Chapter 3- Customer Accounts- Objectives And Tax Issues Flashcards
What happens to losses that remain after offsetting gains and also taking $3,000 against ordinary income?
They are carried forward to subsequent years.
What is not permitted when opening an account, a client’s educational or financial background?
Educational background
True or False: Using a P.O. Box as an address is not acceptable when opening an account.
True. An actual address is required; however, mail may be sent to a P.O. Box.
Is a gift of $30,000 per married couple, per year, exempt from gift tax?
Yes
If a client wins $1 million, what should a RR do?
Update the account form.
Regressive taxes are also referred to as ___________ taxes.
Regressive taxes are also referred to as flat taxes.
What is the first use if capital losses?
They are first used as deductions against capital gains.
Is a gift of $14,000 per person, per year, exempt from gift tax?
Yes
Progressive taxes are also referred to as ___________ taxes.
Progressive taxes are also referred to as graduated taxes.
What are the capital gains tax rates?
Short-term gains are taxed at ordinary income rates, and long-term gains are taxed at a maximum of 20%
If an asset was held for one year or less prior to its sale, any gain or loss would be __________.
If an asset was held for one year or less prior to its sale, any gain or loss would be short-term.
Sales tax is an example of a _____________ tax.
Sales tax is an example of a regressive or flat tax.
How large can a gift be between spouses and remain exempt from the gift tax?
An unlimited amount
Income and estate tax are examples of a _________ or _________ tax.
Income and estate tax are examples of a progressive or graduated tax.
For a gain to be considered long-term, the asset must be held for ___________.
For a gain to be considered long-term, the asset must be held for more than one year.
What is some if the important information to obtain when opening a new client’s account?
Name, address, age, occupation, SSN, citizenship, income, net worth, objectives, risk tolerance, investment experience.
If a client refuses to provide certain information, may the account still be opened?
Yes, although name and address are required.
If there are losses remaining after offsetting gains, what amount may be used against ordinary income?
A maximum of $3,000.
What generates a capital loss or gain?
The sale of an asset, at a price that exceeds its basis (gain) or at a price lower than its basis (loss)
