Final answer:
A rare situation that may arise in a privately owned company to decrease income taxes paid to the government is by adopting tax avoidance strategies such as utilizing tax deductions, credits, and investments in research and development. Companies should consult with a tax professional to ensure compliance with tax laws.
Step-by-step explanation:
In a privately owned company, a rare situation that may arise when they want to decrease the amount of income taxes paid to the government is by adopting tax avoidance strategies. Tax avoidance refers to legal methods employed by individuals or businesses to lower their tax liability. One example of tax avoidance is by utilizing tax deductions and credits that are applicable to the company's operations.
For instance, companies can invest in research and development activities that qualify for tax credits. By doing so, they can decrease their taxable income and potentially decrease the amount of income taxes paid. Another example is by taking advantage of tax deductions for business expenses such as employee wages, rent, and utilities.
It is important to note that while tax avoidance is legal, engaging in illegal practices known as tax evasion is not permitted. Tax evasion involves intentionally misrepresenting or concealing income to avoid paying taxes. Companies should always consult with a tax professional or accountant to ensure they are in compliance with the tax laws and regulations.