Practice Quiz

FINRA Series 6

Category - Series 6

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Under current tax laws, which of the following distributions received from a mutual fund qualify for preferential tax treatment?

I. short-term capital gains
II. long-term capital gains
III. qualifying dividends
IV. non-qualifying dividends
  1. III only
  2. II and III only
  3. I, II, and III only
  4. I, II, III, and IV
Explanation
Answer: B - Only Selections II and III-long-term capital gains and qualifying dividends-qualify for preferential tax treatment under current tax laws. Both are taxed at either 0% or 15%, depending on the investor’s marginal tax rate. Short-term capital gains and non-qualifying dividend distributions are taxed as ordinary income at the investor’s marginal tax rate.
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