Chapter 13 Quiz PDF

Principles of California Real Estate Instructor Materials Chapter 13 Quiz   -XG\RZQVDQDSDUWPHQWEXLOGLQJWKDW¶VZRUWK   -DPHVGHFLGHVWRVHOOKLVKRPH7KLVVDOHPD\ 7KHEXLOGLQJ¶VDGMXVWHGFRVWEDVLVLV UHVXOWLQ $770,000 and it has an...

Principles of California Real Estate Instructor Materials Chapter 13 Quiz   -XG\RZQVDQDSDUWPHQWEXLOGLQJWKDW¶VZRUWK   -DPHVGHFLGHVWRVHOOKLVKRPH7KLVVDOHPD\ 7KHEXLOGLQJ¶VDGMXVWHGFRVWEDVLVLV UHVXOWLQ $770,000 and it has an outstanding $720,000 A. either a capital gain or a capital loss PRUWJDJH 6KH HQWHUV LQWR DQ H[FKDQJH ZLWK B. neither a capital gain nor a capital loss Bruce, who owns a shopping center worth  & DFDSLWDOJDLQEXWQRWDFDSLWDOORVV 7KHVKRSSLQJFHQWHULVPRUWJDJHGIRU D. a capital loss, but not a capital gain $700,000. Bruce also pays Judy $10,000 cash ERRW:KDWLV-XG\¶VDFWXDOJDLQDQGZKDW¶VKHU deferred gain?   7KH FDSLWDO JDLQ H[FOXVLRQ LV DYDLODEOH IRU PDUULHGFRXSOHVRULQGLYLGXDOVZKROLYHGLQD A. $45,000 and $15,000 SULQFLSDOUHVLGHQFHIRUDWOHDVW B. $70,000 and $15,000  & DQG A. 12 months  ' DQG B. 2 years  & \HDUV D. 6 years 2. Which of the following could result in a tax DGYDQWDJH"   5HJDUGLQJ WD[IUHH H[FKDQJHV ZKLFK RI WKH A. A tax-free exchange following is true? B. An installment sale  & $GHSUHFLDWLRQGHGXFWLRQ  $ $QR൶FHEXLOGLQJFDQQRWEHH[FKDQJHGIRU  ' $OORIWKHDERYH an apartment complex B. A personal residence may be exchanged for a house of similar worth   $GDPLVKROGLQJDSLHFHRIXQLPSURYHGSURS-  & 3URSHUW\H[FKDQJHGPXVWEHXVHGLQDWUDGHRU HUW\DVDQLQYHVWPHQW:KLFKRIWKHIROORZLQJ EXVLQHVVRUKHOGIRULQFRPHRULQYHVWPHQW is he entitled to deduct for income tax pur- D. Both properties must carry mortgages poses?  $ $QQXDODSSUHFLDWLRQLQWKHODQG¶VYDOXH   7R EH GHSUHFLDEOH XQGHU LQFRPH WD[ ODZ D B. A loss on the sale of the property SURSHUW\PXVWEH  & $JDLQRQWKHVDOHRIWKHSURSHUW\  ' 1RQHRIWKHDERYH A. a personal residence B. unencumbered  & LPSURYHG 4. Which of the following properties could be  ' YDFDQW depreciated for income tax purposes? A. An owner-occupied farmhouse 10. For tax purposes, which of the following per- B. A commercial apple orchard sonal residence expenses may be deducted from  & 9DFDQWODQG ordinary income?  ' $Q\RIWKHDERYH  $ &OHDQLQJDQGJHQHUDOPDLQWHQDQFHFRVWV  % 5HSDLUFRVWV   'HSUHFLDWLRQRQUHDOSURSHUW\PHDQVWKDWWKH  & 3URSHUW\WD[HVDQGPRUWJDJHLQWHUHVW  $ SURSHUW\EHFRPHVYLUWXDOO\ZRUWKOHVV D. Loss when property is sold  % SURSHUW\¶VYDOXHLQFUHDVHV  & EDVLVGHFUHDVHV D. basis increases 10  Chapter 13: Income Taxation and Real Estate 11. For income tax purposes, a property owner 15. An owner of an apartment complex reports OLYLQJLQKHURZQKRPHPD\QRWGHGXFWZKLFK income on a cash basis. Which of the following of the following expenses? is not tax-deductible?  $ 7KHFRVWRISDLQWLQJDEDWKURRP A. Mortgage interest B. An uninsured loss from damages resulting  % /RVWLQFRPHIURPYDFDQFLHV IURPDNLWFKHQ¿UH  & &OHDQLQJDQGPDLQWHQDQFHFRVWV  & 3URSHUW\WD[HV  ' ,PSURYHPHQWDQGUHGHFRUDWLQJFRVWV D. Mortgage interest  ,Q6H\PRXUERXJKWDKRPHIRU ,Q  KH VROG LW IRU  DQG ERXJKW another home for $657,000. Based on this information, what is his cost basis on his new house and the recognized gain reported on his income tax return? A. $515,000 and $125,000 B. $657,000 and $125,000  & DQGQRQH D. $657,000 and none .DWK\ DQG -RKQ D PDUULHG FRXSOH SXUFKDVH DKRPHIRU$IWHUOLYLQJLQLWIRUVL[ \HDUVWKH\VHOOLWIRU2QZKDWDPRXQW ZLOOWKH\KDYHWRSD\FDSLWDOJDLQVWD[HV"  $  B. $250,000  &  D. Nothing  $ FRQGRPLQLXP RZQHU OLYLQJ LQ KLV FRQGR- minium is permitted to deduct which of the following expenses on his federal income tax return?  $ 5HSDLUDQGXSNHHSRIKLVLQGLYLGXDOXQLW  % ,QWHUHVWSDLGRQDORDQVHFXUHGE\WKHFRP- mon areas  & 0RQWKO\ SD\PHQW WRZDUG XSNHHS RI WKH common areas  ' 1RQHRIWKHDERYH 11  Principles of California Real Estate Instructor Materials Answer Key  $ -XG\¶VDFWXDOFDSLWDOJDLQLVWKH JDLQRQWKHVDOHRIKHUEXLOGLQJ6KH  & 7REHHOLJLEOHIRUDWD[IUHHH[FKDQJH UHFHLYHGDVKRSSLQJFHQWHUZRUWK a property must be used in a trade $785,000, plus $10,000 cash and or business or held for income or in- $20,000 in mortgage relief, totaling YHVWPHQW,WPXVWEHH[FKDQJHGIRU 6LQFHKHUFRVWEDVLVLQWKH like-kind property. apartment building is $770,000, her UHDOL]HG DFWXDO JDLQLV2I  & 9DFDQWODQGGRHVQRWGHSUHFLDWH WKDWLVQRWOLNHNLQGSURSHUW\ 7KHUHIRUHGHSUHFLDEOHUHDOHVWDWHPXVW DQGLVWKHUHIRUHERRW DQGWKXVVXEMHFW KDYHVRPHVRUWRILPSURYHPHQWRUGH- WRWD[ 7KHUHPDLQLQJLVGH- YHORSPHQW ferred gain. & 3URSHUW\WD[HVDQGPRUWJDJHLQWHUHVW  ' $Q\RIWKHDERYHRSWLRQVFRXOGSUR- are tax-deductible. YLGHDIHGHUDOLQFRPHWD[DGYDQWDJH 11. A. Uninsured theft or casualty losses,  % ,IKHORVHVPRQH\ZKHQKHVHOOVWKH property taxes, and mortgage interest SURSHUW\KHKDVVX൵HUHGDFDSLWDOORVV are all deductible expenses for an own- A capital loss on property held for in- er-occupied single-family residence. YHVWPHQWSXUSRVHVLVWD[GHGXFWLEOH General upkeep and repair costs are not deductible. 4. B. As property used in a trade or busi- ness, a commercial apple orchard ' 7KHFRVWEDVLVRQWKHQHZKRXVHLVWKH could be depreciated for income tax purchase price, $657,000. Under cur- purposes. rent income tax law, up to $250,000 in gain may be excluded from tax for an  & 'HSUHFLDWLRQKDVWKHH൵HFWRIORZHULQJ LQGLYLGXDOVHOOLQJDSHUVRQDOUHVLGHQFH WKHSURSHUW\¶VFRVWEDVLV ' 6LQFHWKH\OLYHGLQWKHKRXVHIRU  & $JDLQIURPWKHVDOHRIDSHUVRQDOUHVL- RYHUWZR\HDUVWKH\TXDOLI\IRUWKH dence may be treated as a capital gain. $500,000 capital gain exclusion for $ORVVIURPWKHVDPHVDOHKRZHYHULV married couples. not deductible.  % $FDSLWDOJDLQH[FOXVLRQLVDYDLODEOH on the sale of a principal residence if WKHRZQHU V OLYHGLQLWIRUDWOHDVWWZR years. 12  Chapter 13: Income Taxation and Real Estate 14. B. He may deduct his share of the inter- est paid on a mortgage of the common DUHDV,QGLYLGXDOXQLWPDLQWHQDQFH and repair costs are not deductible and neither are assessments for upkeep of common areas. % /RVWLQFRPHIURPYDFDQFLHVLVVLPSO\ QRWUHSRUWHGDVLQFRPH7KHRWKHUH[- penses are tax-deductible. 13