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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.
Imagine you're a tax-sensitive investor. Which is the better bond for you?
It depends on your tax bracket. Investors in high tax brackets may benefit more from a muni--even if it has a lower yield--due to the tax break.
3.
When selling stock, you can sometimes reduce your capital gains if you sell only certain shares and not others.
True. If the shares were bought at different prices, you can specify that shares bought at higher prices be sold, which can then lower your capital gains.
4.
How do tax-managed funds limit shareholders' tax burdens?
They avoid dividend-paying stocks, they hold securities for a long time, and they sell losing stocks to offset gains in winning stocks. Tax-managed funds use a variety of strategies--not just one--to limit taxes.
5.
Contributions to variable annuities grow tax-deferred until you take them out at retirement.
