A tax avoidance motive is essential in establishing a sound business purpose.

Question

Quizplus · Accepted Answer

Tax avoidance is not a sound business purpose. A sound business purpose is a legitimate reason for engaging in a transaction, such as increasing profits or achieving efficiency. Tax avoidance, on the other hand, involves manipulating the tax system to reduce or eliminate taxes owed without any legitimate business purpose. Therefore, a tax avoidance motive would not be essential in establishing a sound business purpose.

A Tax Avoidance Motive Is Essential in Establishing a Sound