16. The value of a property can be thought of as having two components, a land component and a building component. Since the land component of the original cost basis is not depreciable, it is important to understand how much of the propertys value is typically attributed to the land for tax purposes. As a general rule, the value of land constitutes what percentage (expressed as a range) of the total of a commercial property?

A. 0% - 10% B. 10%-30% C. 30% - 50% D. 50% - 70%

17. Tax law allows investors to take tax credits for the cost of renovating or rehabilitating older or historic structures and for the construction or rehabilitation of qualified low-income housing. Which of the following statements regarding tax credits is true?

A. A $1 credit reduces the investors tax liability by an amount dependent on the individuals income tax bracket. B. A $1 tax credit increases the investors taxable income by $1. C. A $1 tax credit decreases the investors taxable income by $1. D. A $1 tax credit has exactly the same impact on an investors tax liability as a tax deduction.

18. Taxable income from investment property sales must eventually be classified as either ordinary income, depreciation recapture income, or capital gain income. What is the maximum tax rate that an investor can be charged on depreciation recapture income?

A. 10% B. 15% C. 25% D. 35%

19. Given the following information, calculate the straight-line depreciation rate for the second year Cost recovery period: 27 years, Date of purchase: June 12^th.

A. 1.67% B. 1.97% C. 3.63% D. 20.0%

20. Taxable income for an improved property with financing is determined by: (Hint: You might want to use your Cash Flow Analysis Worksheet

A. Subtracting the operating expenses from the gross operating income. B. Subtracting the operating expenses, the cost recovery deduction (depreciation), annual interest, and loan costs amortization from the gross operating income. C. Subtracting the operating expenses from the net operating income. D. Subtracting the vacancy and credit losses from potential rental income