What is the purpose of tax planning? How do we conduct tax planning? How could tax planning lead to unethical behavior?Tax planning is logical analysis of a financial situation or plan from a tax perspective, to align financial goals with tax efficiency planning. The purpose of tax planning is to discover how to accomplish all of the other elements of a financial plan in the most tax-efficient manner possible. Tax planning thus allows the other elements of a financial plan tointeract more effectively by minimizing tax liability. In conducting tax planning, the system will analyze different tax options available to the taxpayer for income and deductions including tax credits in current and future periods must be made. Tax planning involves the identification of tax saving opportunities such as realizing long term capital gains instead of short term as the latter is taxed at a higher rate, earning qualifying dividends which are subject to the tax rate levied for long term capital gains, and earning tax free income such as interest income from municipal bonds among others. Therefore, tax planning is right on the line between ethical and unethical behavior. Tax planning could lead to unethical behavior if the context of the planning is tax avoidance rather than tax minimization. Ethical tax planningmeans working within the law even if it means paying a little more in tax.Response 2When tax planning there is an advanced steps used to cut down the amount of taxes an individual would have to pay when making financial steps. When conducting a tax planning purpose an individual could know before an event what would be the affect of a current situation, have a meeting with a tax consultant and do a tax research to know what would be the best way of action to take. Tax planning is to meet the client's needs and desires in a legaland ethical matter. I do believe that tax planning can cause unethical behavior. when claiming a deduction that has not happened or making a deduction fit and deduction that do not fit in that category is not legal and is unethical behavior. Due to the economy there are individual and organization looking for ways to reduce taxes that they
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