Tax consequences should be evaluated in every significant transaction. It is extremely important at year end. However, the tax tail should not wag the dog. Items to consider at year end would be the deferral of income into the next year and the acceleration of expenses into the current year. However, a business should not automatically go out and spend money just to reduce taxes. If you expect to be in a higher tax rate in the subsequent year you might want to recognize income in the current year and move deductions to the subsequent year. If a tax benefit will be lost in the subsequent year you might want to take the deduction in the current year.
Beware of tax shelters promoted on the basis of tax reduction. A typical comment is that many tax deductions work only in the 100% bracket and then you will only break even. A tax shelter or investment should have an economic benefit.
Do the tax research before entering into a transaction. If you properly research the issue and plan a transaction around the tax research you will have a much better chance to prevail in the event of an audit. It is much easier to defend a position that has been researched than to plug a hole after the transaction.
Beware of tax firms that try to push past the limit or do not know the limits. A tax firm that has a bad reputation with the IRS can increase your probability of an audit. Also, beware of firms who put down the IRS agents as not being competent. The caliber of IRS agents is very high. Our firm works from the basis of respect for the agents and we take the extra steps to provide documentation to support a position taken on a return.