Principles 11

Question 1

Ad valorem

Answer 1

• property taxes

- charged in relation to the value of the property taxed (Assessed value x tax rate = actual tax)

Question 2

County assessor

Answer 2

Is the elected official responsible for determining assessed values and preparing the tax roll.

Question 3

Change in ownership statement

Answer 3

-Anyone who acquires an interest in real property must file this with the county recorder or assessor within 45 days of the date the transfer is recorded.

Question 4

Morgan property taxpayer’s bill of rights

Answer 4

Requires the county assessor to allow inspection and copying of documents related to an assessed property, including an auditor’s work papers.

Question 5

Property tax year

Answer 5

-Runs from July 1 through the following June 30

Question 6

Special assessment

Answer 6

• Can be imposed on real property for a specific local purpose, such as street construction or repair
• it appears as a separate entry on the property tax bill
• are made on an ad valorem basis and are liens on the property until paid
• Acquire approval of two-thirds of voters

Question 7

Benefit assessment

Answer 7

• Aka local assessment, levy based on other than assessed value, special benefit assessment, or special assessment
• differs from s special assessment in that it’s tax base is only the properties benefited
• not a deductible tax for federal and state income tax purposes
• considered a nondeductible assessment to finance a property improvement, rather than a deductible assessment to finance maintenance.

Question 8

Mello-Roos community facilities act

Answer 8

• a special form of property assessment
• law expanded the type of facilities and services that could be provided by improvement bonds and also eliminated the requirement that improvements specifically benefit individual properties

Question 9

Minimum sales tax charged in California

Answer 9

7.5% of gross receipts

Question 10

Sales tax

Answer 10

-Owed by retailers of tangible personal property regardless of whether the tax was paid by a customer

Question 11

Use tax

Answer 11

-is charged to the purchaser for storage, use, or other consumption of certain purchased or leased tangible personal property.

Question 12

Gift

Answer 12

-is a voluntary transfer by an individual of any type of property for less than full consideration

Question 13

Adjusted gross income

Answer 13

Is the taxpayer’s total income

Question 14

Taxable income

Answer 14

Is found by taking allowed exemptions and deductions from adjusted gross income

Question 15

Tax bracket

Answer 15

Is the tax rate applicable to a taxpayer’s taxable income

Question 16

Ordinary income

Answer 16

Is included in adjusted gross income for tax purposes and includes wages, business income, profits, interest, dividends, rents, and royalties, among other items.

Question 17

Capital asset

Answer 17

-is all property except business inventory or other property held for sale in the ordinary course of one’s business

Question 18

Basis

Answer 18

-Generally is its cost when acquired, also known as book value

Question 19

Adjusted cost basis

Answer 19

-the result of property ‘s basis reduced by the amount of depreciation already claimed, but it also can be increased by the cost of any improvements made.

Question 20

Capital gain

Answer 20

-is the difference between the sales price of a capital asset less selling costs and its adjusted cost basis.

Question 21

Tax credit

Answer 21

-is a direct deduction, not from income but from tax owed.

Question 22

Recovery property

Answer 22

-buildings used in business or for rental or other income-producing activities

Question 23

Tax deferred exchange

Answer 23

-the properties exchanged must be of like kind in nature or character.

Question 24

Installment sale

Answer 24

-a taxpayer sells property and receives payments over a term that extends beyond the present tax year.