Question

Hillmer Corporation structures a transaction to shift income from its New York City office to its Dallas office. This tax planning strategy may be taking advantage of the ______.

Answer 1

Hillmer Corporation is using a tax planning strategy to shift income and reduce its tax liability. This strategy is taking advantage of favorable tax structures offered by different states.

Step-by-step explanation:

Hillmer Corporation is using a tax planning strategy to shift income from its New York City office to its Dallas office. This strategy may be taking advantage of the flexibility that companies have to adopt technologies in order to avoid taxes imposed by state or local governments.

For example, some states like Texas offer favorable corporate tax structures and incentives to attract businesses. Texas governor Greg Abbott promoted the state's friendly tax structure to persuade General Electric to relocate its headquarters from Connecticut to Texas. Another example is Texas governor Rick Perry's tour to bring businesses from California to Texas. These examples illustrate how companies can utilize tax planning strategies to shift income and take advantage of tax benefits offered by different states.

By shifting income from a high-tax jurisdiction to a low-tax jurisdiction, Hillmer Corporation can reduce its tax liability and potentially increase its after-tax profits.