Multiple Choice
Identify the letter of the choice that best
completes the statement or answers the question.
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1.
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All of the following may be depreciated EXCEPT:
a. | Equipment | c. | Land | b. | Parking Lots | d. | Shrubs |
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2.
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A charge to install civic improvements such as sidewalks and curbs in a
subdivision is called a:
a. | Value added Tax | c. | Special Assessment Tax | b. | Property
Tax | d. | Transfer
Tax |
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3.
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A couple purchased a home for $175,000, and it has increased in value $100,000
over the last 5 years. They have paid off their old loan and refinanced with an 80% loan at 7%. Which
of the following statements is TRUE?
a. | The interest on the old loan is deductible but not the interest on the new
loan. | c. | The interest on the new loan is deductible but not the interest on the original
purchase. | b. | The interest on a loan to purchase or refinance a primary residence is fully
deductible. | d. | The
deductibility of interest is dependent on the taxpayer's tax
bracket. |
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4.
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Which of the following is not a specific lien?
a. | A Mechanic's Lien | c. | Income Tax Judgements | b. | Real Estate
Taxes | d. | A
Mortgage |
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5.
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A single home-owner has decided to sell his personal residence. If he has lived
in it the required time, how much of the gain can he exclude from capital gain taxes?
a. | $200,000 | c. | $300,000 | b. | $250,000 | d. | $500,000 |
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6.
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In the above question, how much could a married couple exclude?
a. | $250,000 | c. | $500,000 | b. | $300,000 | d. | $600,000 |
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7.
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The value that is the basis for the determination of property tax is the:
a. | Appraised Value | c. | Insured Value | b. | Sales Value | d. | Assessed Value |
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8.
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When taxes on a property are based on the market value of the property, the tax
is called:
a. | Ad Valorem | c. | Value added | b. | Special assessment | d. | Excise |
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9.
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How does a lender protect
himself against a lien being filed for the failure to pay property taxes? a. | The lender requires the buyer to pay his taxes on a monthly basis. | c. | The lender requires
the buyer pay the taxes in advance. | b. | The lender makes the buyer put 1/12 of the
annual taxes in an impound account each month. | d. | The buyer must record the mortgage before a tax
lien is filed. |
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10.
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The commission received by the broker is:
a. | Established by MLS (Multiple Listing Services) | c. | Negotiated between the selling
broker and the buyer | b. | Negotiated between the listing broker and the
seller | d. | Higher than that of
the salesperson |
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11.
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On a principal residence the homeowner can deduct which of the following
for tax purposes?
a. | Principal and Interest Payments | c. | Capital
Improvements | b. | Depreciation | d. | Interest |
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12.
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Which of the following is deductible on an investor's federal tax
return?
a. | The cost of the adjacent lot to be used for parking. | c. | The annual hazard insurance premium
on an office building owned by the investor. | b. | The cost of replacing the building's
central air conditioning system. | d. | The depreciation on a 20-year old personal residence. |
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13.
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A home owner has the following expenses during a tax year: $12,540 paid in
principal and interest on a VA loan; $5,000 for addition of a deck; $1,800 in property tax and $600
paid for hazard insurance. What amount can he deduct for federal tax purposes?
a. | Property taxes and VA insurance Premiums. | c. | Interest and capital
additions. | b. | Principal and interest expense on the VA loan. | d. | Interest on the VA loan and property
tax. |
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14.
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What is a special assessment?
a. | It is evidence that a tax lien has been filed for non payment of property
taxes | c. | It is the amount charged the owner to finance a civic improvement such as a sewer
system which benefits the property. | b. | It is the property tax on a
property. | d. | It creates a
general lien on all properties owned by the individual. |
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15.
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All of the following are true about special assessments EXCEPT:
a. | They are charges in addition to property taxes. | c. | They create a specific lien against
the property. | b. | They are tax deductible like property taxes. | d. | They are based on the value received by the
property. |
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16.
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Which of the following has priority over a mechanic's lien?
a. | A second mortgage | c. | A senior mortgage | b. | A tax lien | d. | A wraparound
mortgage |
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17.
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Property taxes are considered delinquent and become a lien if not paid by
the:
a. | First of each month | c. | End of the month | b. | Due date | d. | 18 months after the due
date |
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