Use the information for the question(s)below.
Consider the following tax rates: *The current tax rates are set to expire after 2025 unless Congress extends them.The tax rates shown are for financial assets held for one year.For assets held less than one year,capital gains are taxed at the ordinary income tax rate (currently 37% for the highest bracket);the same is true for dividends if the assets are held for less than 61 days.
-The effective dividend tax rate for a pension fund in 1999 was closest to:
A)40%.
B)20%.
C)0%.
D)25%.

Question

Use the information for the question(s)below.
Consider the following tax rates:  *The current tax rates are set to expire after 2025 unless Congress extends them.The tax rates shown are for financial assets held for one year.For assets held less than one year,capital gains are taxed at the ordinary income tax rate (currently 37% for the highest bracket);the same is true for dividends if the assets are held for less than 61 days.
-The effective dividend tax rate for a pension fund in 1999 was closest to:
A)40%. 
B)20%. 
C)0%. 
D)25%.

Quizplus · Accepted Answer

The effective dividend tax rate for a pension fund in 1999 is 0%. The given tax rates are only for financial assets held for one year, and the question does not provide information about when the pension fund acquired the assets. Additionally, pension funds are tax-exempt entities, so they are not subject to dividend tax.

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