Tax Avoidance and Tax Evasion

Topics: Tax, Taxation in the United States, Tax avoidance and tax evasion Pages: 4 (1216 words) Published: April 27, 2015
Tax Avoidance Analysis
Tax Avoidance is a legally manipulation for the corporations to lower their tax bill by structuring transactions, is also called tax planning. Different with Tax Evasion, the Tax Evasion is Criminal and completely illegal. And in generally, company which have more profit should have higher tax rate, but with the growth of the company, many tax avoidance strategy were used by management as result of minimize the tax bills and also without obey the law, There are 3 strategies that I would talk about the most common way that company would use in order to shrink their tax bill with out breaking the law. These strategies would defiantly benefit for the companies and decrease the income of government. Government would rewrite or make new tax code or regulations to defense new coming way of tax avoidance. In the next 3 chapters, I would talk about 3 strategies for company, delay income and accelerate deductions, Tax loophole, and Tax haven. Delay income and accelerate deductions is the most reasonable, and safety way. Tax loophole are like on the backdoor of tax law, once the tax regulations been rewrite in time, the loophole would not exist. And tax haven are obviously different with other two ways, it appears after the international economic and the company need to be big enough to doing business between nations in order to take advantage of different nations tax law. Firstly, tax avoidance can be simply achieved by Delay Income and Accelerate Deductions if company uses the cash method of accounting. There are many ways to delay income and accelerate deductions, depends on the business procedure of this company and how transcripts are been recorded in the departments, such as, delay collections, delay dividends, delay capital gains, accelerate payments, accelerate large purchases, and accelerate operating expenses. I would give some sample explanation for these items. Delay collections- delay year-end billing so that the payment can record in...
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