What is the motivation behind the tax departments


Question - Lark Corporation (a calendar year taxpayer) has gross income from operations of $497,000, expenses from operations of $556,000, and dividends received from domestic corporations (less than 20 percent ownership) of $200,000. Currently, Lark does not expect any more income or expenses to be realized by year-end. However, Larks tax department has suggested that the corporation incur another $1,001 of deductible expenditures before year-end. What is the motivation behind the tax department's recommendation, and is such year-end planning ethical?

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Accounting Basics: What is the motivation behind the tax departments
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