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1.
The idea behind creating a class of "qualified dividends" is to prevent _______.
Double taxation. The idea behind making some dividends qualified is to reduce double taxation -- that is, taxation of the same profits at both the corporate and shareholder levels.
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.
All other things being equal, which would you rather own in a taxable account?
The stock of a solid business that grows steadily over time but pays no dividend. You would prefer to own in a taxable account the stock in a solid business that grows steadily over time, but pays no dividend. This would allow you to hold the stock for a long time, deferring the realization of capital gains. Dividends would be taxable.
4.
If you have a capital loss of $4,000 in one year and you deduct the limit of $3,000 on your income tax return, what happens to the leftover $1,000?
You carry it over to the next year. The IRS lets you carry over any undeducted loss into subsequent years.
5.
Which type of tax-advantaged account offers the potential for tax-exempt distributions?
A Roth IRA. A Roth IRA offers tax-free distributions, as long as certain rules are met. The downside is that Roth IRAs must be funded with after-tax dollars.
