Exam (elaborations)
REE5305 Exam 1 (1)
Exam of 1 pages for the course REE 5305 at REE 5305 (REE5305 Exam 1 (1))
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REE5305 Exam 1When the sale of a passive activity produces a capital loss and unused passive losses from
previous years remain, the unused losses can be used to offset any other source of income.
A) True
B) False - ANS-True
Select all of the following statements that are TRUE regarding an effective tax rate?
It can be less than the actual marginal tax rate.
It can be larger than the actual marginal tax rate.
It takes into account the effects of depreciation and time value of money.
It measures the actual difference between the BTIRR and the ATIRR. - ANS-It can be less than
the actual marginal tax rate.
It takes into account the effects of depreciation and time value of money.
It measures the actual difference between the BTIRR and the ATIRR.
Which of the following is the formula for the adjusted basis of a property? - ANS-Original cost +
capital improvements − accumulated depreciation
Net sale proceeds less the adjusted basis of the property determines which of the following? -
ANS-Capital gains or losses
The deductibility of depreciation in calculating taxable income will usually cause the effective tax
rate to be lower than the actual tax rate. - ANS-true
When the sale of a passive activity produces a capital loss and unused passive losses from
previous years remain, the unused losses can be used to offset any other source of income. -
ANS-true
Operating expenses associated with the maintenance and upkeep of an owner-occupied
residential property are generally tax deductible. - ANS-false
If an individual actively participates in the management of a rental property, he may deduct the
full amount of the passive activity losses from active income, regardless of his adjusted gross
income. - ANS-False
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