Which of the Following Is Not an Example of the Conversion

question 30

Multiple Choice

Which of the following is not an example of the conversion tax planning strategy?

• A) selling corporate bonds to purchase growth stocks
• B) selling U.S. Treasury bonds to purchase municipal bonds
• C) cashing in a certificate of deposit to purchase a stock paying qualified dividends
• D) withdrawing funds from a savings account to purchase a qualified small business stock
• E) None of these

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Definitions:

Federal Income Tax Payable

Liabilities owed to the federal government for income taxes that have been incurred but not yet paid.

Direct Method

An accounting approach for the cash flow statement that lists major classes of gross cash receipts and payments.

Deferred Revenue

Deferred revenue is income a company has received for goods or services yet to be delivered or performed, recognized as a liability on the balance sheet until the obligation is fulfilled.

Accounts Receivables

Money owed to a business by its clients for goods or services delivered but not yet paid for.