Death and Taxes

May older LICs have a large tax liability but always say something similar to "BLAH is a long term investor and does not intend to sell...".

Eventually there will be a tax liability, like the old saying says "The are two certainties in life, ...".

A company like AFI and many older style LICs have a large gap between NTA before and after tax. For example, AFI this month has NTA $5.63 pre-tax and $4.87 after tax. That's a large difference in what the shareholder's assets actually are. In more precise terms about 20% of the shareholder's assets are a tax liability that the company says it never has to pay.

I wonder about:

1. If they paid their tax that would come to shareholders as franking credits. Why don't they?

2. What will happen if the tax rate for companies changes (up or down)? I remember the avalanche of special dividends some time ago when the company tax rate was lowered.

3. If accounting standards or some government intervention forced LICs to write assets to market value and pay tax then what would happen. My guess is the market price would dive but not necessarily because there would be one-off profit and franking that would result.

What do other people think?