Suppose Woody wants to buy a boat.Since the interest paid on a boat loan is not tax deductible,he opts for a home equity loan,the interest on which is still tax deductible.This procedure is an example of _____

Question

Quizplus · Accepted Answer

Woody is using a legal strategy to minimize his tax liability by avoiding paying interest on a loan that is not tax deductible and instead opting for a loan where the interest is tax deductible. This is an example of tax avoidance. Tax evasion would involve illegal methods to avoid paying taxes, such as not reporting income.

Suppose Woody Wants to Buy a Boat