REE Ch. 31

Carol sold her investment property for $450,000 and had $21,000 in closing costs. The property had a beginning basis of $312,000, capital improvements of $34,000, and depreciation of $80,000. What was Carol's capital gain? - $163,000 - $3,000 - $184,000 - $129,000

$163,000

Sam purchased a factory with an initial tax basis of $13,000,000. What is his monthly depreciation allowance? - $39,394 - $27,778 - $28,889 - $30,000

$27,778

What is the maximum net capital loss that can be deducted annually? - $3,000 - $5,000 - $7,500 - $10,000

$3,000

Michael sold his house for $330,000 and had $33,000 in closing costs. His beginning basis was $187,000 and he spent $68,000 on capital improvements. What is Michael's capital gain for tax purposes? (assume he doesn't qualify for an exclusion) - $75,000 - $42,000 - $110,000 - $330,000

$42,000

Rob and Lori purchased a home for $350,000 with an additional $5,000 in related purchase costs and then added a garage at a cost of $25,000. They sold the home for $450,000 and paid $28,000 in selling costs. How much was the gain on the sale of their home? - $42,000 - $120,000 - $70,000 - $100,000

$42,000

John and Sheryl bought their home for $354,000. They made $129,000 of improvements. They sold the home for $1,085,000 and paid $56,000 in selling expenses, including the broker's commission. On what amount will they pay capital gains tax? - $175,000 - $1,085,000 - $546,000 - $46,000

$46,000

Robert has three investment properties. They had the incomes of $35,000, $50,000, and $15,000 last year. They had the expenses of $25,000, $73,000, and $3,500 last year. What is the net income for the three properties? - $101,500 - $100,000 - ($1,500) - $1,500

($1,500)

How long must an asset be held if the profit on its sale is a long-term capital gain? - 6 months - 1 year - 2 years - 5 years

1 year

When money is withdrawn from an IRA for purchasing a first home, the money must be used within __________ of withdrawal. - 30 days - 60 days - 120 days - 1 year

120 days

When was the Taxpayer Relief Act signed into law? - 1983 - 1988 - 1992 - 1997

1997

Which of the following is not an example of a like-kind exchange? - A principal residence for a motel - Vacant lot for a store - Rental condo for a gas station - Bed & Breakfast Inn for two small farms

A principal residence for a motel

What is a measurement of how much is invested in the property for tax purposes? - Market value - Amount realized - Basis - Capital gain

Basis

New York non-residents must pay income tax for ______________ income earned in New York City. - Employment - Social security - Royalty - Investment

Investment

Capital losses can NOT be claimed on - Retail rental property - Investment apartment buildings - Office buildings - Personal residences

Personal residences

Which of the following statements about points is true? - A homeowner can never deduct the full amount of points in the year they are paid - In most cases, points paid to refinance a mortgage are deductible in full in the year they were paid - Points paid on a second home can only be deducted over the life of the loan - Points on home improvement loans are always fully deductible in the year they were paid

Points paid on a second home can only be deducted over the life of the loan

The Taxpayer Relief Act did NOT reduce taxes for which of the following? - Real estate investments - Capital gains - Home sales - Retirement savings

Real estate investments

The process wherein the depreciation portion of the gain is taxed as capital gain is called - Tax depreciation - Full gain tax - Recaptured depreciation - Adjusted gain tax

Recaptured depreciation

In what type of exchange is the replacement property acquired prior to transferring the relinquished property? - Delayed exchange - Build-to-suit exchange - Reverse exchange - Simultaneous exchange

Reverse exchange

An unrealized capital gain is - The amount the selling price exceeds the initial price - The amount lost or unrealized if the selling price is lower than the initial price - The amount of tax deduction not allowed for the capital gain - The amount of profit that would result in the sale of an investment if it were to be sold

The amount of profit that would result in the sale of an investment if it were to be sold

Home equity debt is any mortgage taken out after October 13, 1987 that - does qualify as either home acquisitioned debt or grandfathered debt and is secured by the homeowner's qualified home - does qualify as either home acquisitioned debt or grandfathered debt and is not secured by the homeowner's qualified home - does not qualify as either home acquisitioned debt or grandfathered debt and is not secured by the homeowner's qualified home - does not qualify as either home acquisitioned debt or grandfathered debt and is secured by the homeowner's qualified home

does not qualify as either home acquisitioned debt or grandfathered debt and is secured by the homeowner's qualified home

The ______________ is responsible for preparing all of the appropriate documentation for a 1031 exchange transaction, securing the funds in an escrow account until the exchange is completed and submitting a 1099 form to the taxpayer and the IRS for any - initiator - qualified intermediary - taxpayer - IRS

qualified intermediary