What is meant by "tax planning"?

Tax planning refers to the strategic process of analyzing a company's financial situation to identify ways to minimize tax liabilities within the framework of existing tax laws. This involves an in-depth understanding of the tax code, regulations, and various incentives available to corporations, allowing businesses to optimize their tax positions without breaching legal boundaries.

By focusing on tax efficiency, companies can take advantage of deductions, credits, and provisions that can significantly impact their overall financial health. Tax planning is not merely about preparing for tax payments; it's about making informed decisions throughout the fiscal year to enhance tax efficiency and ensure compliance with tax regulations.

When looking at the other options, preparing financial statements for investors does not directly relate to tax liabilities or planning; it is more about reporting financial performance. Manipulating tax liabilities can imply unethical or illegal practices, which contradicts the ethical and legal focus of legitimate tax planning. Lastly, merely calculating current tax liabilities fails to encompass the comprehensive strategies involved in tax planning, which considers future implications and optimizing overall tax obligations rather than just assessing the present tax situation.