Terms
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| Alternative Minimum Tax (AMT) | The requirement to add the income from tax preference items to income above an indexed level. A method to insure that wealthy persons and corporations pay at least some tax.
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| Cost basis | The price paid for assets, including any commissions or fees, used to calculate capital gains or losses when the assets is sold
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| Capital loss | The loss incurred when a capital asset is sold for a lower price than the purchase price.
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| FIFO | An accounting method used to assess a company's inventory, in which it is assumed that the first goods acquired are the first to be sold. The same method is used by the IRS to determine cost basis for tax purposes.
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| Earn income | Income derived from active participation in a trade or business, including wages, salary, tips, commissions and bonuses
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| Gifted vs Inherited Securities |
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| LIFO (Last in, last out) | An accounting method used to assess a company's inventory, in which it is assumed that the assumed that the last goods acquired are the first to be sold. The method used to determine cost basis for tax purposes;
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| LIFO (Last in, last out) Continued | the IRS designates last in, first out as the order in which sales or withdrawals from an investment are made.
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| Investment Income |
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| Marginal Tax rate |
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| Ordinary Income | Earnings other than capital gain.
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| Post-tax |
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| Preferential rates |
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| Pre-tax |
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| Rollover | The transfer of funds from one qualified retirement plan to another qualified retirement plan. If this is not done with in a specific time , the funds are taxed as ordinary income.
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| Specified identification method |
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| Tax-deductible |
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| Tax-deferred |
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| Tax-free |
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| Trustee to Trustee transfer |
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| Unrealized Gain | Amount by which a security appreciates in value before it is sold. Until it is sold, the investor does not actually possess the sale proceeds.
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| Wash sales rule | Selling a security at a loss for tax purposes and, within 30 days before or after, purchasing the same or a substantially identical security. The IRS disallows the claimed loss.
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| Short term gains | Taxed as Ordinary income
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| Corporate bond taxation | Taxable as ordinary income in year received: federal, state, local.
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| US Government Debt Taxation: | Federally taxable as ordinary income in the year received: Exempt from state and local taxes.
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| Mutual Fund dividends | Taxed as ordinary income whether reinvested or not
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| Short term capital gains distributions | Taxed as ordinary income whether reinvested or not.
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| 100% distributions from a qualified plan | Taxed as ordinary income.
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| Only the earnings from a non-qualified plan | Taxed as ordinary income - cost basis returned tax-free
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| Long term capital gain | Taxed at a Maximum rate of 15%
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| Capital gains from the sale of inherited securities | Taxed at a Maximum rate of 15%
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| Common stock cash dividends | Taxed at a Maximum rate of 15%
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| Long term capital gains distributions whether reinvested or not | Taxed at a Maximum rate of 15%
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| Stock dividends on stock: Not taxed upon, cost basis is adjusted and taxable upon sale. | Tax-free
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| Municipal bond interest: Exempt from federal taxation may be subject to state and local taxation. | Tax-free
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| Qualified distributions from a Roth IRAs | Tax-free
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| Distribution from a Coverdell or 529 Plan used for qualified educational expenses | Tax-free
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| Life insurance death benefit to beneficiary( subject to estate tax) | Tax-free
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| 8AM to 9PM (customer's time zone) | Time constraints imposed by the Telephone Consumer Protection Act 1940
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| Daily | Frequency of NAV calculation for mutual fund and variable contracts (business days only)
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| T+1 | Settlement for options and treasury trades.
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| T+3 | Settlement for municipal and corporate securities
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| T+5 | Regulation T payment date
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| 7 calendar days | Maximum time period for redemption of mutual fund shares.
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| within 10 days of first use | Time period for filing investment company ads and sales literature with FINRA
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| 20 days | SEC "cooling off period" for new issues
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| Monthly | Variable contract cash values calculated on this basis
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| 30 days | Minimum waiting period for candidates who fail the Series 6 for the first or second time
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| 45 days | Free look provision on variable contracts
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| 60 days | Maximum time period to complete an IRA rollover
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| 61 days | Size of wash sale window
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| 90 days | Maximum allowable period to backdate a letter of intent
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| 90 days | Time period an account is "frozen"
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| 120 days | Maximum time and RR has to complete the regulatory element of CE after his or her two-year anniversary
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| 180 days | Minimum waiting period for Series 6 candidates who fail of 3rd or later attempts
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| Semiannually | Minimum requirement for investment companies(ICs) to send reports to shareholders
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| 270 days | Maximum maturity for commercial paper and banker's acceptance
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| 1 year | Maximum maturity of a T-bill
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| Annually | Minimum requirement for IC reporting to SEC
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| Annually | Variable contract death benefit calculated on this basis
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| 13 months | Maximum time frame to complete a letter of intent (LOI)
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| 16 months | Maximum shelf life of a prospectus
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| 2 years | Maximum time to convert a variable life policy to a whole life policy
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| 2 years | Registered representatives (RRs) who leave the business longer than this period must retest.
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| 2 years | Maximum length of initial investment advisory contract
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| 5 years | Required holding period for a qualified (tax-free) distribution form a Roth IRA
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| 10 years | Maximum time period associated with statutory disqualification
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| 10 years | Maximum maturity of a T-Note
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| 20 years | Maximum jail term for insider trading violation
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| 30 years | Maximum maturity of a T-bond
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| 59.5 years | Minimum age to begin taking retirement plan distribution without penalty
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| 70.5 years | Age at which required minimum distributions from retirement plans must begin
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| .01% | Value of a basis point
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| .25% | Maximum 12b-1 fee that may be levied by a no load fund
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| 6% | Tax penalty on excess IRA contributions
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| 8.5% | Maximum sales charge allowed under FINRA rules on a single purchase of investment company securities
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| 9% | Maximum sales charged that may be levied over the life of a contractual plan
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| 10% | Penalty for early withdrawal (under 59.5) from retirement plan
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| 12% | Maximum interest rate that may be used in a illustration for variable life contracts
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| 15% | Maximum tax rate assessed against long-term capital gains
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| 15% | Preferential rates for cash dividends on stock
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| 16% | Maximum average annual sales charge that may be levied in a spread load plan (1970) over the first 4 years
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| 20% | Maximum annual sales charge that may be levied in a spread load plan
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| 50% | Failure to take required minimum distribution (RMD) tax penalty on traditional IRAs
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| 50% | Maximum sales charge that may be levied in year one of a front load plan (1940)
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| 70% | Minimum score needed to pass the Series 6 exam
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| 75% | Minimum percentage of the Board of Directors (BOD) that must be disinterested
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| 90% | Minimum distribution of net investment income fir a regulated investment company
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| 300% | Minimum asset to debt coverage ratio for an investment company engaged in bank borrowing
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| 1% | 100 basis point, 100BPs
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| American Depository receipts (ADR) | also called American Depository Shares
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| Annual return | also called Holding period return
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| Ask | also called Offer
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| Authorized stock | also called New Stock
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| B shares | also called Back end load
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| Back end sales charge | also called Contingent deferred sales charge (CDSD)
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| Bondholder | also called Creditor
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| Broker | also called Agent
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