Investment and Finance
The most frequently asked tax questions related to Investment and Finance
For Tax Payers
Need professional help with a specific tax issue or have general tax questions? Ask a CPA is the easiest way to get advice from a licensed accountant in our network.
Ask a Tax QuestionFor Accountants
Provide answers to tax questions and introduce your practice to new potential clients. Build your CPAdirectory profile and earn reputation points.
Answer Tax QuestionsInvestments & Financial Planning
What are the advantages of non-callable tax free bonds ?
Asked Friday, September 29, 2000 by an anonymous user
A non-callable feature protects the owner against the bond being prepaid when interest rates fall. When a bond is callable because of fallen interest rates, the issuer can "call" the bond, paying off the balance of the bond before maturity. If you own the bond, you would then need to reinvest the funds into another investment and thus earn less interest income. If you want to lock in the interest rate and be protected against your bond being called, you should opt for non-callable bonds even though the interest rate is slightly lower.
Will I always receive a tax benefit from the tax credit I received on a K-1 from a passive activity?
Asked Friday, September 29, 2000 by an anonymous user
Generally, you will not get a tax benefit from a tax credit resulting from a passive activity unless the passive activity has income that generates a tax. The tax must be equal or greater than the credit that is allocated to that passive activity to receive the full benefit of the credit. The disallowed credit may be carried forward to future years. The calculation of the allowed credit is reportable on IRS Form 8582-CR. Speak to your local CPA about the passive credits' deductibility.
Prior year suspended losses - Installment method
Asked Friday, September 29, 2000 by an anonymous user
When you sell your passive activity interest at a gain, (using the installment sale method), the prior year suspended losses are not allowed in full.
You are allowed a prorated amount. They are only allowed in the same ratio as the gain recognized each year bears to the gain remaining to be recognized as of the start of the year.
Speak to your local CPA about your passive loss deductibility.
You are allowed a prorated amount. They are only allowed in the same ratio as the gain recognized each year bears to the gain remaining to be recognized as of the start of the year.
Speak to your local CPA about your passive loss deductibility.
Is the stock I received in a stock split taxable?
Asked Thursday, September 28, 2000 by an anonymous user
No. Your receipt of stock under a stock split in not a taxable transaction. When you eventually sell any of the stock , it is then a taxable transaction. It will be reported on IRS Schedule D.
Do I have to pay tax on reinvested dividends ?
Asked Wednesday, September 27, 2000 by an anonymous user
Yes. Dividend reinvestment plans let you use dividends to buy more shares of stock in a corporation instead of receiving the dividends in cash. If you are a member of this type of plan and use dividends to buy more stock at a price equal to its fair market value, you must report the dividend as income on IRS Schedule B.
IRA deduction for 401(k) plan
Asked Wednesday, September 27, 2000 by an anonymous user
Contributions to your 401(k) plan are not the same as an IRA deduction.
The amount you contributed to the 401(k) plan reduces the taxable wages reported in box 1 of your W-2 form.
The amount you contributed to the 401(k) plan reduces the taxable wages reported in box 1 of your W-2 form.
Employee stock options
Asked Wednesday, September 27, 2000 by an anonymous user
If your stock option is granted under a employee stock option plan, the granting or exercise of the option is not included as income on your tax return.
You will report either the income or loss on IRS Schedule D when you sell the stock that you purchased by exercising the option.
Speak to your local CPA about the tax strategies with your options.
You will report either the income or loss on IRS Schedule D when you sell the stock that you purchased by exercising the option.
Speak to your local CPA about the tax strategies with your options.
Is my 18 year old child with $2,200 in investment income subject to the Kiddie Tax ?
Asked Monday, September 25, 2000 by an anonymous user
Yes. The "Kiddie Tax" is applicable to children under 19 years . The "Kiddie Tax" is a tax on children with gross investment income of $2,000 or more. The calculation of the child's tax yields a higher tax calculation using the parents' higher tax rate when applicable.
IRA - 457 plan rollover
Asked Sunday, September 24, 2000 by an anonymous user
You are permitted to roll your money over into an IRA, 401(k) or 403(b) when you retire or change jobs. This portability gives you more options and control over your money.
