Which of the following will legally reduce an investor's tax liability?
A) Tax evasion
B) Tax shelter
C) Tax penalty
D) Tax accounting
E) Tax portfolio

Question

Quizplus · Accepted Answer

A tax shelter is a legal way to reduce an investor's tax liability by investing in certain investment vehicles, such as real estate partnerships, oil and gas partnerships, or equipment leasing partnerships. Tax shelters provide deductions or credits that can offset the investor's taxable income, resulting in a lower tax liability. Tax evasion is illegal and can result in severe penalties, while tax accounting and tax portfolio management are strategies to manage tax liabilities but may not necessarily result in a reduction. A tax penalty is an additional charge imposed by the government for failure to comply with tax laws.

Which of the Following Will Legally Reduce an Investor's Tax