Table of Contents
Internal Memorandum
To: The Managing Director
Cc:
From:
Date:
Re: Methods of Minimizing Tax
The purpose of this memo is to give the options that are available in selection of the various vehicles that are used by the clients in order to minimize the income tax incurred. In addition to this, the options available in minimizing capital gains tax and minimization of the estate tax.
How to Minimize Income Tax
To reduce the income tax that the company will incur there will be need for tax credits. In this case the best options of cars that can be used are the plug-in hybrid and electric cars. These cars incur a combination of both national and local credits that range from $2,500 up to $7,500 at federal levels with an addition of $2,000 credit for the purpose of installation of the charging equipment.
How to minimize Capital Gains Tax
In order to minimize the capital gains tax that may be incurred due to the vehicles being used the appropriate option will be claiming a depreciation in which the car will be assumed as a business loss despite turning in profits. The depreciation will be claimed on a basis of business expense to avoid the extra tax that would be incurred.
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How to minimize Estate Tax
The most effective way to minimize the estate tax will be through planning using trusts and other financial vehicles. The best vehicle in this case will be the intentionally defective grantor trust that will transfer the property rights in some purposes and retain some rights at the same time. This will result in tax adjustments that will lower the tax bill.
The mentioned methods are the best options that are currently available that will be used in ensuring the tax bracket in the income tax, capital gains tax and estate tax are minimized to cut down the cost incurred by the organization.