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1.
A reasonably intelligent person who studies the tax code from time to time can probably make good decisions about how to shelter investment income from taxes.
False. Even the simplest workplace retirement plan can have tax implications that require expert advice.
2.
Pre-tax investments shelter your current income from taxation.
True. The income you invest in pre-tax investments either has no tax withheld or is tax-deductible.
3.
_______ are taxed at a relatively low rate if you hold your investments long enough.
Capital gains. Long-term capital gains are taxed at a lower rate to encourage investment.
4.
The profits realized on the sale of appreciated stocks you held for more than a year are subject to lowered tax rates.
True. Profits made on the sale of stocks you held for more than a year are long-term capital gains, which are taxed at lower rates than regular income, including dividends and interest.
5.
A tax-sheltered account always protects your investment interest from taxes.
False. A tax-sheltered account lets interest grow within your account without taxes until it is withdrawn. Once it is withdrawn, it may be taxed.