Question
1. J oey pays 15% in dividends and capital gain taxes and 30% in ordinary income taxes. In January, she purchased 700 shares of a
1. Joey pays 15% in dividends and capital gain taxes and 30% in ordinary income taxes. In January, she purchased 700 shares of a no-load mutual fund for $36.65 a share with the provision that all distributions are reinvested. In October, she sold 400 shares for $55.42. At the end of the year, she received a statement stating the fund had distributions to her of $218 in qualified dividend income, $1,225 in long-term capital gains, and $1,576 in short-term capital gains. What are Joey's taxes on this investment?
( the right answer should be 2,941.85)
2. Three years ago, an ETF was initiated with 3 million shares in 14 stocks each with a market value of $17. The ETF originally issued 47 million shares. Last year, Drew purchased 184,000 shares for $21.43 a share. The price has now increased to $27.22 a share, and Drew is considering redeeming his shares. Assume none of the original shares have been sold or redeemed. If Drew redeems his shares, what is his cost basis when he sells the shares?
(the correct answer should be 2,795,234.04)
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