Tax Strategies

"Making Every Dollar Count"  - A Case Study Example

This is a real-world situation to illustrate how we can help you keep more of what you earn by using effective tax strategies. We can help your accountant when it comes time to fill out your tax return.

The Company:
ABC Company had significant income projected for the year. Some assets were owned by ABC and others in name of Owner personally. Owner was in the top income tax bracket (35% federal and 6% state plus 15.3% FICA).

Our Objective:
reduce taxes, use business earnings for family, and minimize legal exposure. We do this one piece at a time. Here's what we did:

  1. Created new LLC to lease equipment to ABC - maximized depreciation deduction. Moved assets from Owner to LLC to get liability protection.
  2. LLC hired children under age 18 - no FICA and lowest tax bracket - plus each child had earned income qualifying for deductible IRA contribution.
  3. Leased property owned by Owner and spouse to LLC - obtained full deduction for real estate taxes, improvements, utilities, maintenance and insurance on Schedule E Form 1040, while rents avoid FICA tax because it is unearned income instead of Owner's wages as he was being paid prior to planning.
  4. Moved certain management employees to separate LLC that leases their services back to ABC - created opportunity for better health plan using deductible HSA accounts and a tax deductible life insurance program for supplemental retirement benefits.

Our Results:  Reduced Taxes by 60%

These tried and true strategies were implemented over the course of the year. While your savings and situation may not resemble ABC, we can still offer strategies and options to help you keep more of what you make.

Call us if you're tired of paying too much in taxes, whether its income, gift and/or estate taxes. Let us review your Forms 1040, K-1, 1120 and 1120S for opportunities to save taxes, defer income or shift from ordinary income to tax advantaged income.