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