In: Economics
Do you think there is a difference between the legal forms of conducting a business and the principal Federal income tax forms of doing so? Explain
ans...
Federal Income Tax Law governs the formulation of the policies of
any legal business entity. So, directly, there is no difference
between the legal forms of conducting a business and the principal
Federal income tax form of doing so.
But, Indirectly, there can be some difference in an individual
business policy and the rules concerning their tax calculation. In
the practical practice of business, a businessman is more concerned
with making the profit and saving it. A businessman is always
concerned with how to avoid or lessen the tax burden. On the hand,
Federal is checking how to lessen the tax evasion. Tax law
generally changes from time to time according to the need, Federal
is dealing with new, new ways of tax evasion and so is coming up
with new, new rules to make the tax law firm, these new rules may
change the business's daily course, which a businessman does not
like.
Business policies may differ from time to time, place to place, but
the Federal Tax Law is same for all. Which, will differ the ways of
business operation in both the cases. There are many rules
regarding investments, depreciation, interest. there are expenses
or incomes which a business takes as an expense or income but tax
law doesn't and vise-versa.