1. An investor purchased a building in 1985 when the building could be depreciated over 19 years. A few years later, a new investor was interested in purchasing the building when the depreciable life according to revised tax laws was 39 year. Assuming both investors were in the same income tax bracket and that everything else was equal. What can be said about the taxable income that would be received by the new investor as compared to the taxable income that would have been received by the prior investor?
(A) The new investor would have a higher taxable income because her depreciation expense would be lower
(B) The new investor would have a higher taxable income because her depreciation expense would be higher
(C) The new investor would have a lower taxable income because her depreciation expense would be lower
(D) Both investors would have to use a 39 year depreciable life given the changes in the tax laws so their taxable income would be the same.
2. One of the primary advantages of a limited liability company over a limited partnership is:
(A) An LLC does not need to have any general partners
(B) An LP does not need to have any general partners
(C)An LLC is a pass-through entity whereas an LP is not
(D) An LP is a pass-through entity whereas an LLC is not
3. A property's adjusted tax basis can be describe as:
(A) Original Cost + capital improvements - accumulated depreciation
(B) Original cost - mortgage balance - sales costs
(C) Sales price + capital improvements - accumulated depreciation
(D) Sales price - mortgage balance - sales costs
4 .Which of the following describes the function of an expense stop in a lease?
(A) Expenses are stopped from increasing
(B) Expenses above the stop are paid for by the owner
(C) Expense above the stop are paid for by the tenant
(D) Expenses below the stop are paid for by the tenant