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Stocks 201: Stocks and Taxes

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1.
If you should have both large capital gains and large capital losses, what would be the most effective way to reduce taxes on the gains?
Choose wisely. There is only one correct answer.
Realize both the gain and the loss in the same year. If you did this, the losses would offset the gains. If you did either of the other two approaches, you would either be stuck with a tax bill or you might have to stretch out your losses over many years.
2.
When does your five-taxable-year period for Roth IRAs start?
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On Jan. 1 of the tax year when you make your first contribution or conversion to a Roth IRA.
3.
You must generally begin making mandatory withdrawals from 401(k) and traditional IRA accounts when you reach what age?
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73. You must generally begin making mandatory withdrawals from 401(k) and traditional IRA accounts when you reach 73.
4.
If you buy a stock for $20 and sell it for $30, the $10 gain is a form of ordinary income.
Choose wisely. There is only one correct answer.
False. The $10 gain is a capital gain, and may be taxed differently from ordinary income; it depends on how long you held the stock.
5.
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?
Choose wisely. There is only one correct answer.
You carry it over to the next year. The IRS lets you carry over any undeducted loss into subsequent years.