Tax consequences refer to the tax liability impacts projected or realized from business and personal economic actions and events per prevailing codes.
Potential Consequences:
- Capital asset sales may incur recaptured depreciation expenses or offset capital losses
- Corporate liquidation can trigger doubled taxation unless special provisions apply
- Inheritance often obligates settling estate and inheritance taxes
Example:
An individual weighed tax consequences before accepting a year-end bonus that risked pushing income into a higher bracket.
Takeaways:
Thorough consideration of taxation unavoidably stemming from decisions helps maximize after-tax outcomes. Advisors assist navigating complex interactive rules that may unexpectedly increase burdens without prudent planning and structuring.