Series 7: Taxes
Terms
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- When on a Municipal Bond, do you pay Federal Income tax on ordinary income for accretion?
- When it is a Market Discount Bond.
- Whatever percentage of Keogh contribution the boss makes, he must _______.
- make the same contribution for his employees.
- Short term capital gains are taxed at ____ ____ rates. Long term capital gains are taxed at the maximum rate of ___.
-
ordinary income;
28% - What does ERISA stand for?
- Employee Retirement Income Security Act
- If one overcontributes to their Keogh Plan, there is a ____ Cumulative Penalty tax on the excess.
- 10%
- The maximum contribution on a Keogh plan is what?
- 25% of "self employment" earned income or $30,000 whichever is less.
- There are two types of pension plans what are they?
-
1. Defined Contribution: the contribution is predetermined, the retirement benefits are uncertain.
2. Defined Benefit Plan: A certain benefit is targeted for and actuarial calculations are required to determine the contributions necessary to reach the target. - You have a short term capital gain on securities if they have been held for ____ or less.
- 12 months
- The date of acquisition, to determine long-term status is the _____, not the settlement date.
- trade
- In a Keogh Plan, one is fully vested in __ years.
- 5
- How does a Simple Plan work?
- An employee can contribute up to $6,000 per year by reducing his salary and the employer can match.
- A business is not qualified for a simple plan if they have any other ______, or more than ____ employees.
-
qualified;
100 - There is a ___ penalty if one takes a distribution before they are age 59 1/2.
- 10% tax
- What does acronym in SIMPLE Plan stand for?
- Savings Incentive Match Plan for Employees
- On an IRA payment can't start before age ____ and start no later than ____.
-
59 1/2
70 1/2 - The maximum capital gains loss that can be written off in any year is _____.
- $3,000
- Securities acquired through a gift assume the ____ basis for tax purposes.
- donor's
- Short sales are always ____ ___ gains or losses.
- short term
- Interest received from bonds of the US Govt and most of its agencies are exempt from ___ tax but not from ___ tax.
-
state
Federal - There is no differences between the deductability of ST or LT capital losses except ____________.
- the ST are taken first.
- Conversion of a bond into common stock is/is not a taxable event because ____.
-
is not;
no money changes hands. - A pension plan requires an annual contribution whether or not _____.
- the firm makes any money that year.
- All gains from inheritance are treated as ___ ____.
- long term
- The heir acquires the stock of an inheritance at their value as of ______. This is called ____ ___ ____.
-
date of death.
stepped up basis - When selling stock acquired over years through the payroll deduction plan, the IRS will generally use ____ to determine which stocks held for what period were sold.
- FIFO, First In First Out
- FIFO does not always result in the most favorable tax consquences and the IRS also allows the _____ _____ method.
- identified stock
- There is a ___% dividend exclusion for corporations.
- 70%
- Interest from municipal bonds is exempt from ____ tax but not ___ tax. The one instance interest is exempt from state and federal taxes is when ____.
-
Federal;
State;
The bond was issued by a municipality of your state of residence. - If payments after attaining 70 1/2 are deemed insufficient, there is a tax penalty of ___ on the insufficient distribution.
- 50%
- Interest on FNMA, GNMA, and Sallie Mae are/are not taxable on state and federal levels.
- are
- The corporate income tax rate tops off at ____% of taxable profit.
- 35