Because the capital gains tax is so high, there are no real tax advantages to a stock repurchase option.

Question

Quizplus · Accepted Answer

The statement is incorrect. A stock repurchase option can still provide tax advantages even with a high capital gains tax. For example, by reducing the number of outstanding shares, the company can increase earnings per share, which can lead to an increase in share price and therefore capital gains for investors. Additionally, a stock repurchase can be more tax-efficient for shareholders than a dividend payout, as capital gains tax rates are often lower than income tax rates.

Because the Capital Gains Tax Is So High, There Are