Choose wisely. There is only one correct answer to each question.
0%
Keep studying!
Review your answers below to learn more.
1.
If you buy a stock for $20 and sell it for $30, the $10 gain is a form of ordinary income.
False. The $10 gain is a capital gain, and may be taxed differently from ordinary income; it depends on how long you held the stock.
2.
You must generally begin making mandatory withdrawals from 401(k) and traditional IRA accounts when you reach what age?
73. You must generally begin making mandatory withdrawals from 401(k) and traditional IRA accounts when you reach 73.
3.
When does your five-taxable-year period for Roth IRAs start?
On Jan. 1 of the tax year when you make your first contribution or conversion to a Roth IRA.
4.
If you should have both large capital gains and large capital losses, what would be the most effective way to reduce taxes on the gains?
Realize both the gain and the loss in the same year. If you did this, the losses would offset the gains. If you did either of the other two approaches, you would either be stuck with a tax bill or you might have to stretch out your losses over many years.
5.
If you sell a stock six months after buying it and you realize a profit on it, your gain will be taxed at _______.
The ordinary income rate. This is a short-term gain and is therefore taxed at the ordinary income rate, which is higher than the tax rate on long-term gains.
