Order Taxation Issues Discussion Essay

Order Taxation Issues Discussion Essay
Order Taxation Issues Discussion Essay
1. An investor has purchased a revenue bond with a coupon of 5 percent
and a yield-to-maturity of 5.8 percent. If the investor is in the 28
percent tax bracket, what is the investor’s taxable equivalent yield for
this bond?
(A) 5 percent
(B) 5.8 percent
(C) 6.94 percent
(D) 8.05 percent
106 » McGraw-Hill’s 500 Series 7 Exam Questions to Know by Test Day
422. Which of the following statements are NOT true regarding Roth IRAs?
I. Contributions are made from pretax dollars.
II. Contributions are made from after-tax dollars.
III. Dividends and capital gains accumulate tax free.
IV. Earnings are taxed when earned.
(A) Iand II
(B) IandIV ~
(C) Iland HI
(D) Il and IV
423. A Pennsylvania resident purchases a Pennsylvania higher education
municipal bond. What is the tax status of the interest in Pennsylvania?
(A) It is exempt from state taxes only.
(B) It is exempt from local taxes only.
(C) It is exempt from federal taxes only.
(D) It is exempt from federal, state, and local taxes.
424. An investor bought 100 shares of ABC Corporation on February 14, 2008,
and sold the stock on February 14, 2009, receiving $20 in dividends
during the year. Which of the following statements are true relating to the
sale of the stock?
I. The gains on the sale of the stock are taxed as a short-term capital
II. The gains on the sale of the stock are taxed as a long-term capital
III. Dividends are taxed as ordinary income.
IV. Dividends are taxed as passive income.
(A) Iand IV
(B) Il and III
(C) Land II
(D) Il and IV
425. Distribution from an IRA can begin at age 5942, but must begin at age
(A) 65
(B) 67%
(C) 70%
(D) at retirement
Taxation Issues ¢ 107
What is the length of time for a tax-free rollover of assets between qualified retirement plans to occur?
(A) 30 days
(B) 60 days
(C) 90 days
(D) 120 days
An investor has $20,000 in long-term capital gains and $40,000 in
long-term losses. How much of the capital losses are carried forward to the next year?
(A) $3,000
(B) $17,000
(C) $20,000
(D) $40,000
An investor sells XYZ Corporation common stock on May 1 for a loss.
For the next 30 days this investor cannot buy
I. XYZ common stock
II. XYZ warrants
II. XYZ preferred stock
IV. XYZ call options
(A) I, IL, and III
(B) Ionly
(C) I, U, UI, and IV
(D) I, II, and IV
An investor purchases a 5 percent coupon bond with 15 years to maturity
at 70. How much taxable income should this investor report?
(A) $20
(B) $30
(C) $50
(D) $70
An investor purchases a 7 percent corporate bond with 10 years to maturity
at 115. How much income must this investor report for the year?
(A) $15
(B) $55
(C) $85
(D) $150
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