Chapter 6

Question 1

adjusted basis

Answer 1

the purchase price of a property minus accumulative depreciation, plus acquisition costs, plus capital improvements. AKA Adjusted Purchase Price

Question 2

Adjusted Sales Price

Answer 2

Sales price - cost of sale (commission and closing costs)

Question 3

Appreciation

Answer 3

An increase in the value of property due to a positive improvement in the area or the elimination of negative factos

Question 4

Basis

Answer 4

A buyer’s initial cost for a real estate purchase

Question 5

Boot

Answer 5

Taxable, not like-kind property used in exchange such as cash or other personal prop. that is used to balance an exchange of real property

Question 6

C Corp

Answer 6

legal entity owned by shareholders that has limited liability. Taxed as entity as well as dividends received by the shareholders, therefore double taxation

Question 7

Capital Gains

Answer 7

The gain from the sale of a capital asset, one held for investment purposes

Question 8

Cash Flow

Answer 8

The next spendable income from an investment after operating and fixed expenses including debt service. If expenses exceed income, is “negative” aka cash throw off