Which of the following tax planning strategies is based on the present value of money?
A) timing.
B) tax avoidance.
C) income shifting.
D) conversion.
E) none of these.

Question

Quizplus · Accepted Answer

Timing tax planning strategies are based on the present value of money as they aim to defer taxes to a future period, allowing taxpayers to benefit from the time value of money. By delaying taxes, taxpayers can invest the money and earn returns, which can increase their wealth over time. This strategy is based on the principle that a dollar today is worth more than a dollar in the future, due to inflation and the ability to earn returns on investments. Tax avoidance, income shifting, and conversion are not necessarily based on the present value of money.

Which of the Following Tax Planning Strategies Is Based on the Present