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

Question

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

souvik101990 · Accepted Answer

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.

francoimps · Answer

The key issue that this question tests us on is on correlative conjunctions -- "not only x...but also y." Whenever we are faced with such issues, we should always maintain parallelism, both logically and structurally. Hence, for this type of correlative conjunction, X and Y must have the exact same form.

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

Therefore, the correct answer is B.

Yes, the sentence structure seems awkward, but you should also take not that this is one of the techniques that the GMAT uses in difficult questions.

aditya8062 · Answer

best bet is B  :  collected by the IRS are taxes not only on shareholders’ eventual sales of the securities, but also on 
------------->as only B is parallel

DmitryFarberMPrep · Answer

This is not a good problem. While the GMAT certainly presents difficult and complicated constructions, I have never seen a GMAT SC problem in which the right answer was this backward. (B) inverts the natural grammatical order ("taxes are collected") in an awkward, Yoda-like fashion ("collected by the IRS are taxes") that is totally unneeded.

Compare to the link below, in which the inversion of order prevents us from having a very long and involved subject.

what-was-as-remarkable-as-the-development-of-the-compact-85107.html

farhanchaudhary · Answer

Meaning

Mutual funds are beneficial for investors who wish to diversify, but they expose shareholders to additional taxation :
1. Through taxes on eventual sales of securities, this tax is collected by IRS
2. Through taxes on dividend earned by securities that hold the fund, (we don't know who collects this tax, it may be IRS or other body)
 
Error Analysis 
Parallelism Error : Not only X but also Y X= are taxes on......., Y = on reinvested dividend., these two statement are not parallel.
 
POE 
A) not only are taxes on shareholders’ eventual sales of the securities collected by the IRS, but also on-  as explained in error analysis 
B) collected by the IRS are taxes not only on shareholders’ eventual sales of the securities, but also on-  correct choice, this states both taxes are collected by IR. Parallelism error is corrected 
C) taxes not only on shareholders’ eventual sales of the securities are collected by the IRS but also-  Misses "on" after But also 
D) not only taxes on shareholders’ eventual sales of the securities are collected by the IRS, but also on -  Not parallel Not only "Taxes" but also "On" 
E) taxes are collected by the IRS not only on shareholders’ eventual sales of the securities but also-  Same as C

mightymk · Answer

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

As per meaning of underlined sentences go---taxes are collected not only on X but also on Y
a&d are out
b-correct parallelism maintained
c- parallelism error also comparison is wrong
e-parallelism error not only on X but also Y

jrzayev001 · Answer

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 -  Parallelism issue  
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 -  Idom issue 
D) not only taxes on shareholders’ eventual sales of the securities are collected by the IRS, but also on -  Idom issue 
E) taxes are collected by the IRS not only on shareholders’ eventual sales of the securities but also -  Idom issue

eddyki · Answer

hey guys,

I try to focus on the meaning:

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 -> it sounds awkward.  not only are texas, but also are ...  should better if we use this construction. but we can not, so I rule a out. 
B) collected by the IRS are taxes not only on shareholders’ eventual sales of the securities, but also on ->  I  hold  this one. it sounds wordy, but it does not destory the meaning. the taxes are collected by the IRS. these taxes are not only on X but also on Y 
C) taxes not only on shareholders’ eventual sales of the securities are collected by the IRS but also ->  taxes ... are collected by the irs, but also.. sounds awkward. i think the meaning is also wrong. both taxes are collected by the irs, not only the taxes on the eventual sales of securities. 
D) not only taxes on shareholders’ eventual sales of the securities are collected by the IRS, but also on ->  not only taxes.. but also taxes.../ the meaning is wrong, we want to express that 2 different kind of taxes are collected by the IRS. 
E) taxes are collected by the IRS not only on shareholders’ eventual sales of the securities but also ->  taxes are collected by the IRS -> ok! not only on X, -> ok! but also ... -> the "on" misses.

I'm not satisfied with B, but it is the only answer I got left.

I take B!

Nevernevergiveup · Answer

taxes are collected not only X but also on Y..............is the key intention here. 
here the phrases after idiom parts not only and but also must be parallel and comparable.

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 .

boldened portions on given sentence are not parallel. So A is incorrect.

B) collected by the IRS are taxes  not only  on shareholders’ eventual sales of the securities , 
but also  on reinvested dividend stakes earned by the securities held by the fund itself  
 This is parallel and is correct.

C) taxes  not only  on shareholders’ eventual sales of the securities are collected by the IRS  
but also  reinvested dividend stakes earned by the securities held by the fund itself.  
 bold portions are not parallel.

D)  not only  taxes on shareholders’ eventual sales of the securities are collected by the IRS,  
but also  on reinvested dividend stakes earned by the securities held by the fund itself  
 bold portions are not parallel.

E) taxes are collected by the IRS  not only  on shareholders’ eventual sales of the securities  
but also  reinvested dividend stakes earned by the securities held by the fund itself  
 bold portions are not parallel.

daagh · Answer

For those looking for a quick fix: There is only one thumb rule to look for in correlative conjunction parallelism in GMAT. You must only ensure whatever structure is on the right of the first arm of the pair is also there on the right side of the other arm. i.e., not only on … but also on; not only because… but also because; not only by ---- but also by; both Tom and Dick and so on.

As per the above rule, Only B fits in, and all others can be rejected without hesitation.

As per the above rule, Only B fits in, and all others can be rejected without hesitation.

trungnguyenn · Answer

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.

Not only on  ...  but also on  ... parallelism structure are chosen to be considered here.

Left only B that satisfies the structure above.

B correct.

(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  --- Correct
(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

Prashantsri · Answer

This question is very hard. It is not easily apparent what we need to be paying attention to in these sentences. This question seems to be arranged around the ‘not only…but also’ structure.
Looking at that, B is clearly the right answer, as it is the only one that maintains parallelism.

Leonaann · Answer

I first did the 3/2 splits. it was based on the (not only..on..but also on) split.

So , I came down to these 3 options A,B and D.

I was debating between A and B.

I felt that A was correct compared to B as it focuses on the action rather the doer of the action. Please help me to correct my understanding on this point.

Could someone help to explain why B is a better option than A? thanks.

VerbalBot · Answer

Automated notice from GMAT Club VerbalBot: 

A member just gave Kudos to this thread, showing it’s still useful. I’ve bumped it to the top so more people can benefit. Feel free to add your own questions or solutions.

 This post was generated automatically.

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

Prep Toolkit

Top 5 GMAT Debrief Videos

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards

GMAT Sentence Correction (SC - EA only) Questions

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

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards