1. A taxpayer's adjusted tax basis in a property is:

1) its fair market value less the balance of outstanding mortgages.

2) the amount of the owner's equity in the property.

3) primarily an accounting, rather than a tax concept.

4) none of the above.

2. An important aspect of the depreciation allowance is that:

1) it is an out of pocket cost of doing business, reducing both cash flow and taxable income.

2) the tax shelter it generates can never exceed the income from the property.

3) both (a) and (b) are true.

4) none of the above is true.