Tax Arbitrage

Dictionary Says

Definition of 'Tax Arbitrage'

The practice of profiting from differences between the way transactions are treated for tax purposes. The complexity of tax codes often allows for many incentives which drive individuals to restructure their transactions in the most advantageous way in order to pay the least amount of tax. Some forms of tax arbitrage are legal while others are illegal.
Investopedia Says

Investopedia explains 'Tax Arbitrage'

Tax arbitrage can, for example, involve recognizing revenues in a low tax region while recognizing expenses in a high tax region. Such a practice would minimize the tax bill by maximizing deductions while minimizing taxes paid on earnings. It is suspected that tax arbitrage is extremely widespread, but by its nature, it is difficult to give precise figures as to what extent tax arbitrage is employed.  

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Arbitrage

    The simultaneous ...
  2. Arbitrageur

    A type of ...
  3. Statistical Arbitrage

    A profit ...
  4. Triangular Arbitrage

    The process of ...
  5. Index Arbitrage

    An investment ...
  6. Regulatory Arbitrage

    A practice ...
  7. Liquidator

    In the most ...
  8. Economic Profit (Or Loss)

    The difference ...
  9. Profit

    A financial ...
  10. Operating Income

    The amount of ...

Articles Of Interest

  1. Hedge Funds Hunt For Upside, Regardless Of The Market

    Hedge funds seek positive absolute returns, and engage in aggressive strategies to make this happen.
  2. Trading The Odds With Arbitrage

    Profiting from arbitrage is not only for market makers - retail traders can find opportunity in risk arbitrage.
  3. Trade Takeover Stocks With Merger Arbitrage

    This high-risk strategy attempts to profit from price discrepancies that arise during acquisitions.
  4. Using Interest Rate Parity To Trade Forex

    Learn the basics of forward exchange rates and hedging strategies to understand interest rate parity.
  5. How To Invest Like A Hedge Fund

    Hedge funds earn big returns for investors. Find out how they do it and whether you can too.
  6. The Impact Of Combining The U.S. GAAP And IFRS

    The convergence of accounting standards is changing the attitudes of CPAs and CFOs toward harmonization of international accounting.
  7. Analyze Cash Flow The Easy Way

    Find out how to analyze the way a company spends its money to determine whether there will be any money left for investors.
  8. Digging Into Book Value

    This calculation will serve up your portion of the shareholder pie.
  9. CPA, CFA Or CFP® - Pick Your Abbreviation Carefully

    A couple of letters can mean a big difference. Find out which designation you need and how to get it.
  10. Using Enterprise Value To Compare Companies

    Learn how enterprise value can help investors compare companies with different capital structures.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center