Introduction to Tax Planning

Abstract

In this chapter we explain why integrating taxation into decision making processes is not negligible. Using simple examples, we show that taxation affects optimal investment decisions. We present the two most important objectives of tax research: Tax planning and identifying tax impact on decisions. We discuss main assumptions of an investment decision process briefly and introduce the important terms of tax planning and tax minimization. Moreover, we provide basic concepts of tax planning and discuss different types of decision settings and planning approaches. After studying this chapter, you are able to evaluate the importance of taxation in investment decisions and distinguish between tax planning and tax minimization.