Unit 15- Ethics/Taxation Flashcards
Selling away
When you make a private securities transaction
Churning
excessive trading in customers account to generate commisions
Reverse Churning
Placing in fee based account despite few transactions
What price can compensation not exceed?
$100
What type of gifts are prohibited?
season tickets and vacations
Painting the Tape
transaction occurs with understand that stock will be repurchased at the same price later in the day, creating the perception of volume
Constant Dollar Plan
a fixed dollar amount is invested at any given time. If market value rises, excess is sold vice versa
Constant Ratio Plan
a fixed ratio of asset allocation
tactical asset allocation
short-term portfolio adjustments that adjust asset allocation in consideration of current market conditions
Regressive Taxes
levied equally regardless of income
Progressive Taxes
tax rate increases as income increases
What type of Income is: SALARY
Earned
What type of Income is: bonuses
Earn
What type of Income is: Rental Property
Passive
What type of Income is: LPs
Passive
What type of Income is: Active Participation in trade or business
Active
What type of Income is: enterprises not actively involved in
Passive
What type of Income is: Dividends
Portfolio
What type of Income is: Net Capital Gains
Portfolio
What $ amount of net capital losses can offset income each year?
$3,000
Who taxes Fannie Mae and Freddie Mac securities?
All Levels
When are mutual fund distributions taxed?
the year of distributions
Are stock dividends or stock splits taxable?
No- but they lower cost basis
How are short term gains taxed?
ordinary income
What is the holding period for short term gains?
12 months or less
wash sale
sells the security at a gain/loss and then repurchases the same security within 30 days before/after trade date reporting loss
MAY NOT USE CAPITAL LOSSES TO OFFSET ANY GAINS
When you rollover loss to identical security’s cost basis, how do you calculate new cost basis?”
When long, add to the cost basis
when short, subtract from cost basis
On a muni bond purchased as OID, the effective after tax yield is also the:
Stated yield to maturity
On a muni bond purchased on the secondary market, the effective after tax yield is:
between the stated yield to maturity and the coupon
Shorting against the box
originally used to lock in capital gain. Instead of selling long shares, investor borrows the same shares and sells them short. Bc borrowed shares were sold, no tax event
If a new issue muni bond is bought at a discount, it MUST/MUST NOT be accreted.
MUST
If a new issue muni bond is bought at a discount, at maturity there IS/IS NOT a capital gain?
IS NOT
