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1. The Purpose of Tax Planning – Part 1
Tax planning methods fall into two categories: those that defer taxes and those that reduce taxes. Tax planning can be accomplished by either controlling the facts (changing what the taxpayer does) or by making tax saving elections. Tax planning involves employing these methods to answer the basic questions listed above…….
2. The Purpose of Tax Planning - Part 2
Decisions often have long run implications. This means that tax planners must consider the present value of alternatives and the relative risk of alternatives.…….
3. The Purpose of Tax Planning - Part 3
Tax planning impacts business operations. From the beginning, decisions such as organizational form, jurisdiction (where to form business), capital structure (e.g., whether to receive stock or debt), organizational control, transfers of property, lease or buy, status of workers (as employees or independent contractors), and accounting methods all have major tax implications. Some are difficult, if not practically impossible to change. After considering some practical problems encountered by new business, we will is a look at just a few of the major tax issues.....
4. The Purpose of Tax Planning - Part 4
The taxpayer using the cash method benefits because receivables are not included in income until payment is actually received.
One provision that simplifies reporting for accrual basis taxpayers and at the same time provide a small tax advantage is found is Sec. 461(h) which permits taxpayers to effectively deduct many recurring expenses when paid. A number of requirements must be met--for example, the prepayment cannot be greater than 8.5 months.
