Question

Tax-deferred retirement plans are a type of: A. exemption. B. itemized deduction. C. passive income. D. tax shelter.

Answer 1

The answer is a tax shelter so D.

Step-by-step explanation:

The answer is tax shelter because a tax shelter is an investment that provides immediate tax benefits and a reasonable expectation of a future financial return. A tax deferred retirement plan results in an immediate tax benefit because the money put into such an account or plan, is not taxed until it is withdrawn from the account. :-)

Answer 2

The correct option is D. Tax shelter is a type of financial arrangement which main purpose is to minimize or avoid tax. It is a legal means of cutting short one's tax liability. Tax shelter can come in diverse forms. It may come in form of using one's money to invest in a particular area so that one will be able to claim tax reduction.