Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%

Keep studying!

Review your answers below to learn more.

1.
When you exchange mutual fund shares from one fund to another in a fund family, it is a tax-free exchange.
Choose wisely. There is only one correct answer.
False. An exchange is considered a sale and purchase for tax purposes, except in qualified retirement plans.
2.
Which IRS tax form shows the proceeds of mutual fund share sales?
Choose wisely. There is only one correct answer.
1099-B. This form reports the sales of shares.
3.
Which of the following are not taxed?
Choose wisely. There is only one correct answer.
Capital losses. They are not income.
4.
When is the worst time to buy a fund, from a tax standpoint?
Choose wisely. There is only one correct answer.
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.
5.
Capital gains distributions are taxed at your ordinary income tax rate.
Choose wisely. There is only one correct answer.
False. They are taxed at either the short-term or the long-term rate, whichever is applicable.