Chapter 17 - Investment and Business Brokerage

Question 0

Appreciation

Answer 0

An increase in value or worth.

Question 1

Adjusted basis

Answer 1

Original cost plus improvements less depreciation.

Question 2

Basis

Answer 2

The cost of a property that the Internal Revenue Service uses to determine annual depreciation and gain or loss on the sale of an asset.

Question 3

Bill of sale

Answer 3

A written instrument given to transfer title to personal property.

Question 4

Boot

Answer 4

Money or property given to make up any difference in value or equity between two properties.

Question 5

bulk transfer act

Answer 5

Section of the uniform commercial code which regulates the transfer of personal property designed to protect creditors from the fraud perpetrated by a business owner who sells a business, including equipment, stock, and then disappears, leaving creditors unpaid.

Question 6

Capital Gain

Answer 6

Profits realized from the sale of assets like real estate.

Question 7

Cash flow

Answer 7

The object of income property is to generate spendable income. total amount of money remaining after all expenditures have been paid,including taxes,operating costs, and mortgage payments.

Question 8

Depreciation

Answer 8

For income tax purposes, yearly write-off of a percentage of the cost of a building as an expense.

Question 9

Exchange

Answer 9

A transaction in which all or part of the consideration for the purchase of real property is the transfer of like kind property (for example real estate for real estate). dealt with in section 1031 IRC.

Question 10

Income property

Answer 10

Property held for producing income as well as for a profit on its sale.

Question 11

Installment sale

Answer 11

Purchase price is paid over a period of years. Seller reports any profit on the transaction year by year as it is collected.

Question 12

Leverage

Answer 12

The use of borrowed money to finance investments.

Question 13

Marginal tax rate

Answer 13

The rate at which the investors’s top dollar is taxed.

Question 14

Pyramiding

Answer 14

The practice by which the investors holding can be increased without investing additional capital.

Question 15

Real estate investment syndicate

Answer 15

Joining together of two or more people or firms to carry out one or more business projects. not in itself a legal entity and may be organized into a number of ownership forms.

Question 16

Real estate trust

Answer 16

REIT, investors take advantage of the same tax benefits as mutual fund investors. must have 100 investors and at least 75% of the trust’s income must come from real estate.

Question 17

Return

Answer 17

Generally real estate investments have shown an overall rate higher than the prevailing interest rate charged by mortgage lenders.

Question 18

tax credit

Answer 18

a direct reduction to the tax due rather than a deduction from income before tax is computed.

Question 19

Uniform Commercial Code (UCC)

Answer 19

A codification of commercial law, adopted in most states, that attmpts to make uniform all laws relating to commercial transactions, including chattel mortgages and bulk transfers.