Series 7 Exam Practice Test 12: Taxes and Retirement Plans

1. All of the following are regressive taxes EXCEPT

2. Declan K. purchased 1,000 shares of UPPP common stock at $40 per share. In the next 11 months, UPPP increased in value to $55 per share. How would this result for Declan be categorized?

3. One of your clients has made the following transactions:

I. February 4th he purchased 100 shares of DIM at $40

II. March 15th he purchased 100 shares of DIM at $50

III. July 19th he sold 100 shares of DIM at $46

IV. What is the capital gain or loss?

4. Which of the following are subject to federal taxation?

I. Cash dividends on stock

II. Interest on general obligation bonds

III. Interest on U.S. Treasury Notes

IV. Capital gains on revenue bonds

5. In order to avoid a violation of the wash sale rule, an investor who sold a security at a loss cannot repurchase the same security nor anything convertible into the same security for at least

6. By what age must an individual begin withdrawing money from a qualified retirement plan?

7. Which TWO of the following are TRUE regarding Coverdell Educational Savings Accounts?

I. Contributions are pre-tax.

II. Contributions are after-tax.

III. The maximum annual contribution is $2,000 per student.

IV. The maximum annual contribution is $5,500 per student.

8. Ms. Hudson purchased a 4-percent TUV corporate bond at 90 with 20 years to maturity. Eleven years later, Ms. Hudson sold the bond at 92. What is the gain or loss?

9. Melissa purchased 1,000 shares of JKL common stock at a price of $14 per share. On her granddaughter's 18th birthday, she gives her the securities as a gift. At that point, the market price of JKL is $24 per share. For tax purposes, what is her granddaughter's cost per share?

10. Regarding 401(k) plans, which TWO of the following are TRUE?

I. They are defined contribution plans.

II. They are defined benefit plans.

III. The amount withdrawn at retirement is partially taxable.

IV. The amount withdrawn at retirement is fully taxable.