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.