ProductsCâu 33 / 110
A grandparent withdraws $8,000 from a 529 plan and uses all of it for the beneficiary's college tuition. The federal tax treatment of the earnings portion is:
a.Taxable as ordinary income with a 10% penalty
b.Not taxable, because the distribution was used for qualified education expenses
c.Taxable as a long-term capital gain
d.Taxable to the beneficiary at the beneficiary's rate
Giải thích
Earnings in a 529 plan grow tax deferred and come out entirely free of federal income tax when the distribution pays qualified education expenses such as tuition. Tax and a 10% penalty on earnings apply only to non-qualified withdrawals. Contributions are made with after-tax dollars, so no federal deduction was taken going in.
Trích dẫn luật: Internal Revenue Code Section 529Luyện miễn phí toàn bộ 110 câu hỏi — không cần đăng ký.
Câu hỏi liên quan cùng chủ đề
- Shares of a closed-end investment company differ from open-end fund shares because closed-end shares:
- An open-end investment company may issue:
- A 529 college savings plan interest is classified for regulatory purposes as:
- Which statement about control of a 529 plan account is accurate?
- The Investment Company Act of 1940 classifies investment companies into which three types?
- To be treated as a regulated investment company and avoid paying tax at the fund level on distributed income, a fund must distribute at least:
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