Choose wisely. There is only one correct answer to each question.
0%
Keep studying!
Review your answers below to learn more.
1.
Income from municipal bond mutual funds may be taxable on the state level.
True. In some cases, they are taxable on the state level.
2.
You may be taxed on a transfer between mutual funds because the IRS sees the transfer as a dividend.
False. You will be taxed on it because the IRS sees it as a capital gain, if one has been made.
3.
The _______ is what you earn when you sell mutual fund shares at a profit.
Capital gain. The other two are earned when the fund, not you, makes a profit.
4.
Which IRS form shows ordinary dividends?
1099-DIV. Form 1099-DIV reports dividends.
5.
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.
