What important tax-based reason suggests why some investors might prefer capital
ID: 2809670 • Letter: W
Question
What important tax-based reason suggests why some investors might prefer capital gains? Investors who don't need or want any cash will not accept their dividend and they therefore will not incur any obligation to pay taxes. Investors who don't need or want any cash will not sell their stock and they therefore will not incur any obligation to pay taxes. Investors pay capital gains taxes as their stock appreciates, not at the time of sale, so they will be indifferent to selling the stock. Investors pay taxes only on dividends, not on capital gains.
Explanation / Answer
The answer is:
Investors who don't need or want any cash will not sell their stock and they therefore will not incur any obligation to pay taxes.
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