Income Tax Law Fundamentals - Sample Questions 1 - 5
1. Lillian bought local public activity municipal bonds and financed a new home because she was interested in getting some tax-free interest and itemizing her deductions on her federal tax return. This would be a good example of which of the following:
(1) Tax evasion
(2) Buying bonds exempt from regular income tax, but subject to AMT
(3) Tax avoidance
(4) Supporting a local municipality
(5) Building long-term equity through home ownership
A) 1, 2, and 5 only
B) 2, 3, 4, and 5 only
C) 3, 4, and 5 only
D) 3 and 5 only
2. Which of the following might a CFP® certificant recommend if they want to provide tax-deferred income to an investor:
(1) Corporate bonds in a brokerage account
(2) Dividend stocks in a traditional IRA
(3) Fixed annuity
(4) High-yield mutual funds in a 401(k) plan
(5) REIT investments in a joint brokerage
A) 1, 2 , and 3 only
B) 2, 3, and 4 only
C) 3, 4, and 5 only
D) 1, 2, 3, 4, and 5
3. Which of the following statements about taxes are TRUE?
A) Tax evasion is illegal
B) Tax avoidance is illegal
C) Tax-free income is taxed at the federal level
D) The Treasury Department is the highest source of tax authority
4. All of the following are issued by the National Office of the IRS, EXCEPT?
A) Private letter rulings
B) Technical advice memorandums
C) Revenue rulings
5. Which of the following statements are TRUE regarding the federal tax trial & appeal courts?
I. Jury trial is not available in the U.S. Tax Court
II. Appeals can be made to the U.S. Court of Appeals
III. In the U.S. District Court, taxpayer must pay their deficiency, then sue for refund
IV. U.S. Court of Federal Claims rules on monetary cases against the U.S.
A) I and II only
B) I, II, and III only
C) II, III, and IV only
D) I, II, III, and IV
Investing BasicsRisk-adjusted return is a measurement of risk for an investment or portfolio.
Investing BasicsBuying below the margin of safety minimizes the risk to the investor.
Mutual Funds & ETFsFind out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
Mutual Funds & ETFsFind out about the Guggenheim Enhanced Short Duration ETF, and learn detailed information about this fund that focuses on fixed-income securities.
Mutual Funds & ETFsFind out about the Shares Morningstar Small-Cap Value ETF, and learn detailed information about this exchange-traded fund that focuses on small-cap equities.
Mutual Funds & ETFsFind out about the iShares MSCI KLD 400 Social exchange-traded fund, and learn detailed information about its characteristics, suitability and recommendations.
Mutual Funds & ETFsFind out about the Guggenheim BulletShares 2018 High Yield Corporate Bond ETF, and get information about this ETF that focuses on high-yield corporate bonds.
Mutual Funds & ETFsFind out about the PowerShares DWA SmallCap Momentum Portfolio ETF, and explore detailed analysis the fund's characteristics, suitability and recommendations.
Mutual Funds & ETFsLearn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
Mutual Funds & ETFsFind out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
The amount of risk that an insurance company retains after subtracting ...
Coverage that provides financial protection to investors, financial ...
The maximum loss from a peak to a trough of a portfolio, before ...
The absolute level of a fund's investments.
A technique used by insurance companies to calculate loss reserves.
The financial benefit that a risk-taking activity will bring ...
The Federal Deposit Insurance Corporation, or FDIC, is a government-run agency that provides protection against losses if ... Read Full Answer >>
The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
The term delta refers to the change in price of an underlying stock or exchange-traded fund (ETF) as compared to the corresponding ... Read Full Answer >>
An investor who is overweight in a particular sector risks a loss in value for the portfolio if there is a downturn in that ... Read Full Answer >>
The retail sector consists of companies operating in multiple industries such as specialty retail, general retail, food and ... Read Full Answer >>
Like all equity investments, insurance companies present investors with market risk. Insurance companies, like banks, also ... Read Full Answer >>