Ray Reyes owns a plumbing business. He went to his tax advisor to figure out what business deductions he can take to minimize his tax liability. Ray Reyes also wanted to know what else he can implement in his business to reduce his taxable income.

• Currently, Ray has 5 employees who work full time. He pays them a salary and often has referral bonuses for those who bring in new customers. Ray’s company does not provide retirement plans for his employees at this time.
• Ray recently bought 3 brand new vans for everyday use in his business. He also bought a new Range Rover vehicle that he claims he uses for business purposes.
• Ray is looking to hire two of his family members, one as an operations manager and one as a plumber.
• Ray is in the process of buying new equipment and a new building to conduct business and would like to use an accelerated depreciation method for these items.
• Ray donated $2,500 to a local charity organization in exchange for a printed advertisement of his plumbing company in their charity newsletter.
• Ray recently wired money from his business to an offshore account in the Cayman Islands.
• Ray took out a business loan and used 70% of it for business expenses and 30% of it for a family vacation.

What are some ways Ray Reyes can minimize his tax liability?

Are there some things listed above that he cannot deduct or seem unethical? Why or why not?

Answer rating: 100% (QA)

Step 1 Here discuss about the details of way to reduce the tax liability for the tax payer for the different condition which are incurred to the busin... View the full answer