Which of the following is an example of the conversion 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

The conversion strategy involves converting taxable income into tax-exempt income or reducing taxable income through various strategies. Investing in tax-exempt municipal bonds is a common example of the conversion strategy as the interest income is tax-exempt. The other options do not involve conversion strategies.

Which of the Following Is an Example of the Conversion