Investment Analysis Flashcards

In a Section 1031 exchange, within how many days must replacement property be identified after the relinquished property is transferred?

Answer: 45 days

Replacement property must be identified within 45 days and acquired within 180 days of the transfer.

Since 2018, which assets qualify for like-kind exchange treatment under Section 1031?

Answer: Real property held for business or investment only

The TCJA limited Section 1031 to real property held for productive use in a business or for investment.

An investor holds a Qualified Opportunity Fund investment for at least 10 years. What is the key tax benefit on sale?

Answer: The basis may be stepped up to FMV, excluding post-investment appreciation

After 10 years, an election lets the QOF basis equal FMV at sale, so appreciation within the fund escapes tax.

Gain on sale of depreciated residential rental property attributable to prior straight-line depreciation is taxed at a maximum federal rate of:

Answer: 25%

Unrecaptured Section 1250 gain is taxed at a maximum 25% rate.

A landlord with MAGI of $125,000 actively participates in a rental. What is the maximum special allowance for passive rental losses?

Answer: $12,500

The $25,000 allowance is reduced by 50% of MAGI over $100,000, leaving $12,500 at $125,000.

Over what recovery period is a residential rental building depreciated under MACRS?

Answer: 27.5 years

Residential rental real property is depreciated straight-line over 27.5 years; nonresidential property uses 39 years.

Which study accelerates depreciation by reclassifying building components into 5-, 7-, and 15-year property?

Answer: Cost segregation study

A cost segregation study separates shorter-life components so they qualify for faster depreciation and potentially bonus depreciation.