Q9. All else being equal, an investment fund that has a high level of portfolio turnover will accrue:

A)   more tax liabilities, and have a larger tax deferral benefit.

B)   more tax liabilities, and have a smaller tax deferral benefit.

C)   less tax liabilities, and have a smaller tax deferral benefit.

Q10. Emmanuel Qi purchased 100 shares of QRS on September 23^rd. It is now September 16^th of the following year, and he is planning to sell the shares to harvest a capital gain. You have advised him to wait until September 24^th to sell. This is an example of:

A)   deferring the timing of the tax payment.

B)   minimizing the amount of the tax payment.

C)   both minimizing the amount and deferring the timing of the tax payment.

Q11. An individual, aged 40, is currently in the 25% marginal tax bracket, and expects to be in the 15% bracket when he retires. Making contributions today to a tax-deductible individual retirement account is an example of:

A)   both minimizing the amount and deferring the timing of the tax payment.

B)   deferring the timing of the tax payment.

C)   minimizing the amount of the tax payment.

答案和详解如下：

Q9. All else being equal, an investment fund that has a high level of portfolio turnover will accrue:

A)   more tax liabilities, and have a larger tax deferral benefit.

B)   more tax liabilities, and have a smaller tax deferral benefit.

C)   less tax liabilities, and have a smaller tax deferral benefit.

Correct answer is B)

All else being equal, an investment fund that has a high level of portfolio turnover will accrue more tax liabilities, and have a smaller tax deferral benefit.

Q10. Emmanuel Qi purchased 100 shares of QRS on September 23^rd. It is now September 16^th of the following year, and he is planning to sell the shares to harvest a capital gain. You have advised him to wait until September 24^th to sell. This is an example of:

A)   deferring the timing of the tax payment.

B)   minimizing the amount of the tax payment.

C)   both minimizing the amount and deferring the timing of the tax payment.

Correct answer is B)

This is an example of minimizing the amount of the tax payment. He will still need to make the appropriate adjustment to his next estimated tax payment, so there is no deferral benefit.

Q11. An individual, aged 40, is currently in the 25% marginal tax bracket, and expects to be in the 15% bracket when he retires. Making contributions today to a tax-deductible individual retirement account is an example of:

A)   both minimizing the amount and deferring the timing of the tax payment.

B)   deferring the timing of the tax payment.

C)   minimizing the amount of the tax payment.

Correct answer is A)

The investor’s action is an example of both minimizing and deferring. He will minimize taxes by converting income that would have been taxed at a 25% rate today to a lower 15% rate in the future. He will defer taxes payable until the funds are withdrawn from the account in the future.

Thank you!