Question

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.

Answer 1

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.