Chapter 14 Flashcards
What is Capital Gain?
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.
What is Depreciation?
The ability to deduct expenses on improvements made to income producing property.
What is Straight Line Depreciation?
A method of depreciation under which improvements are depreciated at a constant rate throughout the estimated useful life of the improvement.
What is a Section 1031 Exchange?
A section of the U.S. Internal Revenue Service Code that allows investors to defer capital gains taxes on any exchange of like-kind properties for business or investment purposes.
What is a Boot?
Cash received in a tax-deferred exchange.
Real estate agents should never provide tax advice to their clients…?
A. T (True)
B. F (False)
A. T (True)
The first property tax bill is due on…? A. November 10th B December 10th C. February 10th D. April 10th
B December 10th
This Proposition benefits citizens 55 and older…? A. Proposition 11 B. Proposition 13 C. Proposition 60 D. Proposition 137
C. Proposition 60
Proposition 90 is only available in participating counties…?
A. T (True)
B. F (False)
A. True
Owner occupied residential properties are entitled to a ………... homeowner’s tax exemption? A. 2000 B. 5000 C. 7000 D. 10000
C. 7000
The profit realized from the sale of real estate is known as a…? A. Capital gain B. Capital loss C. Credit D. Debit
A. Capital gain
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…? A. Appreciation B. Depreciation C. Credit D. Debit
B. Depreciation
A method of depreciation under which improvements are depreciated at a constant rate throughout the estimated useful life of the improvement is known as…? A. Straight line depreciation B. Term depreciation C. Adjustable depreciation D. Consistent depreciation
A. Straight line depreciation
A section of the U.S. Internal Revenue Service Code that allows investors to defer capital gains taxes on any exchange of like-kind properties for business or investment purposes is known as…? A. Section 12-A Exchange B. Section 11 Exchange C. Section 1031 Exchange D. Section 90 Exchange
C. Section 1031 Exchange
Cash received in a tax-deferred exchange is known as…? A. Capital gain B. Asset C. Conversion D. Boot
D. Boot
Residential property is considered to have a useful life of…? A. 27.5 years B. 29 years C. 35 years D. 39 years
A. 27.5 years
Non-residential property is considered to have a useful life of…? A. 27.5 years B. 29 years C. 35 years D. 39 years
D. 39 years
The second property tax bill is due on…? A. November 10th B. December 10th C. February 10th D. April 10th
D. April 10th
For depreciation purposes, the value of land can be determined using which of the following methods…? A. Assessed value method B. Appraisal method C. Contract method D. All of the above
D. All of the above
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…? A. Depreciated basis B. Net basis C. Adjusted basis D. Gross basis
C. Adjusted basis
Boot is considered taxable income…?
A. T (True)
B. F (False)
A. T (True)
A personal residence is also known as a…? A. Primary residence B. Secondary residence C. Vacation residence D. Investment property
A. Primary residence
A time-share is an example of a secondary residence…?
A. T (True)
B. F (False)
A. T (True)
Single owners are exempt from paying capital gains taxes on the sale of their primary residence up to…? A. 250000 B. 500000 C. 600000 D. 1000000
A. 250000
