Legal Quote of the Week - Learned Hand on Taxes

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes.
Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any
public duty to pay more than the law demands."

-Judge Learned HandHelvering v. Gregory, 69 F.2d 809, 810 (2d Cir. 1934), aff'd, 293 U.S. 465 (1935)

The court, however, found that (1) where a transaction's only substantial business purpose is avoidance or reduction of Federal tax, the tax law will not regard the transaction, and (2) for Federal tax purposes, where the economic substance of a transaction is different from its legal form, the taxpayer will be bound to its substance.

Business taxation is a complex field, and business managers would be well-advised to consult with experts to ensure they are complying with all relevant federal, state and local laws while at the same time securing the most favorable tax treatment possible for their business.