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Funds 104: Taxes on Mutual Fund Income

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1.
Which IRS form reports withdrawals from retirement plans?
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1099-R. This form reports retirement plan withdrawals.
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.
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.
4.
Buying a mutual fund that has a very low turnover rate will reduce the number of _______.
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Capital gains. A lot of turnover will likely result in a lot of capital gains, which are normally taxable. If you want to reduce taxes, consider low-turnover funds.
5.
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.