Which of the following is an example of the conversion strategy?
A) A corporation paying its shareholders a $20,000 dividend.
B) A corporation paying its owner a $20,000 salary.
C) A high tax rate taxpayer investing in tax exempt municipal bonds.
D) A cash-basis business delaying billing its customers until after year end.
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

The conversion strategy involves converting taxable income into tax-exempt income or income taxed at a lower rate. Investing in tax-exempt municipal bonds is an example of this strategy. Options A, B, and D do not involve conversion strategies. Therefore, option C is the correct answer.

Which of the Following Is an Example of the Conversion