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Funds 104: Taxes on Mutual Fund Income

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1.
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.
2.
An exchange of shares from one mutual fund to another in a fund family is a taxable event, except in the case of _______.
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Qualified retirement plans. Exchanges made within qualified retirement plans are tax-exempt.
3.
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.
4.
Capital gains distributions are taxed at your ordinary income tax rate.
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False. They are taxed at either the short-term or the long-term rate, whichever is applicable.
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.