Which of the Following Is True About Mutual Funds and Taxes

question 26

Multiple Choice

Which of the following is true about mutual funds and taxes?

• A) Capital gain distributions are taxed when you sell your shares.
• B) Income dividends are taxed quarterly.
• C) Investment companies are required to send each shareholder a year-end statement that specifies how much each received in dividends and capital gain distributions.
• D) Capital gains distributions are not taxed.
• E) Taxes can be eliminated if you hold your mutual fund shares in your 401(k) retirement account.

---

Definitions:

Floating GAAP

Generally Accepted Accounting Principles that are adaptable and can change over time with financial reporting standards.

Regulatory Accounting

Accounting practices and policies that are guided by regulatory bodies to ensure transparency, accuracy, and compliance in financial reporting.

Conflicts of Interest

Situations where a person's private interests might interfere with their professional duties or responsibilities.

Mutual Expectations

This term describes the shared, understood obligations or beliefs about future actions between two or more parties in a relationship or agreement.