Taxes & Tax Shelters - Other Tax Rules

Question 1

Dividend distributions are reported for tax purposes _____ by mutual funds

Answer 1

annually

Question 2

A mutual fund shareholder’s aggregate cost basis =

Answer 2

= original purchase price + value of all reinvested dividends and capital gains (these monies have already been taxed and won’t be taxed again on sale)

Question 3

For mutual funds, the IRS mandates that _____ accounting be used unless specified shares are noted by the seller

Answer 3

average cost basis

Question 4

Holding periods are calculated using the ____ dates

Answer 4

trade

Question 5

For short sales, a holding period is ______ established, therefore all gains or losses are always treated as ____

Answer 5

holding period is never established, therefore the gains/losses are always short term

Question 6

Gains/losses with “shorting against the box” are now captured by tax law, except if you cover the short position within ____ days of year end and stay long in the stock for an additional ____ - then you can defer tax

Answer 6

cover short within 30 days; stay long for an additional 60 days

Question 7

Cannot defer taxes using shorting the box to turn a short term gain into a ______

Answer 7

long term gain, holding period stops when shares are sold short

Question 8

To avoid a “wash” sale, a customer must wait ____ to repurchase the position

Answer 8

31 days - if within 30 days then it is considered a wash sale

Question 9

A loss is disallowed if a customer writes a _____ put on that security

Answer 9

a deep in the money put (share price is 10% or more below the strike price)

Question 10

In order to determine if a bond swap is a “wash” sale, 3 of the following must be different:

Answer 10

• issuer
• interest rate
• maturity date

Question 11

If you donate an appreciated property to charity, and has been held for more than 1 year, then there is _____ payable on the increase in value and recipient gets the _____ basis

Answer 11

no tax payable, recipient gets the stepped up basis

Question 12

If appreciated property is donated to anyone other than a charity, then basis is ____

Answer 12

unchanged - and no tax write off (and must pay the gift tax)

Question 13

If you inherit a piece of property/security/etc., then you get a basis =

Answer 13

current fair market value (must pay estate tax)

Question 14

Custodian accounts are taxed at the _____ if there is more than _____ of income (for 2016)

Answer 14

taxed at the parent’s bracket if there is more than $2,100 of income

Question 15

If a corporation owns less than 20% of another company, then ____ of dividends received are excluded from tax; if own more than 20%, then _____ is excluded from tax

Answer 15

70%; 80%

Question 16

Funds received from issuing securities are not considred income. T/F

Answer 16

True

Question 17

The max estate/gift tax for 2016 is ____ and it is a ______ tax

Answer 17

40%, progressive tax

Question 18

Gifts up to ______ can be given without incurring the gift tax in 2016.

Answer 18

up to $14,000

Question 19

The first ______ of an estate is excluded from tax adjusted for inflation annually (which is _____ for 2016)

Answer 19

$5,000,000; which is $5,450,000 for 2016

Question 20

For married couples, there is an _____ exclusion from gift or estate tax

Answer 20

unlimited

Question 21

Exchanging shares of one mutual fund for another fund in the same family is a taxable event. T/F

Answer 21

True

Question 22

Selling a put on a long stock position has _____ effect on the holding period

Answer 22

no effect

Question 23

Excise tax is a _____ tax

Answer 23

regressive