REE 5305 Unit 6 Chapter 11
Which of the following is the formula for the adjusted basis of a property?
Group of answer choices
Sales price − accumulated depreciation
Original cost + capital improvements − accumulated depreciation
Sales price− mortgage balance − sales costs
Original cost − mortgage balance − sales costs - ANS-Original cost + capital improvements −
accumulated depreciation
Net sale proceeds less the adjusted basis of the property determines which of the following?
Group of answer choices
Capital gains or losses
Depreciation allowance for the property
Before-tax net present value of the property
After-tax net present value of the property - ANS-Capital gains or losses
Which of the following includes income from real estate classified as capital assets?
Group of answer choices
Portfolio income
Passive activity income
Passive income
Active income - ANS-Portfolio income
Operating expenses associated with the maintenance and upkeep of an owner-occupied
residential property are generally tax deductible.
Group of answer choices
True
False - ANS-False
Residential property is depreciated over 27.5 years whereas nonresidential property is
depreciated over 39 years.
Group of answer choices
True
False - ANS-True
The deductibility of depreciation in calculating taxable income will usually cause the effective tax
rate to be lower than the actual tax rate.
Group of answer choices
True
False - ANS-True
Which of the following is the formula for the adjusted basis of a property?
Group of answer choices
Sales price − accumulated depreciation
Original cost + capital improvements − accumulated depreciation
Sales price− mortgage balance − sales costs
Original cost − mortgage balance − sales costs - ANS-Original cost + capital improvements −
accumulated depreciation
Net sale proceeds less the adjusted basis of the property determines which of the following?
Group of answer choices
Capital gains or losses
Depreciation allowance for the property
Before-tax net present value of the property
After-tax net present value of the property - ANS-Capital gains or losses
Which of the following includes income from real estate classified as capital assets?
Group of answer choices
Portfolio income
Passive activity income
Passive income
Active income - ANS-Portfolio income
Operating expenses associated with the maintenance and upkeep of an owner-occupied
residential property are generally tax deductible.
Group of answer choices
True
False - ANS-False
Residential property is depreciated over 27.5 years whereas nonresidential property is
depreciated over 39 years.
Group of answer choices
True
False - ANS-True
The deductibility of depreciation in calculating taxable income will usually cause the effective tax
rate to be lower than the actual tax rate.
Group of answer choices
True
False - ANS-True
