Reference no: EM13718597
1. The real rate of interest on a fixed-rate loan:
a. is the same as the effective rate.
b. is reduced when inflation increases during the period of the loan.
c. is increased when inflation increases during the period of the loan.
d. is adjusted to reflect the impact of inflation during the period of the loan.
2. Potential disadvantages of the limited partnership include:
a. losses for all limited partners, without exception, are treated as passive in nature.
b. losses in excess of $25,000 in any one taxable year are treated as passive in nature.
c. losses are treated as passive in nature, if the partner's gross income exceeds $125,000.
d. losses are treated as passive, as the partner's gross income moves from $100,000 to $125,000.
3. The excess accumulated earnings tax may be levied on:
a. tenancy in common real estate holders.
b. general partnerships.
c. corporations.
d. conduits.
4. In the absence of express agreement to the contrary, partners in a general partnership:
a. share profits and losses equally.
b. share profits and losses in proportion to their equity investment.
c. are liable for partnership obligations only to the extent of their investment in the partnership.
d. share liability for partnership obligations in the same ratio that they share profits and losses.
5. The allocation of the initial tax basis may be done by:
a. using the allocation estimated by the tax assessor.
b. writing the allocation into the contract.
c. using the allocation estimated by an independent appraiser.
d. all of the above.
6. Depreciation allowances affect:
a. income tax consequences.
b. net operating income.
c. before-tax cash flow.
d. all of the above.
7. Prepaid mortgage interest on loans to acquire investment property:
a. is deductible as interest expense in the year of prepayment.
b. must be amortized over the life of the mortgage.
c. may be deducted currently or amortized, at the taxpayer's option.
d. may be deducted currently only if doing so does not "materially" distort taxable income.
8. A taxpayer's adjusted tax basis in a property is:
a. its fair market value less the balance of outstanding mortgages.
b. the amount of the owner's equity in the property.
c. primarily an accounting, rather than a tax concept.
d. none of the above.
9. An important aspect of the depreciation allowance is that:
a. it is an out of pocket cost of doing business, reducing both cash flow and taxable income.
b. the tax shelter it generates can never exceed the income from the property.
c. both (a) and (b) are true.
d. none of the above is true.
10. When a property is located in a registered historic district:
a. it is automatically considered a certified historic structure.
b. it is not necessarily considered a certified historic structure.
c. it is up to the property owner to decide if the property is of historic significance.
d. none of the above.
11. Prepaid mortgage interest on commercial property:
a. is deductible in the same pattern as construction-period interest.
b. with certain restrictions, is deductible in the year paid.
c. can never be deducted.
d. none of the above are true.
12.Tax credits for rehabilitating historic structures:
is the same as that for rehabilitating other structures.
b. is twice that as for rehabilitating other structures.
c. requires that the structure be in a registered historic district.
d. are not subject to recapture rules.
13. Passive asset rules do not apply to:
a. limited partnership income and losses.
b. income and losses from property whose owner is actively engaged in a real estate trade or business.
c. income and losses from low-income housing.
d.losses that do not exceed $25,000 per annum.
14. Unless a "withholding certificate" is received, certain transactions involving foreign investors require that a portion of the proceeds be withheld and remitted to the IRS. The withholding requirement is imposed:
a. on sellers only.
b. on buyers only.
c. on U.S. citizens (or U.S. companies) only.
d. only when there is a taxable gain involved.