Which of the following is an example of the income-shifting strategy?
A)A corporation paying its shareholders a $20,000 dividend.
B)A corporation paying its owner a $20,000 salary.
C)A high tax rate taxpayer investing in tax-exempt municipal bonds.
D)A cash-basis business delaying billing its customers until after year-end.
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

Paying the owner a salary allows them to shift income from the corporation to themselves and potentially take advantage of lower tax rates for individuals.

Which of the Following Is an Example of the Income-Shifting