Which of the following tax planning strategies is based on the present value of money?

Question

Quizplus · Accepted Answer

Timing is a tax planning strategy that is based on the present value of money. By timing the receipt or payment of income or expenses, a taxpayer can take advantage of the time value of money and reduce their overall tax liability. For example, if a taxpayer expects their income to be higher in the coming year, they may choose to delay the receipt of bonus income until the following year to avoid being pushed into a higher tax bracket.

Which of the Following Tax Planning Strategies Is Based on the Present