Chapter 17. Flashcards
Adjusted Basis
The original cost of a property minus depreciation ( გაუფასურება) and sales of portions thereof plus allowable additions such as capital improvements and certain carrying costs and assessments. A bookkeeping rather than appraisal term.
Appreciation
Monetary ( ფულადი) gain resulting from the increase in the market value of an investment, excluding additions of capital. For example, a house which is sold five years after it was purchased for 50% more than the purchase price.
Basis
A major accounting method that recognizes revenues and expenses at the time physical cash is actually received or paid out.
Boot
Cash received in a tax-deferred ( გადავადება) exchange.
Capital Gain -
A profit that results from the sale of a property where the amount received from the sale exceed the purchase price.
Capital Loss
The difference between a lower selling price and a higher purchase price, resulting in a financial loss to the seller
Cash Flow
The net result when income from an investment property is subtracted from the expenses. The result is used to determine the rate of return on an investor’s money.
Passive Activity Income
Earnings an individual derives from a rental property in which he or she is not actively involved.
Active Income
Income for which services have been performed.
Tax Depreciation
An income deduction that allows a taxpayer to recover the cost or other basis of certain property. It is an annual allowance for the wear and tear, deterioration, or obsolescence of the property.
Recaptured Depreciation
When real property is sold at a gain and accelerated depreciation has been claimed, the owner may be required to pay a tax at ordinary (non-accelerated) rates to the extent of the excess accelerate depreciation.
Straight-line Depreciation
A method of calculating the depreciation of an asset which assumes the asset will lose an equal amount of value each year.
Tax Shelter
Any method of reducing taxable income resulting in a reduction of the payments to tax collecting entities, including state and federal governments.
Tax-Deferred Exchange
Under Section 1031 of the US Internal Revenue Code, the exchange of certain types of property may defer the recognition of capital gains or losses due upon sale, and hence defer any capital gains taxes otherwise due.
Under the Taxpayer Relief Act of 1997, a single filer can qualify up to how much in tax exemptions…?
$250,000 (Dollars)
According to the IRS, which of the following property types is NOT considered a permitted deduction on one’s tax return…?
Income producing properties
This Act lowered the top tax rate from 50% to 28%…?
Tax Reform Act of 1986
This Act raised the bottom tax rate from 11% to 15%…?
Tax Reform Act of 1986
This program was established to promote private sector involvement in the retention and production of rental houses for low income households…?
LIHC
This type of depreciation is relevant to real estate…?
Tax depreciation
This type of depreciation is described by the physical deterioration of a property…?
Economic depreciation
The taxable income of a property is calculated by subtracting the depreciation from this…?
Net Income
Which of the following assets are NOT depreciable…?
Land
Which of the following is NOT considered a depreciable asset…?
Personal use assets
