Nov '25 (edited) • General discussion
Tax evasion vs tax planning.
The IRS recognizes that taxpayers can organize their affairs to minimize taxes, as long as there is substance and compliance with the law. See the landmark case: Gregory v. Helvering, 293 U.S. 465 (1935) - courts allow “tax; avoidance” but not “tax evasion.”
❌: Tax Evasion / Fraud
IRC § 7201 – Attempt to evade or defeat tax
- States that anyone who willfully attempts to evade or defeat any tax imposed by the Internal Revenue Code is guilty of a felony.
- Penalties: up to $100,000 ($500,000 for corporations) fine, plus up to 5 years in prison.
IRC § 7206(1) – Fraud and false statements
- Makes it a crime to willfully make false statements on a tax return.
IRC § 7206(2) – Aiding and assisting
- Covers anyone who aids or assists in preparing a false return.
IRC § 6662 – Accuracy-related penalties
- Civil penalties for underpayment due to negligence or disregard of rules (20% of underpayment).
- § 6663 – Fraud penalty (75% of underpayment if intentional fraud is proven).
✅: Legal Tax Planning: The tax code permits taxpayers to structure transactions and timing to minimize taxes:
- IRC § 61 – Gross income definition; establishes what counts as taxable income. Planning can defer or exclude certain items legally.
- IRC § 162 – Business expenses; allows deductions for ordinary and necessary business expenses.
- IRC § 170 – Charitable contributions; permits deductions for qualified donations.
- IRC § 401, § 408, § 219 – Retirement contributions (401(k), IRA, etc.) reduce taxable income.
- IRC § 199A – Qualified Business Income deduction (20% for pass-through entities).
- IRC § 263A / § 167 / § 168 – Depreciation and cost recovery rules; allow legal acceleration of deductions.
- IRC § 7701(a)(3) / § 1361 – Entity classification rules (S-corp, LLC, partnership) for tax planning.
👩💻🍀Plan well enough and you might end up legally owing $0 in taxes. It starts with a tax plan. If this is you, I invite you to book a consult. You can do so here.
3
1 comment
Tax evasion vs tax planning.
powered by
skool.com/pay-less-taxes-7922
Showing business owners and investors legal ways to reduce their tax bill with IRS-backed strategies, guided by TaxSavvy Advisors.
Suggested communities
Powered by