How the Rich Avoid Tax

What type of company is Berkshire Hathaway, led by Warren Buffett?

• A manufacturing company

• A technology startup

• A holding company

• A retail chain

What is the primary difference in how income from a salary and income from long-term capital gains are taxed?

• Salary income is taxed at a lower rate than capital gains.

• Capital gains are taxed only when the asset is inherited.

• Capital gains are generally taxed at a lower maximum rate than salary income.

• Both are taxed at the same rate, but capital gains have more deductions.

Which strategy allows billionaires to access funds without selling their appreciated assets, thereby deferring capital gains taxes?

• Donating assets to charity

• Taking out loans against their stock holdings

• Investing in tax-exempt municipal bonds

• Converting assets into real estate

What happens to capital gains taxes on appreciated assets when they are passed down through inheritance under the "stepped-up basis" rule?

• All capital gains are taxed at the time of inheritance.

• The original capital gains are untaxed, and only future gains are taxed if the asset is sold by the inheritor.

• The inheritor pays a flat inheritance tax on the full value of the asset.

• The assets are immediately sold to cover inheritance taxes.