Which of the following scenarios illustrates a potential tax avoidance scheme?
A)A shareholder owns two corporations and undertakes legal steps in order to permit loss utilization between the two companies.
B)Dividends received from shares transferred from a wife to her husband are taxed in the hands of the wife.
C)A man transfers property to his child at a value less than fair market value.
D)Property transferred between arm's-length parties is valued at fair market value.

Question

Quizplus · Accepted Answer

A transfer of property to a child at a value less than fair market value is a potential tax avoidance scheme because it allows the transferor to reduce their taxable income by the amount of the difference between the fair market value and the transfer price.

Which of the Following Scenarios Illustrates a Potential Tax Avoidance