What strategy would a shareholder in a high tax bracket prefer?

Question

Quizplus · Accepted Answer

A shareholder in a high tax bracket would prefer a strategy that minimizes taxable income. Payment of cash dividends would result in immediate taxation at the shareholder's high tax rate. Reduction of debt would not directly benefit the shareholder's taxable income. A stock dividend may result in taxable income as well. However, a repurchase of common shares reduces the number of outstanding shares, increasing the value of remaining shares without creating taxable income for the shareholder.

What Strategy Would a Shareholder in a High Tax Bracket