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