Tax Treatment of Mutual Funds

Question 1

What does the IRS consider a “wash sale”?

Answer 1

selling a position at a loss to lock in tax benefit, and then buying it back within 30 days

Question 2

What 3 determinants does the IRA look at for municipal bond wash sales?

Answer 2

Issuer
Interest Rate
Maturity Date

Question 3

If someone owns shares of a money market and exchanges for shares in the same family of funds is that exchange taxable?

Answer 3

Yes

Question 4

How do you determine average cost basis per share?

Answer 4

Total purchase cost of all shares/number of shares owned

Question 5

What analyzing wash sale situations how is it determined which stock is being sold?

Answer 5

FIFO

First In, Last out

Question 6

For inheritance purposes, what is the cost basis of inherited stock?

Answer 6

Price when owner dies

Question 7

If stock is given as a gift, what is the cost basis?

Answer 7

Original price of purchase if no gift tax is paid