A high tax bracket individual can enhance the avoidance of income taxes through a C corporation by having the corporation retain its after tax earnings so that when the individual dies, his or her heirs can liquidate the corporation and realize little to no gain because of a step-up in basis.

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This statement is true. By retaining after-tax earnings in a C corporation, the high tax bracket individual can avoid paying taxes on those earnings in the short term. When the individual dies, the heirs can liquidate the corporation and receive a step-up in basis, which can minimize the gain realized and ultimately reduce the overall tax liability.

A High Tax Bracket Individual Can Enhance the Avoidance of Income