Chapter 6 Flashcards
To qualify for deferring gain on real property exchange, property must be “like-kind.” Which of the following trades could NOT qualify?
A. An apartment building for a ranch
B. Vacant land for an 8-plex
C. An office building for a shopping center
D. GM common stock for AT&T common stock
D. GM common stock for AT&T common stock
What is NOT an advantage of a corporation?
A. Limited liability
B. Officers appointed by a board of directors
C. Double taxation
D. Living in perpetuity
C. Double taxation
At least 100 people are required by law to participate in order to form a
A. Syndicate
B. Corporation
C. Limited Partnership
D. Real estate investment trust
D. Real estate investment trust
How many times in 10 years could a single person sell their personal home and receive, tax-free, a gain of $250,000?
A. 1 time
B. 2 times
C. 5 times
D. Not available to single taxpayers
C. 5 times
Short-term capital gains are taxed at
A. A maximum of 15%
B. A maximum of 20%
C. A maximum of 28%
D. Ordinary income tax rates
D. Ordinary income tax rates
The maximum amount of gain that would be tax-free to a married couple who sells their personal residence would be
A. $125,000
B. $250,000
C. $500,000
D. Unlimited
C. $500,000
What type of business ownership could be faced with double taxation?
A. Sole and separate
B. S corporation
C. C corporation
D. Limited liability company
C. C corporation
Which of the following would be considered a security?
A. Single family homes in an investment pool
B. More than six separate lots for sale
C. Land owned by a corporation
D. Single family home listed by an LLC
A. Single family homes in an investment pool
What is the advantage of a REIT?
A. Avoidance of corporate taxes
B. Continuity of operation
C. Diversification of investment
D. All of the above
D. All of the above
A man may take depreciation for income tax purposes on all of the following EXCEPT
A. A home rented to friends
B. An apartment building
C. A vacant duplex
D. Land held for future profit
D. Land held for future profit
If a partnership does not pay its debts, the creditors may collect from the personal assets of
A. Limited partners
B. General partners
C. Stockholders of an incorporated company
D. None of the above
B. General partners
All of the following relate to limited liability companies EXCEPT
A. Members
B. Limited liability
C. Articles of incorporation
D. Articles of organization
C. Articles of incorporation
All of the following statements are TRUE regarding depreciation EXCEPT
A. Real estate tax depreciation must relate to an economic life
B. When real estate is fully depreciated, the major tax benefit is lost
C. All income property must be depreciated for tax purposes
D. A building can only be depreciated once
D. A building can only be depreciated once
Which of the following could be borrowed in a tax-deferred exchange?
A. Income
B. Like for like
C. Debt relief
D. Boot
D. Boot
What is NOT part of a tax-deferred exchange?
A. Boot
B. Mortgage relief
C. Like kind
D. Highest and best use
A. Boot
