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Taxes - Essay Example

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In this regard, I would like to identify some available mechanisms that could be used for minimizing of incomes tax, capital gains…
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Taxes
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Taxes Managing Director Finance Manager 25/07 Vehicles to Minimize Taxes I believe that tax planning is needed to reduce income tax now and in future and all the firms essentially require tax efficient financial planning. In this regard, I would like to identify some available mechanisms that could be used for minimizing of incomes tax, capital gains tax and estate tax. Currently many forms are making use of some remarkable vehicles to reduce taxation on their incomes. For example, whole life insurance is one of those vehicles which contract many tax benefits, i.e. if one doesn’t withdraw interest or gains, and then no income tax will be due-ever. Using charitable trusts is another way to reduce income tax, especially for the ones who belong to high income group as these trusts help you to give charity generously, giving you a big tax break (Karayan & Swenson, 2006).
At the time of selling of valuable assets, one can easily minimize Capital Gains tax with the help of one of the most secure asset protection program known as Private Annuity Tax (PAT) which minimizes even smaller properties like artwork or jewelry. When a property is transferred into PAT, it results in smaller tax expense. Another way of minimizing Capital Gains is to get an ISA (Individual Savings Account). Investors can put sufficient funds in ISA and gains made inside this account are CGT-free. Moreover, one more strategy is used which is: Investing in small companies through special tax efficient programs. In this way, one can claim for Capital Gains tax previously paid.
One of the most popular vehicles used to reduce Estate tax is to ‘uniform transfer to minors’. Such type of gifting occurs where your children are minors. The gift is handed over to a guardian and when the children reach the age of majority. Marital transfers is another useful way in which assets are transferred to a surviving spouse, who should not be a non-citizen, which minimized the estate tax which is due. Lastly, Quality Family-Owned Business Interest (QFOBI) is another way in which it reduces the gross value of the state and automatically reduces the amount of estate tax which is charged on the net value of the state (Karayan, et al., 2002).
I am very much hopeful that I have provided you significant and useful amount of information about the vehicles for reducing taxes and these vehicles could be regarded as substantial means for taxes reduction.
References
Karayan, J., & Swenson, C. (2006). Strategic business tax planning. NY: John Wiley & Sons.
Karayan, J., Swenson, C., & Neff, J.W. (2002). Strategic corporate tax planning. NY: John Wiley & Sons. Read More
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