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7/21/2018
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Course 661001- Selling Real Estate Without Paying Taxes
  Final Exam
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661001v - Selling Real Estate Without Paying Taxes

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of 40 Total Questions
Taxation
19 CPE Credit Hours

7/21/2018
Final Exam
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Read 'Chapter 1: Introduction' & answer the following question(s):
1. The tax system in the United States is based on taxing increases in wealth as opposed to taxing income.
2. Forgiveness of debt is not taxable.
3. The following creates taxable gains on the disposition of property:
4. In the author's opinion, taxable gains are good because the alternative is sure to be less desirable.
Read 'Chapter 2: What Are Your Objectives?' & answer the following question(s):
5. The four goals of investment or reinvestment are:
Read 'Chapter 3: How to Estimate Your Capital Gains Taxes' & answer the following question(s):
6. How do capital improvements affect the adjusted basis of a property?
7. A component of capital gain on a property is:
8. The 1997 tax change which reduced the capital gains rate from 28% to 20% only reduced the rate of recapture of depreciation to 25%.
Read 'Chapter 4: Benefiting from a Stepped-Up Basis' & answer the following question(s):
9. When one joint tenant dies in a joint tenancy, his ownership interest:
10. Community property vesting allows the surviving spouse to receive a full stepped-up basis on both the deceased spouse's share and on the surviving spouse's own share.
11. Obtaining the highest possible value for stepped-up basis is always to your advantage.
Read 'Chapter 5: Using the Primary Residence Exclusion' & answer the following question(s):
12. To qualify for the primary residence exclusion, you must pass:
13. The general rule to pass the primary residence exclusion 'use test' is that the owner must have lived in the home for at least two contiguous years.
14. Depreciation taken as a home office deduction will have to be recaptured and taxed when the home is sold.
Read 'Chapter 6: Starker 1031 Tax-Deferred Exchanges' & answer the following question(s):
15. 1031 Exchanges allow taxpayers to change the type or character of real estate investments.
16. The party which facilitates and documents 1031 exchanges and holds funds between the sale of a relinquished property and the purchase of a replacement property is known as a(n):
17. Trading up means:
18. The adjusted basis of relinquished property in a 1031 exchange will transfer to the replacement property.
19. The basic requirements for a fully tax-deferred 1031 exchange include:
20. In a 1031 exchange where the mortgage on the replacement property is less than the mortgage on the relinquished property, the difference in the mortgage amount is called:
21. The proper time to arrange with an accommodator for a 1031 exchange is:
22. A qualified intermediary creates a 'safe harbor' - that is a legal presumption that there was no actual or constructive receipt of funds.
23. Government licensing requirements for accommodators are:
24. Replacement property identified 46 days after the closing and transfer of relinquished property may qualify for a deferred 1031 exchange.
25. Notifying your title company by telephone that you've identified a replacement property satisfies the 45 day identification rule.
26. A common arrangement for reverse exchanges where a friendly party purchases and holds replacement property until such time as the relinquished property is sold is known as:
27. A QEAA is a:
Read 'Chapter 7: Installment Sales' & answer the following question(s):
28. In balancing the risks and benefits of installment sales, you should:
29. Too high of an interest rate on an installment sale may cause the buyer to refinance sooner which may trigger immediate capital gains tax.
Read 'Chapter 8: Combining a 1031 Exchange with an Installment Sale' & answer the following question(s):
30. One of the main reasons for using the combination 1031 exchange with an installment sale is to reduce the level of real estate investments as a whole.
Read 'Chapter 9: Private Annuity Trusts' & answer the following question(s):
31. Unlike an installment sale, when appreciated realty is exchanged for a private annuity contract, capital gains are triggered.
32. The trustee of a private annuity trust is responsible for:
33. The requirement that a private annuity trust be unsecured may be discomforting to a property owner as they lose control of the asset.
Read 'Chapter 10: Charitable Remainder Trusts' & answer the following question(s):
34. With a charitable remainder trust, you are able to take a charitable gift income tax deduction to offset your immediate income tax liability subject to certain limitations.
35. A charitable remainder trust is fairly simple to change or cancel once it's been set up.
36. The trustee of a charitable remainder trust may not be:
37. A wealth replacement trust is a trust designed to purchase and continue paying premiums on a life insurance policy that will pay a set amount on the death of the donor.
Read 'Chapter 11: Tax-Free Real Estate Investing in an IRA' & answer the following question(s):
38. Self directed IRAs are illegal.
39. Prohibited transactions of a self directed IRA include:
40. Income from debt-financed property is considered Unrelated Business Income (UBI).
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