Suppose you have maxed out your allowable contributions to your tax-sheltered retirement plans and you still want to shelter income. The best choice of investment for you to minimize the tax bill is to invest in ________.

Question

Quizplus · Accepted Answer

Investing in stocks with low or zero dividend yields can minimize the tax bill because they generate less taxable income than stocks with high dividend yields or bond interest payments. Since there is no dividend income, there is no tax liability until the stocks are sold, and the capital gains can be offset with capital losses in the future. This strategy can also provide potential tax benefits for heirs who may receive the stocks at a stepped-up basis if the assets appreciate in value before they are inherited.

Suppose You Have Maxed Out Your Allowable Contributions to Your