The CEO at Big Co.has decided to sell a piece of capital equipment after the company's year-end in order to avoid paying capital gains tax this year.Which tax planning method will the CEO be using?
A)Transferring income to another entity.
B)Shifting income from one time period to another.
C)Converting the nature of income from one type to another.
D)This is a form of tax evasion and is not allowed.

Question

Quizplus · Accepted Answer

The CEO is using the method of shifting income from one time period (next year) to another (this year) in order to avoid paying capital gains tax this year. This is a legitimate tax planning method, as long as it is done within the boundaries of the law.