State Exam Ch 17

Front 1

Chapter 17

Adjusted basis

Back 1

Original Cost, Plus improvements, minus depreciation.

Front 2

Appreciate

Back 2

And increase, in the worth, or value, of a property.

Front 3

Basis

Back 3

Investors initial cost for the real estate property. The IRS uses this to determine, annual depreciation, and gain, or loss on the sale of the asset.

Front 4

Bill of Sale

Back 4

Document, transferring ownership, of personal property.

Front 5

Boot

Back 5

Money or property, given to make up, any difference in value or Equity, between two properties in an exchange.

Front 6

Bulk Transfer Act. Designed to protect creditors, from fraud perpetrated by a business owner, who sells the business, including equipment and stock, and then disappears, leaving creditors unpaid.

Back 6

The seller must notify the buyer about creditors, who have not been paid, and the purchaser notices creditors, at least 10 days before, the transfer of ownership. Creditors have up to, 6 months, to file claims, on the chattels involved.

Front 7

Capital Gain

Back 7

The difference between, the adjusted basis of a property, and its net selling price.

Profit, on the sale, of an asset.

Front 8

Cash flow

Back 8

Money left from rental income, after expenses are paid.

Front 9

Depreciation

Back 9

A lost, in value, due to any cause, or any condition, that adversely affects, the value of an improvement to real property.

Front 10

Exchange

Back 10

Transaction, in which all or part, of the consideration for the purchase of real property, is the transfer, of a like kind of property. (Example) real estate for real estate.

Front 11

Income property

Back 11

Property held, for producing income property, as well as, for a profit, on its sale.

Front 12

Installment sale

Back 12

Sale, in which the seller, receives purchase price, over a period of years.

Front 13

Leverage

Back 13

Extensive use, of borrowed money, for purchases.

Front 14

Marginal tax rate

Back 14

The rate, at which, the investors top dollar is taxed.

Marginal - relating to or situated at the edge, Top, or margin of something

Front 15

Pyramiding,

Back 15

Holding and Refinancing property, to buy more.

Pyramiding - to build up, stack, hold, or Heap

Front 16

Real Estate, Investments Syndicate

Back 16

A joining together, of two or more people, or firm, to carry out, a project.

Front 17

Real Estate Investment Trust

(R. E. I. T.)

Back 17

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

A group, who pool's resources together, to buy real estate.

Front 18

Return

Back 18

Cash flow, plus income tax saving, plus appreciation.

Front 19

Syndicate

Back 19

A combination of people, or firm, form to accomplish, a joint venture, of mutual interest.

Front 20

Tax Credit

Back 20

Direct deduction, from income tax due.

Front 21

Uniform Commercial Code (U.C.C.)

Back 21

Law, regulating, the transfer, of business personal property.

Front 22

One advantage of real estate investment is?

Back 22

Hedge against inflation.

Front 23

One disadvantage of real estate investment, is?

Back 23

The need, for physical, and mental effort.

Front 24

The investors, initial cost, for the real estate, is called?

Back 24

Basis.

Front 25

Leverage, involves the extensive use of?

Back 25

Borrowed money

Front 26

A properties Equity, represent its current value, lease which of the following?

A. Depreciation.

B. Mortgage indebtedness.

C. Physical Improvement.

D. Selling cost, and depreciation

Back 26

Answer.

B. Mortgage indebtedness.

Front 27

The primary source, of tax shelter, in real estate investments, come from, the accounting concept, known as?

Back 27

Depreciation.

Front 28

For tax purposes, the initial cost, of an investment property, plus the cost of, any subsequent improvements to the property, less depreciation, represent the investment?

Back 28

Adjusted basis.

Front 29

The investor, who secures, what the IRS, regards as excessive tax shelter, may be subject to?

Back 29

Alternative Minimum Tax.

Front 30

Tax shelter

Back 30

any method, of reducing taxable income, resulting in a reduction of the payments to tax collecting entities, including state and federal governments.

Front 31

Alternative Minimum Tax.

Back 31

ensures that taxpayers pay at least the minimum. The AMT recalculates income tax after adding certain tax preference items back into adjusted gross income.

Front 32

Julia is exchanging her apartment building, for an apartment building of Greater market value, and must include, a $10,000 boot, to even out the exchange. Which of the following may be used as a booth?

A. $10,000 cash.

B. Common stock With a current market value of $10,000.

C. A parcel of rural land with a current market value of $10,000

D. All of the above.

Back 32

Answer.

D. All of the above.

Front 33

The bulk transfer act, requires that, the purchaser of a business?

Back 33

Notify creditors before the sale.

Front 34

After learning of the sale of a business, suppliers, who have not been paid, need to take action, Within?

Back 34

Six months.

Front 35

Besides the title to real estate, or a present lease, the business may also be selling:

Back 35

1. Fixtures, & stocks in inventory.

2. The business name.

3. Customer list.

4. Goodwill.

5. Special rights such as copyrights, patents, franchises, and licenses

Chapter 17