1. Tax credits:
1) reduce taxable income in the year the credit is earned.
2) reduce taxable income in the year the credit is recognized.
3) are direct offsets against income tax liability.
4) are available only to corporations and trusts.
2. If a potential investor estimates the market value of an industrial park to be $10,000,000 and can obtain a loan with the following terms: loan to value of 75%, interest rate of 11%, and 20 years with 3 discount points. The estimated remaining discount expense that can be taken as a tax deduction as a result of a sale after a 7 year holding period is
1) $11,250
2) $78,750
3) $146,250
4) $225,000
5) none of the above.