Multiple Choice and Short Answer

1. An annual deduction based on the class life of an asset is:

a. Cost of Sale b. Cost Recovery c. Special Improvement Tax d. Cost Basis

2. Total basis must be allocated among:

a. land b. building improvements c. land improvements d. personal property e. all the above

3. The Cash Flow Analysis PowerPoint lists four acquisition methods a property is acquired. They include all the following except:

a. Tax-deferred exchange b. Purchase c. Stolen d. Gift e. Inheritance

4. The Purchase Price plus the Acquisition Cost equals the:

a. Mortgage Amount b. Cost Recovery Figure c. Original or Acquisition Basis d. Active Income

5. The purchase price of an acquired piece of property is $230,000 cash and has acquisition costs of $20,000. The tax assessment for this property is:

TAX CARD	Assessed Value	Ratio Calculations
Land	$40,000	$40,000 / $200,000 = 20%
Improvements	$160,000	$160,000 / $200,000 = 80%
Total Assessment	$200,000

a. What is the acquisition basis for the purchased property?

b. What is the allocation for land?

c. What is the allocation for improvements?