The remedies for income tax are varied. Three different types of remedy are available.
Incoming Shifting by type of income, for example, by changing income into capital gains
Income Shifting by taxpayer, for example shifting income from a taxpayer with a high marginal rate to lightly taxed children or businesses with deductions or losses
Income Shifting by time, for example deferring the realization of income until retirement when one is, presumably, in a different tax bracket
Income tax is a direct tax levied on your income. Your income includes wages, salary, commission, benefits, and income from property and interest paid or payable during a given year. Income tax is not a tax on the increase in your wealth nor a tax on your consumption of wealth or capital.
Significant differences in tax treatment can result from undertaking identical income activities, generating the same before-tax cash flow, but through different legal organizational forms.
The major forms of organization are:he major forms of organization are:
• Individual, directly or through a sole proprietorship
• Trust, a legal form that separates legal and beneficial ownership
• Through a Partnership, a flow through form that flows income or gains through to its partners: corporations, natural persons, or even trusts