Which of the following is an example of the income shifting strategy?
A) A corporation paying its shareholders a $20,000 dividend.
B) A corporation paying its owner a $20,000 salary.
C) A high tax rate taxpayer investing in tax exempt municipal bonds.
D) A cash-basis business delaying billing its customers until after year end.
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

Paying the owner a salary is an example of the income shifting strategy because it shifts the income from the corporation to the owner, who may be in a lower tax bracket and thus pay lower taxes on the income. The other choices do not involve shifting income to a lower tax bracket.

Which of the Following Is an Example of the Income