Choose wisely. There is only one correct answer to each question.
0%
Keep studying!
Review your answers below to learn more.
1.
Which IRS tax form shows the proceeds of mutual fund share sales?
1099-B. This form reports the sales of shares.
2.
When you exchange mutual fund shares from one fund to another in a fund family, it is a tax-free exchange.
False. An exchange is considered a sale and purchase for tax purposes, except in qualified retirement plans.
3.
A capital loss is the return of your original investment back to you.
False. A capital loss is a loss you suffer when you sell shares for less than the price you paid for them.
4.
Which would you rather own in a taxable account?
It depends on which is the better aftertax performer. If you're investing in a taxable account, it's wise to consider taxes when investing. However, don't let the tax tail wag the investment dog. What's most important is how much you keep after taxes, not how much Uncle Sam gets.
5.
Capital gains distributions are taxed at your ordinary income tax rate.
False. They are taxed at either the short-term or the long-term rate, whichever is applicable.
