13. The tax liability on a sale of a property that was bought without financing is (you can look at Line 10 on the Annual Cash Sales Worksheet):

a. The sales price multiplied by the tax rate and the assessed value. b. Equal to the NOI c. The amount of tax owed on the capital gain created from appreciation plus the amount of tax owed on the gain created by the recapture of the straight-line cost recovery. d. None of the above

15. You have purchased a duplex property for $275,000. The propertys assessed value was $200,000, of which $140,000 is for improvements and $60,000 is for land. The property was purchased on the first day of the tax year. What is the cost recovery for the year of acquisition?

a. 4,000 b. 6,709 c. 5,156 d. 275,000

16. Cost Recovery Deduction depends on the useful economic life of an asset defined by the IRS. The class life of residential real estate improvements is:

a. 39.0 years b. 37.5 years c. 27.5 years d. 29 years

17. The straight-line cost-recovery method uses this calculation:

a. 100/29 b. Original Basis (100%) / Class Life c. Year of acquisition /39 years d. Original Basis / 15^th of the month

18. Taxable income for an improved property which has no financing is determined by:

a. Subtracting the operating expenses from the gross operating income b. Subtracting the vacancy rate from the Potential Rental Income c. Subtracting the operating expenses and the cost recovery deduction from the gross operating income d. Multiplying the sales price by the cap rate

19. Find the Adjusted Basis using the following figures: Original Basis is $2,000; Capital Improvements are $700; Cost Recovery Taken is $400

Answer: ___________________

20. Straight-line cost recovery is taxed at ordinary income rates up to a:

a. Max of 20% b. Max of 30% c. Max of 25% d. Max of 50%

21. In the Arkansas Apartments Discounted Cash Flow Assumption Data, the total Assessed Value is:

a. 1,300,000 b. 700,000 c. 300,000 d. 1,000,000

22. In the Arkansas Apartments Discounted Cash Flow Assumption Data, the capital gains tax rate is:

a. 25% b. 37% c. 20% d. 15%