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Funds 104: Taxes on Mutual Fund Income

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1.
You may be taxed on a transfer between mutual funds because the IRS sees the transfer as a dividend.
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False. You will be taxed on it because the IRS sees it as a capital gain, if one has been made.
2.
Which of the following in a mutual fund is not taxable?
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A mutual fund share. Only income is taxable.
3.
When is the worst time to buy a fund, from a tax standpoint?
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Right before a fund makes a distribution. If you buy a fund just before it makes a distribution, you'll pay taxes on that distribution, even though you haven't enjoyed any of the appreciation that led to that distribution.
4.
Income from municipal bond mutual funds may be taxable on the state level.
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True. In some cases, they are taxable on the state level.
5.
Which IRS tax form shows the proceeds of mutual fund share sales?
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1099-B. This form reports the sales of shares.