Investment and Business Brokerage

Question 1

return

Answer 1

total income, direct cash flow and indirect benefits

Question 2

leverage

Answer 2

using borrowed money to increase the return on an investment

Question 3

appreciation

Answer 3

increase worth or value of real property

Question 4

income property

Answer 4

property held for producing income and profit on its sale

Question 5

cash flow

Answer 5

spendable income generated by income property

Question 6

pyramiding

Answer 6

a technique used by many investors to systematically leverage the equity of one property to purchase multiple, or larger income properties

Question 7

exchange

Answer 7

transferring property with the advantage of deferring taxation of capital gains

Question 8

alternative minimum tax

Answer 8

applies to taxpayers with high economic income by setting a limit on tax benefits for real estate ownership

Question 9

boot

Answer 9

difference in price between properties such that the property being bought costs less than the one being sold

Question 10

capital gain

Answer 10

taxable profit on on investment

difference between adjusted basis of property and its net selling price

Question 11

adjusted basis

Answer 11

the cost of real estate property, after accounting for any increases or decreases to its original value

Question 12

basis

Answer 12

the investor’s initial cost for the real estate

Question 13

depreciation

Answer 13

the process used to deduct the costs of buying and improving a rental property

Question 14

tax credit

Answer 14

direct reduction in tax due

Question 15

National Register of Historic Landmarks

Answer 15

the official list of all the country’s historic buildings, districts, sites, structures, and objects worthy of preservation

Question 16

installment sales

Answer 16

a sale of property where seller receives payment for the full purchase price on an installment basis

Question 17

marginal tax rate

Answer 17

rate at which the top dollar is taxed, top applicable income tax bracket

Question 18

syndicate

Answer 18

a joining together of two or more people to carry out one or more business projects

Question 19

real estate investment syndicate

Answer 19

a form of business venture in which a group of people pool their resources to own and/or develop a particular piece of property

Question 20

private syndication

Answer 20

a small group of closely associated and/or widely experienced investors

Question 21

public syndication

Answer 21

generally involves a large group of investors who may or may not be knowledgeable about real estate investment

Question 22

Securities and Exchange Commission

Answer 22

federal agency that oversees securities exchanges, securities brokers and dealers, investment advisors, and mutual funds in an effort to promote fair dealing, the disclosure of important market information, and to prevent fraud

Question 23

real estate investment trusts (REITs)

Answer 23

trust ownership of real estate by a group of at least 100 individuals who purchase certificates of ownership in the trust

Question 24

uniform Commercial Code

Answer 24

set of standardized laws that regulate the transfer of personal property

Question 25

Bulk Transfer Act

Answer 25

section of UCC that is most applicable to real estate

regulates transfer of real estate business, prevents fraud when a business is sold

Question 26

besides title to real estate or present lease, why else might someone sell a business?

Answer 26

1. fixtures and stock in inventory
2. business name
3. customer lists
4. goodwill (community participation)
5. special rights (copyrights, patents, franchises, licenses)

Question 27

a property’s equity represents it current value less____

Answer 27

any liens on that property

Question 28

bulk transfer act requires that purchaser of a business______

Answer 28

notify creditors before the sale