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1.
Exchange-traded funds _______ pass capital gains taxes to their shareholders.
Do not. ETFs only generate taxes by owning dividend-paying stocks or by changing their holdings to reflect changes in their indexes.
2.
What is the tax attraction of variable annuities?
Contributions grow tax-deferred until retirement. Gains are then taxed as income upon withdrawal.
3.
Which statement is true?
Funds with exceptionally low turnover rates tend to be tax efficient. High-turnover funds aren't necessarily less tax efficient than low-turnover funds. A fund with a 200% turnover rate can be just as efficient as a fund with a 50% turnover rate. But funds with 0% to 20% turnover rates tend to be tax-efficient.
4.
If you're considering selling an appreciated investment that you bought 11 months ago, why might it make sense to hold it another month before selling it?
Because the capital gains tax would be lower after the 12 months. The lower capital gains tax can be quite an advantage for you.
5.
Municipal bonds are popular with investors because they are free of ______ tax.
Federal and sometimes state. Muni bonds are free of federal and sometimes state taxes. This can sometimes make them more attractive than bonds that pay higher interest rates. It depends on your tax bracket.
