1. Yes. Actually US and CA. The CA FTB states: Current state law states that if, at the end of each quarter, a RIC has at least 50 percent of the funds’ assets invested in obligations, which would also be exempt from tax if held by an individual, the tax exempt-interest portion of those dividends would also be tax-exempt in the hands of the RIC's shareholders. Federal and California obligations may be combined to meet the 50 percent asset test.
2. $100 earned 67% is CA tax exempt so $67 is CA exempt. Great question since each state has different rules. CA answer is b.
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