Chapter 17 - Investment and Business Brokerage

Question 1

An increase in value or worth.

Answer 1

Appreciation

Question 2

The cost of a property that the Internal Revenue Service uses to determine annual depreciation and gain or loss on the sale of an asset.

Answer 2

Basis

Question 3

A written instrument given to transfer title to personal property.

Answer 3

Bill of sale

Question 4

Money or property given to make up any difference in value or equity between two properties.

Answer 4

Boot

Question 5

Section of the uniform commercial code which regulates the transfer of personal property designed to protect creditors from the fraud perpetrated by a business owner who sells a business, including equipment, stock, and then disappears, leaving creditors unpaid.

Answer 5

bulk transfer act

Question 6

Profits realized from the sale of assets like real estate.

Answer 6

Capital Gain

Question 7

The object of income property is to generate spendable income. total amount of money remaining after all expenditures have been paid,including taxes,operating costs, and mortgage payments.

Answer 7

Cash flow

Question 8

For income tax purposes, yearly write-off of a percentage of the cost of a building as an expense.

Answer 8

Depreciation

Question 9

A transaction in which all or part of the consideration for the purchase of real property is the transfer of like kind property (for example real estate for real estate). dealt with in section 1031 IRC.

Answer 9

Exchange

Question 10

Property held for producing income as well as for a profit on its sale.

Answer 10

Income property

Question 11

Purchase price is paid over a period of years. Seller reports any profit on the transaction year by year as it is collected.

Answer 11

Installment sale

Question 12

The use of borrowed money to finance investments.

Answer 12

Leverage

Question 13

The rate at which the investors’s top dollar is taxed.

Answer 13

Marginal tax rate

Question 14

The practice by which the investors holding can be increased without investing additional capital.

Answer 14

Pyramiding

Question 15

Joining together of two or more people or firms to carry out one or more business projects. not in itself a legal entity and may be organized into a number of ownership forms.

Answer 15

Real estate investment syndicate

Question 16

REIT, investors take advantage of the same tax benefits as mutual fund investors. must have 100 investors and at least 75% of the trust’s income must come from real estate.

Answer 16

Real estate trust

Question 17

Generally real estate investments have shown an overall rate higher than the prevailing interest rate charged by mortgage lenders.

Answer 17

Return

Question 18

a direct reduction to the tax due rather than a deduction from income before tax is computed.

Answer 18

tax credit

Question 19

A codification of commercial law, adopted in most states, that attmpts to make uniform all laws relating to commercial transactions, including chattel mortgages and bulk transfers.

Answer 19

Uniform Commercial Code (UCC)

Question 20

Original cost plus improvements less depreciation.

Answer 20

Adjusted basis