From the course: Finance Foundations: Income Taxes

Unlock the full course today

Join today to access over 22,700 courses taught by industry experts or purchase this course individually.

Is your goal to minimize your income taxes?

Is your goal to minimize your income taxes?

From the course: Finance Foundations: Income Taxes

Start my 1-month free trial

Is your goal to minimize your income taxes?

“

- When it comes to income taxes, is your goal to minimize the amount of tax paid? Okay, well evaluate the logicof the following reasoning. Okay, well, evaluate the logic of the following reasoning. I have a small business. My revenue is $4,000. I'm going on a business trip. I can make the trip, travel, hotel, and food for about $1,000. However, I want to spend more on the trip because the whole thing is a business expense. I can write it off on my taxes. I plan to travel first class all the way, and spend $3,000 instead of $1,000. Because my income tax rate is 30%, Because my income tax rate is 30%, the extra $2,000 I spend on the trip the extra $2,000 I spend on the trip will give me an additional $600 in tax savings. in tax savings. So, if I want to minimize my income taxes, I should take the expensive trip, right? Well let's think about this a little bit. Well, let's think about this a little bit. This chart helps us see the two options. This chart helps us see the two options. If…

Contents