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Question 1 of 10
1. Question
Which is (are) the right ways of cash dividends taxation?
I. If held fewer than 61 days, they are taxed at the recipient’s tax bracket
II. If held more than 61 days, at no more than 15 percent.
III. If held fewer than 61 days, at no more than 15 percent.
IV. If held more than 61 days, they are taxed at the recipient’s tax bracket.Correct
Cash dividends are taxed in two ways: if held fewer than 61 days, they are taxed at the recipient’s tax bracket; if held more than 61 days, at no more than 15 percent.
Incorrect
Cash dividends are taxed in two ways: if held fewer than 61 days, they are taxed at the recipient’s tax bracket; if held more than 61 days, at no more than 15 percent.
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Question 2 of 10
2. Question
From which type(s) of bond interest income come?
I. Corporate bond
II. Refunding bond
III. Municipal bond
IV. U.S. government securities bondCorrect
Interest income comes from bonds, either corporate, municipal, or U.S. government securities bonds.
Incorrect
Interest income comes from bonds, either corporate, municipal, or U.S. government securities bonds.
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Question 3 of 10
3. Question
Which of the following statement(s) is (are) true about Municipal bonds?
I. Municipal bonds may be taxed at the state level.
II. Municipal bonds and their distribution of gains come in many different sizes.
III. The IRS treats Municipal bonds based on their investment type, as well as their objective.
IV. Municipal bonds funds income are not taxed by the federal government.Correct
Municipal bonds are tax-free for federal filings, but may be taxed at the state level. U.S. government bond interest is taxed federally, but tax-free in state filing.
Incorrect
Municipal bonds are tax-free for federal filings, but may be taxed at the state level. U.S. government bond interest is taxed federally, but tax-free in state filing.
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Question 4 of 10
4. Question
Stock funds’ income, as well as short-term capital gains, are capped at –
Correct
Stock funds’ income, as well as short-term capital gains, are capped at 15 percent for tax purposes.
Incorrect
Stock funds’ income, as well as short-term capital gains, are capped at 15 percent for tax purposes.
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Question 5 of 10
5. Question
Which of the following statement(s) is (are) true about Capital Gain/Loss and Taxes?
I. When an investor holds a security for less than one year before selling, the capital gain is taxed at their tax bracket and the capital loss can be used to offset capital gain on other investments.
II. Long-term capital gains taxes are capped at 15 percent; long-term capital loss can be offset by long- term capital gain on other investments.
III. When an investor holds a security for longer than a year before selling, the IRS considers this investment long-term.
IV. If there is a net capital loss, the investor can write up to $3,000 off against his income.Correct
When an investor holds a security for less than one year before selling, the capital gain is taxed at their tax bracket and the capital loss can be used to offset capital gain on other investments. When an investor holds a security for longer than a year before selling, the IRS considers this investment long-term. Long-term capital gains taxes are capped at 15 percent; long-term capital loss can be offset by long- term capital gain on other investments. If there is a net capital loss, the investor can write up to $3,000 off against his income.
Incorrect
When an investor holds a security for less than one year before selling, the capital gain is taxed at their tax bracket and the capital loss can be used to offset capital gain on other investments. When an investor holds a security for longer than a year before selling, the IRS considers this investment long-term. Long-term capital gains taxes are capped at 15 percent; long-term capital loss can be offset by long- term capital gain on other investments. If there is a net capital loss, the investor can write up to $3,000 off against his income.
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Question 6 of 10
6. Question
Which of the following statement is true about the Wash Sale Rule?
The Wash Sale Rule states investors cannot buy or sell the same security –Correct
The Wash Sale Rule states investors cannot buy or sell the same security 30 days before or after claim- ing a loss on the sale of that same security.
Incorrect
The Wash Sale Rule states investors cannot buy or sell the same security 30 days before or after claim- ing a loss on the sale of that same security.
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Question 7 of 10
7. Question
Karen Williams bought a 5 percent corporate bond at 75, maturing after 10 years. For bonds, assume a par value at maturation of $1,000; she bought her bond for $750. Her annual income is-
Correct
To calculate her annual income for this bond, you will need to add her annual interest income, as well as the gains made annually toward the par value. Her interest is 5 percent, so $50 a year. Her total accretion is $250 ($1,000 – $750), which makes $25 for each of the 10 years to the bond’s maturity. Her annual income is $25 + $50 = $75.
Incorrect
To calculate her annual income for this bond, you will need to add her annual interest income, as well as the gains made annually toward the par value. Her interest is 5 percent, so $50 a year. Her total accretion is $250 ($1,000 – $750), which makes $25 for each of the 10 years to the bond’s maturity. Her annual income is $25 + $50 = $75.
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Question 8 of 10
8. Question
John Griffin bought an 8 percent 10-year bond at 105. He receives $80 a year in interest. After amortization what will be his annual income?
Correct
To amortize the $50 premium he paid for this bond, you divide it by 10 to reach the annual cost, so $5. He re- ceives $80 a year in interest (8 percent on a $1,000 bond), making his annual in- come after amortization $80 – $5 = $75.
Incorrect
To amortize the $50 premium he paid for this bond, you divide it by 10 to reach the annual cost, so $5. He re- ceives $80 a year in interest (8 percent on a $1,000 bond), making his annual in- come after amortization $80 – $5 = $75.
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Question 9 of 10
9. Question
When was the the Employee Retirement Income Securities Act (ERISA) signed into law?
Correct
The Employee Retirement Income Securities Act (ERISA) was signed into law in 1974.
Incorrect
The Employee Retirement Income Securities Act (ERISA) was signed into law in 1974.
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Question 10 of 10
10. Question
Which of the following statement is true about Tax-qualified plans?
I. Tax-qualified plans allow the investor to use pre-tax dollars to invest, therefore deducting the contributions from his income.
II. Under a tax-qualified plan, both contributions and gains are tax-deferred.
III. Under a tax-qualified plan, the investor does not pay taxes until he or she withdraws from the account, presumably in retirement.
IV. Tax-qualified plans take contributions from after-tax dollars.Correct
Tax-qualified plans allow the investor to use pre-tax dollars to invest, therefore deducting the contributions from his income. Under a tax-qualified plan, both con- tributions and gains are tax-deferred, meaning the investor does not pay taxes until he or she withdraws from the account, presumably in retirement.
Incorrect
Tax-qualified plans allow the investor to use pre-tax dollars to invest, therefore deducting the contributions from his income. Under a tax-qualified plan, both con- tributions and gains are tax-deferred, meaning the investor does not pay taxes until he or she withdraws from the account, presumably in retirement.