Introduction To Taxation 1. The second installment of the real estate tax is due: December 10 February 1 March 1 April 10 None Hint 2. Under FIRPTA, how much must the buyer withhold from the sales price when the seller is a U.S. citizen? nothing 10 percent 1 percent 3 1/3 percent None Hint 3. A tax on the gross receipts of a broker would be a: none of these business license tax use tax sales tax None Hint 4. The following are not exempt from real property taxation: both b and c grapevines 3.5 years old fruit trees 3.5 years old growing crops None Hint 5. A married couple sold the home they had lived in for three years and realized a $600,000 profit. What would they pay in taxes? nothing $125,000 $15,000 $100,000 None Hint 6. A disadvantage of corporations in relation to taxes is: both a and b neither a nor b double taxation because both corporate profit and dividends to stock holders are taxed minimum tax rates None Hint 7. Gerald sells his residence for $200,000. He purchased it 12 months ago for $220,000. For tax purposes he has: a $20,000 loss no loss or gain a tax shelter a $20,000 capital gain None Hint 8. The capital gains rate for a person in the 10 percent tax bracket for a gain in 2012 would be: 10 percent 15 percent 5 percent zero None Hint 9. Boot in an exchange would be: all of these unlike property received cash received mortgage relief None 10. The owner of an apartment building would have a number of tax deductions. Which of the following is not a deduction? depreciation cost to build a swimming pool interest paid on a mortgage monthly gardening costs None Hint 11. A buyer does not have to withhold part of the purchase price from a foreign national seller when: it is a personal residence with a $250,000 sale price none of the above the broker failed to explain the withholding requirement the property is unimproved None Hint 12. A veteran who is disabled due to military service and whose only income is his or her $18,000 pension has a property tax exemption of: more than $150,000 $4,000 $150,000 $40,000 None Hint 13. The term tax shelter is associated with: sales tax income tax personal property tax real estate tax None Hint 14. The proposition that allows an elderly homeowner to transfer his or her cost baisis to another home in the same county is: Proposition 90 Proposition 60 Proposition 58 Proposition 13 None Hint 15. Which of the following is an ad valorem tax? use tax real estate tax sales tax both a and c None Hint 16. For a tax-free exchange on Sharon's rental units, she should exchange for: smaller apartment units and take cash to balance out the trade an apartment unit of a greater value, and pay cash to balance out the trade a residence for herself having the same value an apartment unit of the same value with a lower mortgage None Hint 17. Boot refers to: exchanges sale of a business evictions commercial or income property None Hint 18. Which proposition allows a property to retain its tax base when it is transferred from parent to child? 60 58 42 90 None 19. A purchaser at a tax foreclosure sale obtains a: warranty deed sheriff's deed state controller's deed tax deed None Hint 20. Josie takes a $30,000 loss on operations of her apartment building. In the same year, her total adjusted gross income is $152,000. How much of her other active income can be sheltered from taxes? none $25,000 $30,000 $12,500 None Hint 21. The California sales tax is: both a and b a tax on real property a tax on personal property an ad valorem tax None Hint 22. Ralph builds a swimming pool at his apartment building in order to reduce his vacancy factor. For tax purposes, he may: deduct the cost of the pool as an expense in the year it was expended none of these add the value of the pool to his depreciation for that year add the cost of the pool to his book value None Hint 23. The party responsible for reporting a sale to the IRS is the: buyer escrow broker seller None 24. A foreign seller sold his residence in California for $300,000. How much must the buyer withhold for California tax purposes? $150,000 3 1/3 percent of sale price 10 percent of sale nothing None Hint 25. Which of the following should have the least impact on property tax rates? homeowner's exemptions amount of commercial property in the area compactness of the area large amounts of vacant land None Hint 26. For tax purposes, Paul can depreciate: his residence on his farm a mature fruit orchard raw land held for appreciation his urban residence None Hint 27. A prudent person would be interested in income taxes: when he or she first considers at the time the first income is received after purchasing after sale after purchasing None 28. An advantage to a seller of an installment sale is: the two-year rule the payment of capital gains over the contract period the fact that boot is not taxable tax avoidance None 29. Three years ago a taxpayer had a large capital loss but no gain to offset it. How much of the gain is she allowed to use each year to shelter other income? $1,000 $3,000 no limit $5,000 None 30. Boot in an exchange would be: all of these mortgage relief cash received unline property received None 31. To be eligible for the universal exclusion, a couple must have: used it as a permanent residence for two years neither a nor b owned the property for five years both a and b None Hint 32. The long term capital gains rate on the gain by a person in a 28 percent tax bracket is: 5 percent 15 percent 25 percent 28 percent None 33. A property owner's tax rate would be set by the: tax assessor county board of supervisors tax collector mayor None Hint 34. A taxpayer, who has an adjusted gross income of $125,000, suffered a passive loss of $100,000. How much of his loss can be used to shelter active income? none $12,500 $100,000 $50,000 None Hint 35. A man traded his commercial property for vacant land. As to this trade, which is a true statement? it qualifies as a 1031 exchange it would be considered like for like if there was boot the boot would be taxable all of the above None 36. A seller had owned income property for 19 months. The tax on the capital gains upon sale would be: 5 percent 28 percent 25 percent 15 percent None Hint 37. The adjusted basis of a taxpayer's residence would be: cost plus improvements cost cost minus imrpovements cost plus improvements minus depreciation None Hint 38. The maximum gift a donor can give to each donee and be exempt from the federal gift tax is: $1,000 $10,000 zero $13,000 None Hint 39. The period for redemption for unpaid taxes is: five years from the sheriff's sale five years from the date of book sale five years from the date assessed five years from delinquency None Hint 40. For income tax purposes, an income property owner cannot deduct: loss of income because of vacancy rental commission paid management fees depreciation None Hint 41. The term "tax roll" refers to: current tax rate times assessed value maximum annual tax increase total taxable assessed value the property's adjusted cost basis None Hint 42. You may gain a federal tax advantage by: depreciating income property trading like for like all of these taking proceeds of a sale over a number of years None 43. A buyer purchased a home on April 15. The taxes for the tax year had been paid, but the buyer received a tax bill anyway. This bill is known as a: revised statement of taxes delinquency charge transfer charge supplemental tax bill None Hint 44. Which of the following transfer of a principal residence would result in the reassessment of a property? transfer between spouses transfer between grandparents and a grandchild transfer between registered domestic partners transfer between cousins None Hint 45. The federal income tax would be best described as a(n). ad valorem tax progressive tax graduated tax cumulative tax None Hint 46. A tax collector is selling a tax-defaulted property at public auction; the sale: must be at reasonable market value must be at least 50 percent of market value is to the highest bidder regardless of the bid must be at least 25 percent of market value None 47. Street improvements are assessed based on: assessed value ad valorem value none of these front footage None 48. Clyde, age 53, sells his residence for $160,000. He purchased it for $40,000 18 years earlier. Clyde does not intend to buy another house. What portion of the sale price is taxable? $160,000 $35,000 $120,000 none None Hint 49. Under the Street Improvement Act of 1911, how long does an owner have to pay the bill after receipt? 90 days 10 days 45 days 30 days None Hint 50. Harold sells a lot to Dick for $29,420. Dick assumes a first trust deed of $17,933. He gives Harold $1,000 cash and a second trust deed for the balance. The revenue stamps required are: $16.50 $12.65 $22.45 $19.80 None Hint 51. When a seller pays points, for tax purposes this would: be deductible as an interest expense not be deductible be treated the same as a prepayment penalty increase the cost basis None Hint 52. Regina's city puts in a sewer line in front of her lot. She can expect a: tax rate increase general assessment special assessment all of these None 53. By use of a tax shelter, a taxpayer may: decrease his or her net spendable income increase his or her book value evade taxes defer taxes None Hint 54. A veteran must apply for tax exemption by: March 1 December 31 April 15 June 1 None 55. The unadjusted basis of a taxpayer's residence would be: cost minus improvements cost plus improvements cost plus improvements minus depreciation cost None
