Which of the following benefits does not occur when owner-shareholders accumulate earnings of their closely-held corporations at the entity level and later sell their stock at an increased value?
A) Deferral of shareholder tax until the year of sale.
B) Conversion of ordinary income into capital gain.
C) Increase in corporate capitalization and reduction in debt-equity ratio.
D) All of these choices occur when owner-shareholders accumulate earnings of the closely-held corporations.

Question

Quizplus · Accepted Answer

All the listed benefits occur when owner-shareholders accumulate earnings at the entity level and later sell their stock at an increased value, including tax deferral, conversion of income type, and improvements in financial ratios.

Which of the Following Benefits Does Not Occur When Owner-Shareholders