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Funds 104: Taxes on Mutual Fund Income

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1.
Which of the following in a mutual fund is not taxable?
Choose wisely. There is only one correct answer.
A mutual fund share. Only income is taxable.
2.
Buying a mutual fund that has a very low turnover rate will reduce the number of _______.
Choose wisely. There is only one correct answer.
Capital gains. A lot of turnover will likely result in a lot of capital gains, which are normally taxable. If you want to reduce taxes, consider low-turnover funds.
3.
Which IRS form shows ordinary dividends?
Choose wisely. There is only one correct answer.
1099-DIV. Form 1099-DIV reports dividends.
4.
Which of the following are not taxed?
Choose wisely. There is only one correct answer.
Capital losses. They are not income.
5.
When you exchange mutual fund shares from one fund to another in a fund family, it is a tax-free exchange.
Choose wisely. There is only one correct answer.
False. An exchange is considered a sale and purchase for tax purposes, except in qualified retirement plans.