Tax Avoidance

Tax avoidance is the legitimate non-payment of government taxes by making use of provisions and/or loopholes in tax law.

An example would be the sale of real estate; if properly structured as a "1031 exchange" (named for the Internal Revenue Code section) for other usable real estate, no tax would be owed on the sale (even if the gain was substantial).

The difference between tax avoidance and tax evasion can sometimes rest upon a fine legal distinction, and is subject to court challenges.