Think of it like a Venn Diagram that has three partially overlapping circles: skillset, personality, and career path.
Skillset – Tax and Audit have several overlapping skills required to be successful–obviously they both require a pretty thorough knowledge of advanced accounting concepts and practices. This I would say is tested by the CPA exam: do you have the requisite skillset to be successful in auditing or tax? The CPA exam will tell you, for the most part, if you have acquired the “basic” skills you need to be successful.
Personality – I mean this in both an individual sense and an industry sense.
–Individual – Some people gravitate towards auditing and some people gravitate towards tax. I'm not talking about basic skills here, but an inclination for one or the other discipline to “make sense” to one person and not another. Some people find that understanding process and controls, and how journal entries are supposed to work, and how to identify potential fraud, etc., comes naturally to them–thus, they become auditors. Others find that researching tax law, and making judgments about how to structure a business, or how to structure large transactions, or how to manage risk comes naturally–these people tend to become tax professionals. **THIS IS OBVIOUSLY A GENERALIZATION**
–Industry – the industries themselves have different personalities. My experience is that auditors tend to be much more aware and insightful about actual business operations. They think much more broadly than tax professionals do. My personal opinion is that their experience is much more broadly transferable across industries and disciplines. There are definitely more CFOs/COOs that started their careers in audit because they have to see all the moving parts. Tax experts, however, tend to be just that –experts. As your career in tax grows I have found people become experts on fairly narrow (but very important) issues in tax. There may only be a handful of people in the United States who know how to deal with a certain issue, and their entire career may be built on that expertise. Of course, they know more than this but their value comes from how to put the pieces together in a coherent narrative that adds value and mitigates risk for clients or their own corporations.
–Career Path – The overlap here is important, but not defining. As others have mentioned, if you want to be a CFO then you might want to lean towards auditing. But, on the other hand, you want to become someone who has an incredibly deep knowledge of a particular concept/law/practice/etc., then I would lean towards tax. A CFO/Audit Partner needs to be a very big-picture thinker, and needs to know how the various financial pieces of a company fit together and work. A VP Tax or a Tax Partner needs to see the big picture, but value is added when that VP/Partner knows more than most people about a very specific set of facts and circumstances.
My 2 cents.
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