Tax advice is usually aimed at answering one question, namely, what is the tax effect of some amount of income or some expenditure. Often, someone just wants to know if he or she can deduct some expenditure on his or her tax return. Or sometimes the taxpayer wants to know the effect of selling property or starting a business.

TAX PLANNING

Tax planning aims to minimize income (and estate) taxes. Tax planning includes making projections of income in order to estimate future tax liabilities and analyzing planned transactions to minimize the tax impact or to maximize tax benefits.

Tax planning is more involved than "tax advice". The issue at hand may be the tax implications of a whole series of transactions that may take years to complete. Perhaps the issue is how to structure a real estate deal or how to structure the ownership of business or change the ownership.

Or you may be receiving or selling stock options. It is very important to know the tax consequences and try to minimize the impact of taxes, including the AMT.

The dreaded AMT (Alternative Minimum Tax) can hit you despite tax planning if you're not careful. Many taxpayers do not realize that there is a second method for computing income taxes. If the first (regular) income tax method doesn't get you, then the second (AMT) will. Maybe.





























Copyright©1999 Ira M. Freed