Well.... Last week I was Tee'd Off at the apparent incompetence of the On-Line Continuing Education that is required to renew my Real Estate License but after a week of delaying another afternoon of agony I decided to take my final course today.
My choice was to learn about 1031 Tax-Free Exchanges. Math has always been one of my strong subjects so on the list of educational courses I ASSUMED this course would be both beneficial and relatively pain free! I'm not quite half way through the material but I am thoroughly disgusted. Will someone PLEASE point out what I am not understanding that caused me to FAIL the chaper two exam. After misunderstanding some questions on the first exam I decided to move on and not over analyze why I was wrong. The second exam has pissed me off....
Below the summary shows I failed by getting two questions WRONG...
Here is Question 1 for which my answer was $13,500. Basically it appears to be pretty simple math but there is clearly something wrong. Looking at the word problem I am told of a Capital Gain of 135,000 but the seller offered financing and only received 45,000 in the first year. Taxes would be 15% on the gain in the year is is received... So... Am I wrong or is the test answer WRONG? They say the ANSWER is 36,000 but go on to justify how they arrive at 13,500 ( my answer ) Can some one show me the light?
Below is the review of Question 7 that is a little more subjective to interpretation but equally disturbing. Keep in mind the yellowish portions does not show up on the test. The question states "When an owner sells a property on installment, taxes are paid on the ____________" Knowing from the reading assignment that capital gains are taxed at 15% and interest income from installment sales would be taxed as unearned income in the year the money is received I had no doubt my answer was correct.... "portion of capital gain and interest received in each year" WRONG!
I don't think I'm wrong on either of these questions and would welcome any feedback to set me straight if I have made an error. Back to my aggravation for another few hours....
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