By Philip Falco, CPA, Juris Doctor – Honors. In an opinion penned in 1934, Judge Learned Hand endorsed the use of tax planning. In Helvering v. Gregory, 69 F.2d 809, Judge Learned Hand wrote:
“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.”
To put it another way, there is no patriotic duty to pay more tax than the least tax payable under the tax code. This is the essence of tax planning in a nutshell.
A solid understanding of the tax code is what it takes to navigate to the least tax payable under the tax law.