TAX 660 Summary Lecture
TAX 660 Lecture 1: Introduction to Tax Planning and Class Organization Objectives: Taxes are
ubiquitous, influencing company choices and having an impact on cash flow (type of cost) oTax
Strategy Framework (tax planning opportunities) oThe role of taxes in various business choices
(investments, location decision, org. form) oAll tax planning implications: Parties involved,
taxes (explicit/implicit), and costs (tax/non-tax) oIndependent of specific tax rules, general
logic/concept of tax planning Tax minimization: Reduce the amount of taxes paid (no non-tax
expenses), beneficial after a decision has been taken. Tax planning: Consider taxes while
executing decisions to optimize after-tax returns/profits, integrate taxes into decision making,
and consider non-tax costs in all tax-related decisions. Example: Profits per share (EPS) = net
income (after taxes) / average number of outstanding shares Tax evasion: Tax-avoidance
behavior, judicial provisions to prohibit it | Income evasion.
Legislations: A representative who is legally compelled to remit taxes. Financial: The agent who
really suffers the costs of the tax Tax obligation Equals tax rate multiplied by tax base (taxable
income). Several Forms of Income Tax Preparation: transferring money (expenses) across... 1)
Time: If tax rates remain constant or are projected to vary (time value of money interest), 2)
Legal jurisdictions: Various tax legislation (rate, base) 3) Several forms of income: Various forms
