1.why it is generally better for taxpayers to maximize their after-tax incomes rather than simply minimize their current year tax liabilities. Create a simple example to illustrate how minimizing the current years tax liability does not always result in maximizing after-tax income, and walk your friend through each step of your calculation.

2.What are the four basic variables that can change the structure of a transaction and impact the related tax consequences? Provide your friend with a general description of each variable, and using your own numbers, create a short, simple example to show how each can be used effectively to reduce taxes from the perspective of legal tax planning. Despite the potential tax benefits from pursuing effective tax planning strategies, why must a taxpayer be careful not to ignore the importance of nontax factors?