alleryStart learning →Compared with dividends, repurchases let shareholders
APay tax later as capital gains
BReceive tax-free dividends
CGet bonus shares instead
DAvoid all tax permanently
Answer & Solution
Correct answer: A. Pay tax later as capital gains
Tax on dividends is due in the year paid, whereas holders of repurchased stock pay capital gains tax when they sell.
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Related questions
Under Section 68, specified securities includeAfter a buy-back, a remaining investor's proportionate ownershipThe details of the transfer to capital redemption reserve are to be disclosed in the40,000 shares of face value Rs 5 are bought back at Rs 9. Equity share capital is debited Which can absorb the premium paid on a buy-back?Shares that a company has bought back areWithin six months after a buy-back, a company may still make aThe register of bought back shares is kept at the company's