Question

A family of open-end investment company funds permits investors to switch from one fund to another for a nominal service fee. What are the tax consequences of such an exchange

Answer 1

Step-by-step explanation:

Exchange privilege could be described as an opportunity to give mutual fund shareholders the ability to exchange their funds in another fund within the same fund.

The consequences following this is, if you exchange the fund one year or less from when you bought it you'll pay taxes at a short term capital gain, while if you held it longer you'll have long term capital gains. The longer the investment the longer the capital and vice versa