In order for the attorney to avoid ethical violations and the possibility of civil and criminal liability, he must be careful in accepting new clients and in advising and servicing them. The basic concept that should be employed is the performance of due diligence.
The problem with most tax planning is that you have to give up something to get something. To get an income tax deduction you must spend a dollar to save taxation on a dollar. To get a deduction for a business expense, you must incur a business expense. To get a personal deduction you must pay a deductible expense.
Income taxes are not at a 100% rate thankfully, so one normally thinks wisely before spending a dollar to save tax on a dollar, usually about 40% (35% federal plus state tax). Then if you save the dollar long enough your estate may become so large that it has to pay an estate tax of almost 50% (currently 47%). Let’s not forget FICA and Medicare, both sides being around 15%. Phew, it’s no wonder why most people loathe the IRS and tax time.
Your business has matured, or your real estate has appreciated, time to cash out and sell. It has taken a long time, and since you have held your shares or real estate for greater than one year, the gain qualifies for long-term capital gain taxation. A 15% federal tax rate; not bad!
Yet, 15% of a $10,000,000 gain is $1,500,000. With a $20,000,000 gain it is $3,000,000. That is an awful lot of money.