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Funds 104: Taxes on Mutual Fund Income

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1.
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.
2.
When you exchange mutual fund shares from one fund to another in a fund family, it is a tax-free exchange.
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False. An exchange is considered a sale and purchase for tax purposes, except in qualified retirement plans.
3.
Which of the following in a mutual fund is not taxable?
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A mutual fund share. Only income is taxable.
4.
Which IRS form reports withdrawals from retirement plans?
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1099-R. This form reports retirement plan withdrawals.
5.
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.