tax planning strategies and related limitations

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1、spi6235x_ch03_000-025.inddPageii18/01/131:58PMf-499~/Desktop/MH01795:201:SPILKERchapterTaxPlanningStrategies3andRelatedLimitationsLearningObjectivesUponcompletingthischapter,youshouldbeableto:LO3-1Identifytheobjectivesofbasictaxplanningstrategies.LO3-2Applyth

2、etimingstrategyanddescribeitsapplicationsandlimitations.LO3-3Applytheconceptofpresentvaluetotaxplanning.LO3-4Applythestrategyofincomeshifting,provideexamples,anddescribeitslimitations.LO3-5Applytheconversionstrategy,provideexamples,anddescribeitslimitations.L

3、O3-6Describebasicjudicialdoctrinesthatlimittaxplanningstrategies.LO3-7Contrasttaxavoidanceandtaxevasion.spi6235x_ch03_000-025.inddPage118/01/131:58PMf-499~/Desktop/MH01795:201:SPILKERhileworkingwiththeirCPAduringWtheiraudit,BillandMercedesdecidetoinquireabout

4、lessriskytaxplanningopportunities.Specifically,theywouldliketogainabetterunderstandingofhowtomaximizetheirafter-taxreturnswithoutincreasingtheirpotentialforanotheraudit.(Althoughitwasfunandeducational,oneauditisenough!)Mercedesisconvincedthat,asasmall-busines

5、sowner(LavishInteriorDesignsInc.),shefeelsshepaysmorethanherfairshareoftaxes.Likewise,Bill,anavidinvestor,wonderswhetherheismissingthemarkbynotconsideringtaxesinhisinvestmentdecisions.■StorylineSummaryTaxpayers:BillandMercedesFamilyBillandMercedesaremarriedde

6、scription:withonedaughter,Margaret.EmploymentBillisaneconomicsprofessor;status:Mercedesisasmall-businessowner.Filingstatus:Married,filingjointlyCurrentBillandMercedeswanttosituation:engageinlessriskytaxplanningstrategies.3-1spi6235x_ch03_000-025.inddPage215/0

7、1/137:36PMf-499Unsaved...3-2chapter3TaxPlanningStrategiesandRelatedLimitationsBillandMercedeshavecometotherightplace.Thischapterdescribesthebasictaxplanningconceptsthatformthebasisofthesimplesttomostcomplextaxplanningtransactions.Intheprocesswealsodiscussthej

8、udicialdoctrinesthatserveasbasiclimitsontaxplanning.LO3-1BASICTAXPLANNINGOVERVIEWEffectivetaxplanningrequiresabasicunderstandingoftherolesthattaxesandnontaxfactorsplayinstructuringbusines