tax avoidance

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Tax avoidance

Minimizing tax burden through legal means such as tax-free municipal bonds, tax shelters, IRA accounts, and trusts. Compare with tax evasion.

Tax Avoidance

The act or practice of taking steps to legally reduce one's tax liability. One may do this directly by taking advantage of an applicable tax credit or tax deduction. More often, however, the term refers to a person or company making trades or conducting other activities specifically to avoid taxes. For example, one may sell a stock at a loss to offset a gain on the sale of another stock. It is important to note that tax avoidance is different from tax evasion, which is the minimization of one's tax liability through illegal means, though it is generally acknowledged that the line between the two can be murky.

tax avoidance

The reduction of a tax liability by legal means. For example, high-income individuals avoid significant federal income taxes by purchasing and holding municipal bonds. Compare tax evasion.

tax avoidance

any efforts by taxpayers to arrange their financial affairs so as to avoid paying TAX by taking maximum advantage of taxation allowances and reliefs. In this way taxpayers can legally minimize their tax burden. Compare TAX EVASION.

tax avoidance

any efforts by taxpayers to arrange their financial affairs so as to avoid paying TAX by taking maximum advantage of taxation allowances and reliefs. In this way taxpayers can legally minimize their tax burden. Compare TAX EVASION.

tax avoidance

Perfectly legal and ethical strategies for reducing taxes to the lowest possible number. Contrast with tax evasion.

References in periodicals archive ?
with tax havens, expressly allowing for avoidance of tax in some
58) A "disqualified asset" is any property or right to property transferred to the requesting spouse if the principal purpose was the avoidance of tax or payment of tax.
But there still exists today a substantial industry advising on the legitimate avoidance of tax, whether this be income, capital gains, inheritance or even corporation tax.
the formation of such affiliates was the avoidance of tax.
Unfortunately, abusive tax transactions that have no business purpose other than the avoidance of tax, like the one the Tax Court described in ACM Partnership, reinforce the perception that the tax system is not fair.
Various exceptions to the addback provisions are provided, including an exception for interest charges for banks if the transaction did not have as a principal purpose the avoidance of tax and the expenses are paid pursuant to an arm's-length contract at an arm's-length interest rate.
Generous tax reliefs and the avoidance of tax penalties are available to those that respond to environmental issues such as asbestos removal, company car emissions and purchase certain energy saving plant and machinery.
The IE's participation is pursuant to a tax-avoidance plan if one of the principal purposes of such participation is the avoidance of tax under section 881.
6015(c)(4)(B) defines disqualified assets as assets, the principal purpose of whose transfer was avoidance of tax or payment of tax.
These regulations are issued pursuant to authority granted to the Commissioner by section 7701(l) to disregard the participation of one or more persons in a multiple-party financing transaction when necessary to prevent the avoidance of tax.
The statute provides that if an avoidance of tax exists, the transaction may be "recharacterized.
Therefore, as life expectancies increase, the avoidance of tax on account earnings (even without current deductibility of contributions) makes Roth IRAs attractive for older taxpayers.