Additional Tax Planning Considerations for Businesses
State & Local Tax Considerations
Businesses have numerous state and local tax matters to consider for compliance and planning purposes, including where income and sales are subject to tax, sourcing of income and the application of elective taxes that many states have for partnerships and S corporations.
Let us help you with your state and local income tax needs, including sales/use and franchises taxes.
Planning for What’s Next
Charitable Contributions
For tax year 2024, the maximum allowable contribution deduction is limited to 10% of a corporation’s taxable income. Flowthrough entities’ charitable contributions may be limited based on the owner’s taxable income. Careful planning is needed to capture the tax benefit potential of charitable contributions.
Retirement Plans
Have you revisited your company’s retirement plan lately?
Recent legislation has provided new opportunities to consider. Let ‘s look at the many retirement savings options to make sure that you are taking advantage of tax deductions as well as providing ways for employees (and owners) to save for retirement.
Employee Retention Credit (ERC)
The IRS has continued to warn employers to be cautious of third parties taking improper positions related to ERC eligibility, as claiming the credit inaccurately can result in severe consequences. We can help you appropriately navigate the ERC.
Estimated Tax Payments and IRS Forms K-2 & K-3
Let’s review estimated tax payments and assess any liquidity needs. We can also help you with IRS forms K-2 and K-3, which require much more effort and potentially apply to smaller entities. Let’s discuss how these schedules apply to your situation and strategize for compliance.
Digital Assets and Virtual Currency
If you hold and transact with digital assets, including non-fungible tokens (NFTs) and virtual currencies such as cryptocurrencies and stablecoins, you should be aware of a safe harbor that allows for the allocation of unused basis before the end of the year if you used the universal method to determine the cost of those assets. We can help you understand the tax and investment consequences of digital assets.
Optimization Strategies for Business Transactions and Partnership Compliance
Navigating tax considerations in business transactions with owners, alongside comprehensive insights into partnership audit rules, can be tricky and get complex. Ensuring proactive planning to minimize potential repercussions for both entities and partners is essential and something we can assist you with.
Transactions Between Business and the Owners
Transactions between a business and its owners carry significant tax considerations. This includes aspects such as loans, distributions, and salaries. Our expertise lies in structuring these elements in a manner that is most beneficial from a tax perspective.
Partnership Audit and Adjustment Rules
Changes to the partnership audit and adjustment rules have been in effect for a few years but we are still seeing some partnerships and their partners blindsided at the unpleasant consequences that can arise from these rules. Careful planning today can help mitigate any unfavorable consequences to both the entity and the partners themselves. Also, be aware that even if your business isn’t a partnership, you’ll want to evaluate the effect these rules could have if you’ve invested in any partnership.
Preparing for Disasters
Do you have a disaster recovery plan in place for your business and, if so, have you updated it recently? We can help you review your plan, especially as it relates to financial information.