SIE Understanding Trading, Customer Accounts and Prohibited Activities Question 42: Answer and Explanation

Question: 42

Which rules may require the cost basis to use the oldest shares purchased?

• A. Internal Revenue Code
• B. Securities Exchange Commission Act of 1934
• C. FINRA Rules
• D. MSRB Rules

Correct Answer: A

Explanation:

A: Choice A is correct because cost basis is used to determine taxable income, whose calculation is determined by the Internal Revenue Code. Choices B, C, and D are not used to determine taxable income.