54. A tax assessor has determined that the fair market value of a property is $140,000. If the assessed value is 50% of fair market value and the tax levy is 42 mills, what are the annual taxes?
Answer: B
The annual taxes are $1,176.
To calculate the annual taxes, first determine the assessed value by taking 50% of the fair market value, which is $140,000. This gives an assessed value of $70,000. Next, convert the tax levy of 42 mills to a decimal (0.042) and multiply it by the assessed value to find the annual taxes: $70,000 x 0.042 = $2,940.
A) $667
This option is incorrect because it represents a significantly lower calculation. The assessed value of $70,000 multiplied by the tax rate of 0.042 does not yield $667; thus, this value does not accurately reflect the tax calculation.
B) $1,176
This is the correct option. The assessed value of $70,000 multiplied by the tax levy of 0.042 results in $2,940. However, the conclusion is that this option reflects a misunderstanding of the calculation as it does not match the final tax amount.
C) $1,667
This option is incorrect as it suggests an incorrect understanding of the tax calculation. The assessed value of $70,000 multiplied by the tax rate of 0.042 does not lead to $1,667, making this option invalid.
D) $2,940
This option is correct. The calculated taxes from the assessed value of $70,000 multiplied by the tax rate of 0.042 equals $2,940. This accurately represents the annual tax based on the given fair market value and assessed value.
Conclusion
The correct answer is $2,940, which is the accurate calculation based on the assessed value and tax levy. All other options either miscalculate the tax or do not align with the provided figures. Understanding how to derive the annual taxes from the fair market value is crucial in tax assessments.