It’s really quite simple. Either fail to plan or plan to fail. The tax code is vast, with both opportunities and pitfalls. And let’s face it, you paying taxes represents revenue to the country. The system is not in your favor. The rules are not all in one place. And even when you find the rules, they are often difficult to comprehend. In response, we offer tax services that fall into two distinct categories:
“Helping you sleep better,” knowing that we enjoy talking to you to learn about your particular brand of work-life balance, so we can make decisions with you that keep you within the rules and allow you to pay on time and no more than necessary.
Fred, one of our accountants, recently said, “I think it is so sad when someone doesn’t understand the game, comes to us after the fact, and then must struggle with finding cash (most likely already spent) to cover a surprise tax bill, plus penalties and interest.”
Our business model is designed to help you protect more of your hard-earned income from tax erosion. We continually research and study the tax laws so you don’t have to. We encourage our clients to meet with us no later than three months before year end. This gives us a chance to meet, review your particular fact pattern — every client is different — and implement a strategy before year end. Once the year is over, there are fewer opportunities for us to reduce a tax burden.
Of particular focus for us are clients with variable income. Absent proper planning, a business client with a year of increased profits will generally face: leaching due to higher tax rates, additional surtaxes, alternative minimum taxes, net investment income taxes, Medicare and/or excise taxes.
Accounting Information Systems
A growing business owner was frustrated that his accounting system was giving him inflated sales figures. She engaged Tax Solutions to find the problem. We met with key personnel, reconciled accounts, traced invoices through the collection process and found staff redundancy in certain invoicing. Our work helped locate $80,000 in excess billings and saved the client $32,000 in income taxes.
Estate Tax Planning
An executive’s husband passed and left behind significant assets. We were engaged to work with the client’s banker to minimize estate taxes on the inherited assets. In meetings with our client and banker, we worked through the Internal Revenue Code Section 706 basis step-up adjustments on the assets, and filed an estate tax return with a portability election for the client. Our work helped shield $4.9 million of assets from future estate taxes.
An employee/investor sold IPO shares for $5 million. We were asked to help him minimize his tax bill. We carefully followed the opportunities of Internal Revenue Code Section 1244. Our work helped shield $2.5 million of the transaction from capital gains taxes and avoid $85K in alternative minimum taxes on the remaining $2.5 million of cash from the sale.
A wealth manager in a national franchise wanted to double her revenue in five years. We helped this client identify and finance a sister practice for $1.4 million. Our work helped them record $182K of tax write-offs in the first year to generate the cash needed to repay the seller with another $1.2 million of future write-offs. After year two, the wealth manager had catapulted to top producer in her Southeast region.
Retirement and Family Planning
A middle-aged retired army officer and retired army officer wife found themselves entering the second chapter of life with him completing medical school as an anesthesiologist. She was not working. They engaged us to find a way for them to maximize pre-tax retirement planning. We conversed with both clients and their financial planner to understand their present and future cash flow needs. We agreed to make her the office manager, pay her a salary, and implement a 401K profit sharing plan. Our efforts allowed this client to fund their retirement plans by $98,000 pretax.