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Tax Avoidance
(redirected from Avoid Taxes)

   Also found in: Dictionary/thesaurus, Financial 0.01 sec.

The process whereby an individual plans his or her finances so as to apply all exemptions and deductions provided by tax laws to reduce taxable income.

Through tax avoidance, an individual takes advantage of all legal opportunities to minimize his or her state or federal Income Tax, gift tax, or estate tax. An individual may, for example, avoid federal income tax by investing a large sum of money in municipal bonds, since the interest on such bonds is not considered taxable income on which federal tax is due. Interest on the same amount of money placed in a savings account must be included as taxable income.

Tax avoidance must be distinguished from Tax Evasion, which is the employment of unlawful methods to circumvent the payment of taxes. Tax evasion is a crime; tax avoidance is not.



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However if you are an auditor for the government, you are constantly searching for areas and steps that companies and individuals have taken to avoid taxes, some legal and some illegal.
The bankruptcy court rejected the plan of reorganization proposed by South Beach because it was not approved by a noninsider impaired class of creditors as required by Bankruptcy Code Section 1129(a)(10), and, as alleged by the trustee, its principal purpose was to avoid taxes (In re South Beach Securities, Inc.
The tobacco industry has found yet another way to exploit children and legally avoid taxes.
 
 
 
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