Ch 14 CA RE Practice

Question 1

Which of the following allows property to be transferred between family members without being taxed on the first million dollars of market value…?
AProposition 11
BProposition 58
CProposition 60
DProposition 90

Answer 1

B Proposition 58

Question 2

Proposition 13 was enacted in…?
A1964
B1968
C1978
D1991

Answer 2

1978

Question 3

Landscaping is an example of a capital improvement…?
AT (True)
BF (False)

Answer 3

true

Question 4

In order to qualify for the primary residence capital gains tax exemption, the owner must have lived in the house for ………. out of the previous 5 years?
A1
B2
C3
D4

Answer 4

2

Question 5

A time-share is an example of a secondary residence…?
AT (True)
BF (False)

Answer 5

true

Question 6

Boot is considered taxable income…?
AT (True)
BF (False)

Answer 6

(True)

Question 7

The value of property used to determine the amount of gain or loss realized by an owner upon sale of the property is known as the…?
ADepreciated basis
BNet basis
CAdjusted basis
DGross basis

Answer 7

Adjusted basis

Question 8

For depreciation purposes, the value of land can be determined using which of the following methods…?
AAssessed value method
BAppraisal method
CContract method
DAll of the above

Answer 8

All of the above

Question 9

What refers to the original cost or other basis of property, reduced by depreciation deductions and increased by capital expenditures?

Answer 9

Adjusted Basis or Adjusted Tax Basis

Question 10

Non-residential property is considered to have a useful life of…?
A27.5 years
B29 years
C35 years
D39 years

Answer 10

39 years

Question 11

Residential property is considered to have a useful life of…?
A27.5 years
B29 years
C35 years
D39 years

Answer 11

A 27.5 years

Question 12

Cash received in a tax-deferred exchange is known as…?
ACapital gain
BAsset
CConversion
DBoot

Answer 12

Boot

Question 13

The amount of decrease in value of an asset that is allowed in computing the value of the property for tax purposes is known as…?
AAppreciation
BDepreciation
CCredit
DDebit

Answer 13

B Depreciation

Question 14

Owner occupied residential properties are entitled to a ………... homeowner’s tax exemption?
A2000
B5000
C7000
D10000

Answer 14

C 7000

Question 15

Proposition 90 is only available in participating counties…?
AT (True)
BF (False)

Answer 15

(True)

Question 16

This Proposition benefits citizens 55 and older…?
AProposition 11
BProposition 13
CProposition 60
DProposition 137

Answer 16

C Proposition 60

Question 17

The agent is considered an __a__ of the broker. The broker must carry __b__ in case something happens. The IRS see the agent as an __c__. When you have a commission check, set up a tax saving account to put __d__% of the commission check into the account?

Answer 17

a) employee
b) worker’s compensation
c) independent contractor
d) 20%

Question 18

What is the loss of value of property brought about by age, physical deterioration or functional or economic obsolescence?

Answer 18

Depreciation

Question 19

Economic depreciation is the same as tax deprecations?

Answer 19

False

Question 20

Economic Depreciation results from the following 3 things?

Answer 20

Physical Deterioration
Functional Obsolescence
Economic Obsolescence

Question 21

what is the loss in value caused by unrepaired damage or inadequate maintenance?

Answer 21

physical deterioration

Question 22

The loss in value due to resulting from functional

problems caused by age or poor design?

Answer 22

functional obsolescence

Question 23

A loss in value due to factors away from the subject property but adversely affecting the value of the subject property

Answer 23

ECONOMIC OBSOLESCENCE

Question 24

A term used for accounting purposes to identify the amount of the decrease in value of a property that is allowed for tax purposes

Answer 24

tax depreciation

Question 25

What prop allows spouses or domestic partner, including kids, grandkids, step kids transfer to one another up to $1MM market value without reassessment property tax?

Answer 25

prop 58

Question 26

What prop allows 55+ to downsize and a taxpayer can transfer current base year tax to a replacement?
Both property must be in the same county, 55+, original house qualifies for the transfer, new home equal or lower

Answer 26

60 prop

Question 27

What prop allows other home sellers/buyers to go to other counties from participating counties such as Alameda, LA, OC, Santa Clara, San Diego, Ventura?

Answer 27

prop 90

Question 28

What is at resale of a capital item, the amount by which the net sale proceeds exceed the adjusted cost basis (book value). Used for income tax computations. Gains are called short or long term based upon length of holding period after acquisition. Usually taxed at lower rates than ordinary income.

Answer 28

capital gain

Question 29

What is The ability to deduct expenses on improvements made to income producing property

Answer 29

Depreciation