Week 8 Essay Example | Topics and Well Written Essays - 250 words - 5

Week 8 - Essay Example Thus enforcing the change will promote saving (Jacqueline, 2012). Suppose there two family members with US citizenship; one works in Australia while the other in US. The one in US had purchased a piece of land while the one in Australia owns a rental house in Australia. The two family members decide to exchange the ownership of the two properties; a house and a land. Postponing paying tax is one of the strategies of maximizing tax avoidance and minimizing the IRS scrutiny (Jacqueline, 2012). One pays tax whenever he/she sells a property and gains. To avoid the case of obvious gain (which will make you pay tax), one can directly reinvest the proceeds in a similar property as part of a qualifying like-kind exchange. For example, suppose you want to sell off your land and buy a rental house. You may have a gain in cash if your land has higher value compared the rental house you want to buy; if there is cash exchange. To avoid tax, you can find a rental house with higher value than your land and exchange. Thus although you may have gained, it a like-exchange for similar property hence you will not pay