Deferral of capital gains taxI) means that the investor doesn't need to pay taxes until the investment is sold.II) allows the investment to grow at a faster rate.III) means that you might escape the capital gains tax if you live long enough.IV) provides a tax shelter for investors.
A) II and III
B) I, II, IV
C) I, III, and V
D) II, III, and IV

Question

Quizplus · Accepted Answer

Deferral of capital gains tax means that the investor doesn't need to pay taxes until the investment is sold (I), which allows the investment to grow at a faster rate because the money that would have been paid in taxes continues to earn returns (II). It also acts as a tax shelter because it delays the tax liability (IV). There is no option V in the question, and the idea of escaping capital gains tax by living long enough (III) is incorrect because eventually, the tax must be paid upon sale or can be affected by estate considerations, but it doesn't inherently mean one can escape it entirely through longevity.

Deferral of Capital Gains TaxI) Means That the Investor Doesn't