CSI IFC Exam - Topic 7 Question 1 Discussion

Actual exam question for CSI's IFC exam

Question #: 1
Topic #: 7

[All IFC Questions]

An investor purchases units of an equity fund for $17.60. In which of the following circumstances would an investor potentially owe taxes on capital gains?

AThe fund is sold today for $18.80 per unit and the proceeds are reinvested

BThe fund is currently valued at $18.80 per unit

CA dividend distribution is reinvested into additional units of the same fund

DThe fund is currently valued at $16.45 per unit

Show Suggested Answer

Suggested Answer: A

Capital gains are realized when an investor sells a fund at a profit. Selling units at $18.80 (purchased at $17.60) triggers a taxable capital gain in a non-registered account. The feedback from the document states:

'Capital gains are generated when an investor sells an investment for more than the price paid; for example, selling a stock at a profit will generate a capital gain. Capital gains are not realized when an investment goes up in price; a sale must occur.'

by Noel at Jan 27, 2026, 01:50 PM

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Dominga

5 days ago

I remember something about capital gains being realized only when an asset is sold, so maybe B and D wouldn't apply here.

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Rosendo

10 days ago

I think option A might be the right answer since selling the fund would trigger a capital gains tax, but I'm not entirely sure about the reinvestment part.

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Lisha

15 days ago

I feel pretty confident about this one. I just need to remember the basic principles around capital gains and when they apply. Reviewing the study materials should help me nail this question.

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Barrett

20 days ago

For option A, the sale would definitely trigger capital gains taxes, since the sale price is higher than the purchase price. The other options are a bit trickier, but I think I can work through them.

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Colton

26 days ago

I'm a little confused on the dividend reinvestment part. Does that count as a sale even if the money stays in the fund? I'll need to double-check the rules on that.

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Barney

1 month ago

Okay, let me see here. I think the key is whether the fund has been sold or not. If it's just the current value, that doesn't trigger taxes, right?

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Luann

1 month ago

Hmm, this seems like a straightforward capital gains question. I'll need to think through the different scenarios and when taxes would be owed.

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