CRPC EXAM Prep | Questions And Answers Latest {2024- 2025} A+ Graded | 100%
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Long-Term Capital Gains - 1. Net gains from the sale of share held by the fund for more than one year.
2. Subject to the capital gains rates, usually lower than ordinary income tax rates.
Short-Term Capital Gains - 1. Net gains from the sale of shares held by the fund for one year or less.
2. May be treated as ordinary dividends, thus taxable at ordinary income tax rates.
Qualified Dividends - 1. Dividends from common stock of domestic corporations and qualifying foreign
corporations.
2. Normally taxed as long-term capital gains (subject to certain holding period restrictions).
Ordinary or NonQualified Dividends - 1. Investment income earned by the fund from interest and
nonqualified dividends minus expenses; often used a sa blanket term that includes all taxable income
except long-term capital gains.
2. Taxable at ordinary income rates.
Zero-Coupon Bonds - 1. Non-interest-paying debt securities sold at a discount to face value.
2. Generate tax obligations without generating the cash to pay them through the accreted value.
3. Generally purchased in nontaxable accounts.
Accreted Value - The increased value of a zero-coupon bond as it approaches face value at maturity.
T-bills - 1. Short term versions of zero-coupon bonds (they make not interest payments but are sold at a
discount to face value).
2. Terms range from 4 -52 weeks..
3. Difference between cost and face value is the total return, which is treated as interest income for
income tax purposes.
4. Taxed in the year the T-bill matures, not when it is purchased.
5. Interest income is exempt from state and local taxes, but not federal taxes.
, Treasury Notes - 1. A treasury note is a marketable U.S. government debt security with a fixed interest
rate and a maturity between one and 10 years.
2. Treated the same as corporate bonds, except interest is exempt from state and local taxes, and any
original issue discount must be accrued annually and treated as interest income.
3. Not a cash equivalent.
Treasury Bonds - 1. A marketable U.S. government debt security with a fixed interest rate and a maturity
of more than 10 years with interest payments made semi-annually.
2. Treated the same as corporate bonds, except interest is exempt from state and local taxes, and any
original issue discount must be accrued annually and treated as interest income.
Treasury Inflation-Indexed Securities - 1. Combine fixed interest rate with principal amount of the
securities adjusted for inflation.
2. Interest payments taxed upon receipt.
3. Inflation adjustments to the principal are taxable in the year adjustments occur, even though inflation
isn't paid until maturity.
4. Exempt from state and local taxes.
5. Usually purchased in tax-deferred accounts to avoid paying taxes before maturity.
Types of Will Substitutes - 1. Jointly held property (some forms)
2. Insurance proceeds paid to named beneficiaries
3. The naming of beneficiaries for the proceeds of qualified retirement plans
4. Trusts funded during the owner's lifetime
5. POD and TOD accounts
Joint Tenancy - Ownership of the property is equal and passes immediately to the survivor. Property is
not subject to probate process.
Fee Simple - 1. The most complete and absolute form of ownership.
2. One person has all ownership rights and can designate who will receive the property at their death.
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Long-Term Capital Gains - 1. Net gains from the sale of share held by the fund for more than one year.
2. Subject to the capital gains rates, usually lower than ordinary income tax rates.
Short-Term Capital Gains - 1. Net gains from the sale of shares held by the fund for one year or less.
2. May be treated as ordinary dividends, thus taxable at ordinary income tax rates.
Qualified Dividends - 1. Dividends from common stock of domestic corporations and qualifying foreign
corporations.
2. Normally taxed as long-term capital gains (subject to certain holding period restrictions).
Ordinary or NonQualified Dividends - 1. Investment income earned by the fund from interest and
nonqualified dividends minus expenses; often used a sa blanket term that includes all taxable income
except long-term capital gains.
2. Taxable at ordinary income rates.
Zero-Coupon Bonds - 1. Non-interest-paying debt securities sold at a discount to face value.
2. Generate tax obligations without generating the cash to pay them through the accreted value.
3. Generally purchased in nontaxable accounts.
Accreted Value - The increased value of a zero-coupon bond as it approaches face value at maturity.
T-bills - 1. Short term versions of zero-coupon bonds (they make not interest payments but are sold at a
discount to face value).
2. Terms range from 4 -52 weeks..
3. Difference between cost and face value is the total return, which is treated as interest income for
income tax purposes.
4. Taxed in the year the T-bill matures, not when it is purchased.
5. Interest income is exempt from state and local taxes, but not federal taxes.
, Treasury Notes - 1. A treasury note is a marketable U.S. government debt security with a fixed interest
rate and a maturity between one and 10 years.
2. Treated the same as corporate bonds, except interest is exempt from state and local taxes, and any
original issue discount must be accrued annually and treated as interest income.
3. Not a cash equivalent.
Treasury Bonds - 1. A marketable U.S. government debt security with a fixed interest rate and a maturity
of more than 10 years with interest payments made semi-annually.
2. Treated the same as corporate bonds, except interest is exempt from state and local taxes, and any
original issue discount must be accrued annually and treated as interest income.
Treasury Inflation-Indexed Securities - 1. Combine fixed interest rate with principal amount of the
securities adjusted for inflation.
2. Interest payments taxed upon receipt.
3. Inflation adjustments to the principal are taxable in the year adjustments occur, even though inflation
isn't paid until maturity.
4. Exempt from state and local taxes.
5. Usually purchased in tax-deferred accounts to avoid paying taxes before maturity.
Types of Will Substitutes - 1. Jointly held property (some forms)
2. Insurance proceeds paid to named beneficiaries
3. The naming of beneficiaries for the proceeds of qualified retirement plans
4. Trusts funded during the owner's lifetime
5. POD and TOD accounts
Joint Tenancy - Ownership of the property is equal and passes immediately to the survivor. Property is
not subject to probate process.
Fee Simple - 1. The most complete and absolute form of ownership.
2. One person has all ownership rights and can designate who will receive the property at their death.
