A High Tax Bracket Individual Can Enhance the Avoidance of Income

question 28

True/False

A high tax bracket individual can enhance the avoidance of income taxes through a C corporation by having the corporation retain its after tax earnings so that when the individual dies, his or her heirs can liquidate the corporation and realize little to no gain because of a step-up in basis.

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Definitions:

Assignment

The conveyance of property or legal rights from one party to another.

Contract Amount

The total financial obligation or the sum involved in a contract agreed upon by the parties.

Service of Process

The procedure by which a party to a lawsuit gives an appropriate notice of initial legal action to another party (such as a defendant), court, or administrative body to exercise jurisdiction over that person so as to enable that person to respond to the proceeding.

Intended Beneficiary

An individual or entity explicitly chosen to benefit from a contract, even though they are not a direct party to the agreement.