of their residence is:

a. a release of equity
b. a reassessment event
c. a local assessment
d. a notice of change of ownership

Answer 2

b. a reassessment event

Question 3

The property tax year runs from:

a. January 1 through December 31
b. April 10 through December 10
c. July 1 through June 30
d. December 10 through December 9

Answer 3

c. July 1 through June 30

Question 4

A lien in the amount of tax due is placed on all assessed real property on:

a. April 15
b. December 10
c. January 1
d. July 1

Answer 4

c. January 1

Question 5

When all past-due property taxes are paid, the county tax collector issues:

a. a receipt for unpaid taxes
b. a letter of credit
c. a certificate of redemption
d. a release of equity

Answer 5

c. a certificate of redemption

Question 6

The buyer of property at an auction by the tax collector receives:

a. a certificate of sale
b. a release of equity
c. a quitclaim deed
d. a tax deed

Answer 6

d. a tax deed

Question 7

A benefit assessment also may be called:

a. a tax credit
b. a special assessment
c. a community assessment
d. a documentary transfer tax

Answer 7

b. a special assessment

Question 8

The use of property assessments was expanded by:

a. the Senior Citizens’ Tax Act
b. the Mello-Roos Community Facilities Act
c. the State Board of Equalization
d. the Housing Economic Recovery Act

Answer 8

b. the Mello-Roos Community Facilities Act

Question 9

A deed may show on its face that which of the following taxes was paid?

a. Release of equity
b. Gift tax
c. Deed tax
d. Documentary transfer tax

Answer 9

d. Documentary transfer tax

Question 10

Sales and use taxes are the responsibility of:

a. the Internal Revenue Service
b. the Franchise Tax Board
c. the State Board of Equalization
d. the Department of Housing and Community Development

Answer 10

c. the State Board of Equalization

Question 11

In California, there is a state sales tax on:

a. food
b. buildings to be removed from land by the buyer as part of transaction
c. fixtures sold as part of a business
d. inventory sold as part of a business

Answer 11

c. fixtures sold as part of a business

Question 12

The State of California collects:

a. federal income tax
b. gift tax
c. state income tax
d. inheritance tax

Answer 12

c. state income tax

Question 13

A gift is made:

a. by a donor to a beneficiary
b. when an individual voluntarily transfers property for anything less than its fair market value
c. any time property is transferred between parent and child
d. when like-kind property is exchanged

Answer 13

b. when an individual voluntarily transfers property for anything less than its fair market value

Question 14

Gift tax is payable when the total value of gifts to an individual in one year is more than:

a. $8,000
b. $14,000
c. $15,000
d. $28,000

Answer 14

b. $14,000

Question 15

Sam gave his friend Joe $15,000 for his tuition at Old Ivy, sending the money directly to the school. Must a gift tax return by filed?

a. Yes, because this is a gift
b. No, because this gift has an exemption
c. Yes, so that the exemption can be claimed
d. No, because this is not considered a gift

Answer 15

d. No, because this is not considered a gift

Question 16

Mario died in 2014, leaving only his separate property estate value at $500,000. Must an estate tax return be filed?

a. Yes
b. No
c. Only if Mario was a widower
d. Only if the estate is probated

Answer 16

a. Yes

Question 17

The rate of federal income tax paid depends on the taxpayer’s:

a. tax bracket
b. state income tax paid
c. location
d. source of income

Answer 17

a. tax bracket

Question 18

Property that can be depreciated for income tax purposes is called:

a. recovery property
b. tax basis
c. boot
d. like-kind property

Answer 18

a. recovery property

Question 19

With respect to investment property, an investor can make use of:

a. the residence replacement rule
b. exclusion from taxation
c. property tax postponement
d. mortgage interest deductions from property income

Answer 19

d. mortgage interest deductions from property income

Question 20

For 2016, all of the following were deductions from a homeowner’s gross income for purposes of federal income taxation EXCEPT:

a. mortgage interest on a loan of $750,000
b. local property tax
c. mortgage interest on combined first- and second-home loans totaling $935,000
d. depreciation based on a 39-year schedule

Answer 20

d. depreciation based on a 39-year schedule