A(n)________ attempts to minimize taxes on a family business passed from one generation to the next by creating two classes of stock-one for the parents (preferred stock),whose value is locked in,and another for the children (common stock),whose value reflects the market value of the business.

Question

Quizplus · Accepted Answer

The strategy described in the question is known as an estate freeze, which aims to minimize taxes on a family business passed from one generation to the next. By creating two classes of stock, one for the parents (preferred stock), whose value is locked in, and another for the children (common stock), whose value reflects the market value of the business, the parents can transfer ownership of the business gradually to the children without triggering significant tax liabilities. Therefore, the best choice for this scenario is Estate Freeze.

A(n)________ Attempts to Minimize Taxes on a Family Business Passed