From the course: Finance Foundations: Income Taxes

Schalten Sie den kompletten Kurs noch heute frei

Join today to access over 23,400 courses taught by industry experts.

Strategy 2: Shift income from one pocket to another

Strategy 2: Shift income from one pocket to another

From the course: Finance Foundations: Income Taxes

Start my 1-month free trial Buy for my team

Strategy 2: Shift income from one pocket to another

"

- The second basic tax strategy is to shift income from one pocket to another. Such as from a high tax state or country, to a low tax state or country. As an example, let's consider Microsoft. Is this a US company? Well, the company is based in the United States, but where is its income generated. Here you can see Microsoft's income for 2012, 2013 and 2014. You can see rather quickly that Microsoft is generating most of its income outside of the United States. Okay, now why would the company structure its operations like that? Well, in its publicly available financial statements, Microsoft reports that it produces and distributes products and services through regional operating centers located in Ireland, Singapore and Puerto Rico. Now, why these three locations? Simple, tax rates are lower than those in the United States. Here's another exhibit with average tax rate information for four companies. Exxon Mobile, Microsoft, Home Depot and Walmart. You can see that Walmart has an…

Inhalt