The Wall Street Journal asks (and answers) ten surprising questions related to mutual funds and taxes - the biggest surprise being that ten questions about mutual funds and taxes can actually be pretty interesting.
Take for example the quiz's last question, about a recent Supreme Court case concerning muni bonds:
10) The Supreme Court recently heard a case involving muni bonds. What is it about?
A. Whether muni bonds can be subject to the alternative minimum tax
B. Whether a state can tax interest on most out-of-state muni bonds while exempting interest on its own
C. Whether muni bonds may "guarantee" returns to out-of-state investors
ANSWER: B. The justices were asked to reverse a Kentucky court ruling that said the state couldn't favor its own bonds, in a case being closely watched by other states with similar laws.
The argument largely comes down to whether munis are akin to milk -- or trash. The lawyer challenging the Kentucky law argued that preferential treatment is unconstitutional because the court has ruled that states cannot put up protectionist barriers around their dairy industries. But Kentucky's lawyer cited a ruling that allowed two New York counties to discriminate on their own behalf by requiring trash haulers to deliver waste to publicly owned disposal facilities when cheaper private-sector alternatives existed.
If the Kentucky court ruling stands, single-state muni funds would become irrelevant."
The Wall Street Journal asks (and answers) ten surprising questions related to mutual funds and taxes - the biggest surprise being that ten questions about mutual funds and taxes can actually be pretty interesting.
Take for example the quiz's last question, about a recent Supreme Court case concerning muni bonds:
10) The Supreme Court recently heard a case involving muni bonds. What is it about?
A. Whether muni bonds can be subject to the alternative minimum tax
B. Whether a state can tax interest on most out-of-state muni bonds while exempting interest on its own
C. Whether muni bonds may "guarantee" returns to out-of-state investors
ANSWER: B. The justices were asked to reverse a Kentucky court ruling that said the state couldn't favor its own bonds, in a case being closely watched by other states with similar laws.
The argument largely comes down to whether munis are akin to milk -- or trash. The lawyer challenging the Kentucky law argued that preferential treatment is unconstitutional because the court has ruled that states cannot put up protectionist barriers around their dairy industries. But Kentucky's lawyer cited a ruling that allowed two New York counties to discriminate on their own behalf by requiring trash haulers to deliver waste to publicly owned disposal facilities when cheaper private-sector alternatives existed.
If the Kentucky court ruling stands, single-state muni funds would become irrelevant."
LINK
See also:
Capital Gains Questions?
Tougher Tax Times Ahead for Mutual Fund Investors
How Mutual Funds Work - Capital Gains
Six Mutual Fund Tax Tips