tax shelter

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Tax shelter

Legal methods taxpayers can use to reduce tax liabilities. An example is the use of depreciation of assets.

Tax Shelter

An investment vehicle that reduces one's tax liability. For example, a 401(k) defers taxation until withdrawal from the account and may therefore be considered a tax shelter. Tax shelters are legal unless their sole purpose is to avoid taxes. See also: Tax evasion.

tax shelter

An investment that produces relatively large current deductions that can be used to offset other taxable income. Popular tax shelters include real estate projects and gas and oil drilling ventures. Also called shelter. See also abusive tax shelter.

tax shelter

An investment that generates paper losses or tax credits that may be used to offset other income and thus reduce taxes.

References in periodicals archive ?
Abusive tax shelters are marketing schemes involving artificial transactions with little or no economic reality.
The Tax Court held that the tax shelter exception to the tax practitioner/client privilege did not apply to documents in the form of the minutes of meetings between a partnership and a federally authorized tax practitioner because the tax advice in the documents was not given in connection with the promotion of a tax shelter.
In other words, the statue of limitations for tax shelters may possibly be extended from three to as long as four years.
Further discussion of tax shelters is beyond the scope of this chapter.
Now with its admission of "unlawful conduct," KPMG--along with law firms and banks with which it jointly sold tax shelters--will be more vulnerable to lawsuits from tax shelter clients who had to pay the IRS back taxes and penalties.
The final disclosure and listing regulations are significantly tighter than earlier versions, which applied only to corporate taxpayers, required the existence of at least two tax shelter characteristics and provided subjective-type exceptions that taxpayers and their advisers were prone to rely upon.
The most common tax shelters in recent years include investments in films, computer software, mutual fund fees, resource activities (oil and gas, mining and renewable energy), and e-commerce.
However, the factor of most concern to the Treasury Department is the rapid increase in the use of illegitimate tax shelters by large companies.
Estimates show that abusive tax shelters cost California $500 million in lost tax revenue each year.
The IRS first used transaction pattern evidence successfully to challenge individual tax shelters in which different individuals invested in the same shelter.
Arecent federal appellate court decision addresses whether accounting and law firms may protect the names of clients that participate in tax shelters.
Concluding that there was a need for a comprehensive interpretation of member responsibilities that would apply across the spectrum of tax planning and include tax shelters (regardless of how that term is defined), the AICPA tax executive committee issued Interpretation no.