California: Real Estate Principles - Chapter 17

2 of 10 - Alexandra and Marita's company has qualified as a trust. It has distributed 96% of its income to its shareholders. Which earnings require the payment of federal taxes? A. The company only pays federal taxes on the retained earnings. B. The company only pays federal taxes on the retained earnings, which are taxed at corporate rates. C. The company only pays federal taxes on the distribution to its shareholders. D. The company is exempt from federal taxes due to its trust qualification. It is required only to pay state and local taxes.

B. The company only pays federal taxes on the retained earnings, which are taxed at corporate rates.

8 of 10 - Alexandra and Marita have formed a REIT. They have their investors and resources and are ready for business. The REIT will be investing in an assorted portfolio of real estate and mortgage investments. What type of REIT have Alexandra and Marita formed? A. An Equity Trust B. A Mortgage Trust C. A Combination Trust D. A Joint Venture Trust

C. A Combination Trust

4 of 10 - This form of syndication avoids double taxation but has a lack of centralized management. Which form fits the description? A. The Corporate B. The General Partnership C. The Joint Venture D. Both B and C

D. Both B and C

6 of 10 - This form of syndication allows limited liability for the investors but has negative tax features. Which form fits the description? A. The General Partnership B. The Joint Venture C. The Limited Liability Company D. The Corporate Form

D. The Corporate Form

7 of 10 - A small group of investors are in the initial stages of putting together a real estate investment trust (REIT). Which of the following is not a qualification? A. A REIT must be beneficially owned by at least 100 investors. B. The company must distribute at least 85% or more of its income to its shareholders. C. Each share of certificate of interest must carry with it an equivalent vote. D. No five, or fewer, persons may hold more than 50 percent of the beneficial interests.

B. The company must distribute at least 85% or more of its income to its shareholders.

9 of 10 - Marita and Alexandra set up a Limited Partnership. Marita is named General Partner and Alexandra is named Limited Partner. Marita embezzles funds from the investors. Is Alexandra liable for Marita's indiscretion? A. Alexandra is only liable if she is named as a general partner in the certificate or if she participates in control of the business. B. Alexandra is as liable to the investors as Marita. However, unless she was involved in the crime, she is only financially liable. C. Alexandra is liable and a partner, whether it be a general or limited partner. D. Both B and C

A. Alexandra is only liable if she is named as a general partner in the certificate or if she participates in control of the business.

1 of 10 - What is the correct order of regulatory agency jurisdiction changes to non-corporate California real estate syndicates since The Real Estate Syndicate Act's inception in 1970? A. The Department of Corporations, The California Bureau of Real Estate, The Department of Corporations B. The California Bureau of Real Estate, The Department of Corporations, Real Estate Commissioner C. Real Estate Commissioner, The California Bureau of Real Estate, The Department of Corrections D. Real Estate Commissioner, The California Bureau of Real Estate, The Department of Corporations

A. The Department of Corporations, The California Bureau of Real Estate, The Department of Corporations

3 of 10 - Marita tells Alexandra they must obtain their broker-dealer license from the Department of Corporations to engage in the sale of real estate syndicate security interests. Alexandra disagrees with Marita, explaining they both have their broker licenses and that is sufficient. Who is correct and why? A. Marita is correct. Section 15632 was added to The Real Estate Syndicate Act requiring real estate brokers to obtain a broker-dealer license. B. Alexandra is correct. Section 25206 was added to the Corporations Code making obtaining a broker-dealer license optional. C. Marita is correct. Section 25206 has an added provision dealing with brokers violating the Corporations Code and requiring the broker-dealer license. D. None of the above

B. Alexandra is correct. Section 25206 was added to the Corporations Code making obtaining a broker-dealer license optional.

5 of 10 - Alexandra and Marita are forming a real estate syndicate. They have their initial investments and are ready to proceed. What happens next? A. Operation, Origination, Completion or Liquidation B. Syndication, General Partnership, REIT C. Origination, Operation, Completion or Liquidation D. Origination, Exemption, Corporation

C. Origination, Operation, Completion or Liquidation

10 of 10 - This is the most frequently used organizational form for real estate syndicates. Which form fits the description? A. The General Partnership or Joint Venture B. The Corporate Form C. The Limited Partnership D. The Combination

C. The Limited Partnership