Mutual funds, though helpful for personal investors who wish to divers

Mutual funds, though helpful for personal investors who wish to diversify their portfolios, expose shareholders to additional taxation: not only are taxes on shareholders’ eventual sales of the securities collected by the IRS, but also on reinvested dividend stakes earned by the securities held by the fund itself.

A) not only are taxes on shareholders’ eventual sales of the securities collected by the IRS, but also on
B) collected by the IRS are taxes not only on shareholders’ eventual sales of the securities, but also on
C) taxes not only on shareholders’ eventual sales of the securities are collected by the IRS but also
D) not only taxes on shareholders’ eventual sales of the securities are collected by the IRS, but also on
E) taxes are collected by the IRS not only on shareholders’ eventual sales of the securities but also

Solution: B.
This sentence tests sentence structure and may be best solved by looking at the 3/2 split between the answer choices on the last word. Three choices use “on” as the last word, while two choices omit “on” – signifying that we’ll need to ensure that the multiple phrases in the sentence are connected properly. Connector words like “on”, “but”, “to”, “that”, etc. make for terrific decision points.
When testing connectors, you may want to quickly write your own “ideal” sentence to determine which components need to be connected. Here, ideally, the sentence would say something like:
The IRS collects taxes not only on shareholders’ sales but also on reinvested dividends.
In this ideal sentence, we need to include the word “on” for both items to denote that taxes are collected on both types of income. Answer choice E, the most popular choice on this question, does not include that word “on” to link the collection of taxes to the reinvested dividends, and is therefore wrong. We need the word “on” at the end, and we also need “on” to be logically drawn back to “taxes are collected”.
Look back at choice B, the correct answer. It’s awkward, but it does exactly what we need it to do – it leads with “taxes are collected”, and connects that phrase to both components with the word “on”. The only awkwardness is an inverted subject/verb structure. We want to see:
Taxes are collected (by the IRS) not only on shareholders’ stakes but also on reinvested dividends
But choice B gives us
Collected by the IRS are taxes not only on shareholders’ stakes but also on reinvested dividends.
As we concluded at the outset, we’re being tested on the structure of the sentence, so that’s paramount, and choice B gets that 100% correct. And inverted subject/verb structure is not an error – it may be awkward but it is okay! It throws us off the scent here, but if you look back for specifically what is necessary – connecting both types of income back to the collection of taxes – it does exactly that and is therefore correct.