Funds Beginner: Taxes on Mutual Fund Income

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1.
An exchange of shares from one mutual fund to another in a fund family is a taxable event, except in the case of _______.
Choose wisely. There is only one correct answer.
Qualified retirement plans. Exchanges made within qualified retirement plans are tax-exempt.
2.
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.
3.
Which IRS form shows ordinary dividends?
Choose wisely. There is only one correct answer.
1099-DIV. Form 1099-DIV reports dividends.
4.
Which would you rather own in a taxable account?
Choose wisely. There is only one correct answer.
It depends on which is the better aftertax performer. If you're investing in a taxable account, it's wise to consider taxes when investing. However, don't let the tax tail wag the investment dog. What's most important is how much you keep after taxes, not how much Uncle Sam gets.
5.
Income from municipal bond mutual funds may be taxable on the state level.
Choose wisely. There is only one correct answer.
True. In some cases, they are taxable on the state level.