Suppose you want to buy a boat, but you know that interest paid on a boat loan is not tax deductible.Therefore, you take out a home equity loan, the interest on which is still tax deductible.This procedure is an example of
A)illegal tax avoidance
B)illegal tax evasion
C)legal tax avoidance
D)legal tax evasion
E)the answer cannot be determined from the information given

Question

Quizplus · Accepted Answer

This is an example of legal tax avoidance because it involves structuring the financial transaction in a way that minimizes tax liability, using legal means. It is not illegal tax evasion, which involves intentionally and illegally concealing income or assets to avoid taxes.

Suppose You Want to Buy a Boat, but You Know