6 - Securities Analysis, Taxation & Federal Law Flashcards Preview

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Flashcards in 6 - Securities Analysis, Taxation & Federal Law Deck (189)
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1

Tax rate increases as income increases

Progressive tax

2

Taxes that are levied equally regardless of income

Regressive taxes

3

Three examples of regressive taxes

Sales, excise, property

4

Two examples of progressive taxes

Income, estate

5

Three types of income subject to taxation

Earned, passive, portfolio

6

Two sources of passive income

Limited partnerships, rental property

7

Three taxable forms of portfolio income

Interest, dividends and capital gains

8

Minimum holding period for lower long-term capital gains tax rate

1 year and 1 day

9

Short-term holding period for capital gains tax computation

1 year or less

10

Maximum amount of capital loss that can be used to offset current income each year

$3,000

11

Maximum tax rate applicable to long-term capital gains

15%

12

Period of time for which capital losses can be carried forward

Indefinitely

13

Transaction which disqualifies capital loss because substantially similar securities are repurchased within 30 days

Wash sale

14

Number of days before or after a sale for a loss for which a purchase of substantially similar securities must be avoided

Thirty days

15

Under the wash sale rule, purchases of any of these four securities of the same issuer are considered substantially identical to purchases of the issuer's stock

Long calls, rights, warrants and convertible bonds

16

Three accounting methods available for determining which shares to liquidate

FIFO, share identification, average basis

17

Method of share identification assigned by the IRS if no other method is chosen

FIFO

18

Maximum tax rate that applies to qualified dividends

15%

19

Cash dividends that are eligible for taxation at the same rate as long-term capital gains

Qualified

20

Minimum holding period of stock for dividends to be classified as qualified

Sixty-one days

21

Tax implication of stock splits and stock dividends

Reduction to cost basis; no current taxation

22

The amount of investment in property; used to determine the gain or loss at time of sale

Cost basis

23

The accounting method that allows an investor to select which shares to liquidate for tax purposes

Share identification

24

Shares that would be liquidated first to result in the lowest possible capital gain

Shares with highest cost basis

25

The process of adjusting the cost basis of a bond purchased at a discount

Accretion

26

The process of adjusting the cost basis of a bond purchased at a premium

Amortization

27

A change of two of these three municipal bond characteristics avoids the wash sale rule

Issuer, coupon, maturity

28

The cost basis at maturity of a municipal bond purchased at a price of 108 with 8 years to maturity

Cost basis = par

29

The date which determines the amount of the tax deduction for charitable donations of appreciated property

Date the donation is made

30

The amount of tax deduction available for gifts of securities made to family members or others

None