Tax Planning Guide

Opportunity Unbound

It’s never too early to begin tax planning. With continuous updates through the year, this handy reference can help you evaluate your options and strategies when it comes to requirements and opportunities to mitigate your tax liability. Staying actively involved could also help you preserve and create longer-term wealth for you and your family.

To learn more about these changes and how they affect you or your business, visit our dedicated tax reform page for a comprehensive list of topics and industry insights, or contact your Moss Adams professional.

Spotlight

Business Planning Opportunities

ASC 740

Companies that relied on Staff Accounting Bulletin 118 will need to complete and disclose the results of their provisional estimates within the 12-month measurement period that began in December 2017.

Explore what’s changed, your planning opportunities, and additional resources on this topic.

Business Deductions and Credits

Tax reform made substantial changes to the way businesses now must manage their expenses, requiring additional scrutiny, increased data management, and extra review of contract details.

Explore what’s changed, your planning opportunities, and additional resources on this topic.

Choice of Business Entity

With the new, significantly lower C corporation tax rate of 21% and ability to deduct state income taxes in full, many business owners are exploring whether to convert their companies to C Corporations. However, this strategy isn’t right for everyone.

Explore what’s changed, your planning opportunities, and additional resources on this topic.

Exit Planning

While there aren’t any specific tax-related changes when it comes to exit planning, there are still several strategies to consider when planning for the future of your company. These include:

  • Ownership transfer to family members
  • Management buyout
  • Employee stock ownership plan (ESOP)
  • Outside sale 
  • Ownership transition

Explore what’s changed, your planning opportunities, and additional resources on this topic.

International Considerations

Tax reform introduced sweeping changes to how the United States taxes international business while preserving many of the concepts that previously existed. With new GILTI provisions and a new tax on offshore earnings, there are several considerations for taxpayers making cross-border transactions and investments.

Explore what’s changed, your planning opportunities, and additional resources on this topic.

Research Credit Safe Harbor

Companies that incur qualified R&D costs are eligible for a R&D tax credit, which could potentially save them thousands of dollars in annual state and federal taxes.

The R&D credit is based on four criteria:

  • uncertainty
  • process of experimentation
  • technological in nature
  • qualified purpose

Companies that don’t perform an R&D tax credit study risk improperly calculating the credit and lacking sufficient documentation in the case of an IRS audit. The ASC 730 Safe Harbor Directive offers an opportunity to reduce this risk.

Explore what’s changed, your planning opportunities, and additional resources on this topic.

Revenue Recognition

ASC 606, Revenue from Contracts with Customers, represents a monumental change to how companies recognize revenue. The tax implications of a company’s adoption of ASC 606 for financial reporting purposes are varied and complex—in some cases, creating new book tax differences and additional data maintenance requirements. Compounding the tax impacts are changes to the tax rules under Internal Revenue Code (IRC) Section 451 for revenue recognition.

Explore what’s changed, your planning opportunities, and additional resources on this topic.

State & Local Tax

Following the US Supreme Court’s decision in South Dakota vs. Wayfair on June 21, 2018, many states have enacted economic nexus laws. These laws require remote sellers to collect sales tax into their respective states, similar to laws enacted in South Dakota.

Explore what’s changed, your planning opportunities, and additional resources on this topic.

Personal Planning Opportunities

Standard Deductions

Taxpayers could choose to claim either the standard deduction or to itemize their deductions. The standard deduction is a fixed number determined by a taxpayer’s filing status and is annually adjusted for inflation.

Explore your planning opportunities and additional resources on this topic.

Other Deductions and Credits

While some taxpayers may use the standard deduction, careful planning is important for taxpayers who itemize deductions to help identify current and future tax-saving strategies.

Explore your planning opportunities and additional resources on this topic.

Alternative Minimum Tax

The alternative minimum tax (AMT) is an additional tax to which taxpayers may be subject. The calculation of AMT prevents overutilization of tax breaks, by disallowing certain deductions and requiring additional income recognition.

Explore your planning opportunities and additional resources on this topic.

Estate Planning

The combined gift and estate tax exemption and the generation-skipping transfer (GST) tax exemption have created a considerable number of estate planning opportunities and more flexibility with your plan, including the following:

  • You could utilize a larger amount of the estate and gift unified exemption.
  • You could use the exemptions before the scheduled estate and gift exemption reduction.
  • You could better determine the impact of income tax on your exemptions and how to utilize those exemptions.

Explore your planning opportunities and additional resources on this topic.

Out-of-State Residency for Individuals and Trusts

The federal tax reform limitation on the state and local taxes paid deduction has prompted more aggressive tax planning in states with higher taxes. Many taxpayers are looking for ways to decrease their tax liability, but there are some important things to consider when planning an individual residency or sponsored transition.

Explore your planning opportunities and additional resources on this topic.

Trust Situs

There are different trust income taxes depending on where the trust is deemed to be located—also known as the trust situs. This could also affect the potential trust taxation for beneficiaries.

Explore your planning opportunities, and additional resources on this topic.

Capital Gains

Capital gains haven’t changed much since 2017, so many planning opportunities remain the same.

Explore your planning opportunities, and additional resources on this topic.

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