$11.$ The tax system

Understanding taxes

Which source of investor income is susceptible to double taxation?

Dividends

Interest earned

You bought $1,000$ shares of Tund Corp. stock for $$60\mathrm{.}59$ per share and sold it for $$82\mathrm{.}35$ per share after a few years. How will your gain or loss be treated when you file your taxes?

As a capital gain taxed at the long$-$term tax rate

As a capital gain taxed at the current ordinary$-$income tax rate

As a capital loss deducted from taxable income in the year that the loss is realized

As a capital loss taxed at the long$-$term tax rate

Suppose you want to invest $$10,000.$ You have two options: $(1)$ Invest in California municipal bonds with an expected rate of return of $12\mathrm{.}00\%,$ or $(2)$ invest in J and K Corp.$$s bonds with an expected rate of return of $18\mathrm{.}00\%.$ Assume that your decision is based on a tax perspective. If everything else is the same for both bonds, at what tax rate would you be indifferent between these two bonds?

$28\mathrm{.}33\%$

$33\mathrm{.}33\%$

$41\mathrm{.}66\%$

$30\mathrm{.}00\%$

If a taxpayer is liable to pay $$8,950$ under AMT law but $$7,500$ according to the regular tax system, the taxpayer will need to pay taxes according to the $.$

To offset taxable income in a given year, ordinary corporate operating losses can be:

Carried back for $5$ years and carried forward for $10$ years

Carried back for $2$ years and carried forward for $20$ years