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Tax Avoidance |
Also found in: Dictionary/thesaurus, Financial, Wikipedia, Hutchinson | 0.02 sec. |
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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. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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The revisions also state that EPCRS is unavailable in cases where either the plan or plan sponsor has been a party to an abusive tax avoidance transaction and the plan failure is directly or indirectly related to the abusive tax avoidance transaction. The May modifications also define "the principal purpose" of tax avoidance or evasion. Definition: A covered opinion is written advice about a transaction that is a tax avoidance transaction identified as a listed transaction in published guidance or which has as a principal purpose the avoidance or evasion of any tax imposed by the Code (Section 10. |
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