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NEW QUESTION: 2
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NEW QUESTION: 3
Tex Payor purchased 1,000 shares of Stocks4U, a mutual fund with a 5% front-end load, on February
26th.The fund's net asset value on that date was $30.40 and its offer price was $32.Tex sold his shares on March 15th of the following year for $45 a share.
What were the tax consequences for Tex?
A. Tex must pay taxes on $14,600, which will be taxed as ordinary income at Tex's marginal tax rate.
B. Tex must pay taxes on $45,000, which will be taxed at a preferential long -term capital gain rate under current tax law.
C. Tex must pay taxes on $14,600, which will be taxed at a preferential long-term capital gain rate under current tax law.
D. Tex must pay taxes on $13,000, which will be taxed at a preferential long-term capital gain rate under current tax law.
Answer: D
Explanation:
Explanation/Reference:
Explanation: If Tex purchased 1,000 shares of Stocks4U at its offer price of $32 on February 26th, and sold his shares the following year on March15th for $45 a share, he must pay taxes on $13,000, which will be taxed at a preferential long-term capital gain rate under current tax law.
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