About 150 million American households are gearing up to file their tax returns over the next few months, and all of them will be looking hard for ways to cut their taxes. Unfortunately, the typical American taxpayer won't have access to the lucrative tax loopholes that many corporations take advantage of each and every year. In particular, these seven corporate tax loopholes save businesses billions in taxes -- and they're completely legal.

Tax forms and money with a pencil.

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1. Tax deferral on overseas income

The U.S. corporate tax system imposes income tax on a U.S. corporation's worldwide income. To avoid that tax, many U.S. companies that do business overseas create foreign subsidiaries in the places where they do business. Although those foreign companies are completely controlled by their U.S. parent, they don't have to pay U.S. tax on their profits as long as they hold onto their profits rather than paying them to the U.S. company in the form of dividends.

Proponents of the break argue that most countries have territorial tax systems that don't impose home-country income tax on foreign profits in the first place. Opponents, however, argue that the provision gives an incentive to do business overseas, contributing to the ongoing losses of jobs and manufacturing capacity domestically.

2. Tax havens and transfer pricing

Another way corporations use foreign subsidiaries is to take advantage of what's known as transfer pricing. Companies that are related to each other through common ownership often trade products with each other, and the price at which those trades takes place has a big impact on their respective profitability. Theoretically, using realistic transfer pricing should give each company a fair basis on which to determine their profits.

Abuse of transfer pricing happens when related companies set prices that unfairly benefit the company that happens to be based in a low-tax country, known as a tax haven. Taken to an extreme, the final result can be a nearly complete shift in taxable income from the U.S. to a tax haven country, taking away American tax revenue.

3. Tax deduction for punitive damages

Lawsuits against corporations are frequent, and in cases of wrongdoing, juries and judges often award punitive damages to plaintiffs. Yet in reality, the American taxpayer ends up shouldering some of the burden of paying those punitive damage awards, because they're deductible on corporate tax returns.

Some lawmakers have sought to eliminate the tax break for punitive damages, noting that criminal fines aren't eligible for a tax deduction. Others disagree, questioning the ability of juries to determine seemingly arbitrary punitive damages amounts that in some cases bear little relation to the actual damages done. In any event, the break is still available.

4. Favorable tax treatment for carried interest

The carried interest provision gives financial professionals like hedge fund managers the ability to receive some of their income at favorable capital-gains tax rates. Even though the money is collected as compensation for services, the break doesn't treat that compensation as ordinary income. Proponents of the provision argue that the uncertain and variable nature of the compensation makes it more speculative and therefore like an investment generating capital gains income, but those who oppose it note that many other types of compensatory income get taxed at ordinary rates.

5. Tax savings from last-in, first-out accounting

Last-in, first-out accounting, or LIFO for short, lets companies treat sales as if they were the most recently manufactured or purchased item in their inventory. Because prices rise over time, the effect of LIFO accounting is to defer larger taxable profits on older inventory with the lowest cost basis. International accounting rules have eliminated LIFO accounting, but the practice is still available to U.S. companies domestically.

6. Accelerated depreciation of machinery and equipment

The tax laws have several provisions that allow for immediate or accelerated depreciation, effectively giving them an upfront tax break for purchases of items that are designed to last for years. Section 179 of the Tax Code gives businesses up to $500,000 in immediate deductions on qualifying equipment, with the provision starting to phase out for businesses purchasing more than $2 million. Bigger spenders can take advantage of bonus depreciation, which gives them 50% larger depreciation write-offs than they'd otherwise be entitled to take.

7. Industry-specific tax breaks

There are plenty of tax breaks that are targeted at specific corporate taxpayers. Until 2011, ethanol producers got a tax credit for every gallon of fuel they produce, which many saw as a subsidy to keep corn prices higher and benefit farm states. Real-estate developers and construction companies still benefit from a credit for investing in low-income housing projects, encouraging new building that offers 20% to 40% of housing units to eligible lower-income residents. Other tax breaks have gone to motorsports entertainment complexes, racehorse owners, film and television production, and rum excise tax rebates.

What you can do

Corporations get plenty of tax breaks, but there are still a few that ordinary Americans can use. For example, saving tax-free for retirement using a Roth IRA can help you escape Uncle Sam's clutches as well. Similar tax-free treatment for college savings through 529 plans and healthcare expenses through health savings accounts can similarly keep the IRS at bay.

Nevertheless, many American taxpayers will end this tax season being jealous of the corporate loopholes that businesses can use. Investors in those companies know quite well the benefits that favorable tax laws can have the businesses whose stock they own.