CFO by the Hour
BUSINESS IMPACT: Back Office Flexibility
This option is for businesses who can’t justify the cost of a full-time CFO. This is a flexible role for us as your needs change and your business grows. We’re available to guide you through financing plans, capital projects, financial projections, cash flow, day-to-day accounting operations, oversight of accounting staff and all the financial aspects of running a business. You have the flexibility to use SVA professionals as much or as little as you need, scaling up or down in real time as your business demands.
BUSINESS IMPACT: Qualified Write-Offs
Section 179 enables manufacturers to write off qualifying fixed asset purchases in the year those purchases are made. The Section 179 deduction increases to $1,020,000 in 2019 and $1,040,000 in 2020 with the phase-out limitation increasing from to$2,550,000 in 2019 and $2,590,000 in 2020 These amounts are indexed for inflation for years beginning after 2018. The Section 179 deduction applies to tangible personal property such as machinery, equipment and office furniture which is purchased for use in a trade or business. The new law increases the scope of Qualified Improvement Property (QIP) to include the following improvements to non-residential property after the date the property was first placed in service: roofs, heating, ventilation, and air-conditioning property, fire protection, and alarm and security systems.
Doubling of Bonus Depreciation to 100%. Effective for assets acquired and placed in service after September 27, 2017. The provision applies to both new and used property. As such, this provision heightens the importance of cost segregation studies. Costs identified as tangible personal property and land improvements are eligible for immediate expensing whether the property is new construction or acquired property. The 100% expensing is available through 2022, after which it begins phasing out by 20% per year. For example, immediate expensing is limited to 80% in 2023, 60% in 2024 and so forth until it is fully phased out in 2027.
Our SVA Tax experts can meet with you and complete an individual tax plan for your business to make certain you are including all provisions that can improve your tax position.
Domestic Production Activities Deduction (DPAD), also called Manufacturing Deduction
BUSINESS IMPACT: Tax Relief
The Domestic Production Activities Deduction is intended to provide tax relief for businesses that produce goods in the United States rather than producing it overseas. The deduction went into effect in 2005 and applies to both small and large businesses. The term "domestic production activity" cuts across a broad swath of businesses. The IRS has determined that businesses qualifying for the deduction must undertake work in one of the following categories:
- Construction performed in the United States
- Electricity, potable water or natural gas produced in the United States
- Films and videos produced at least 50% in the United States
- Architectural or engineering services performed in the United States for domestic construction projects
- The disposition of tangible personal property, sound recordings or computer software created or developed, in whole or in part, in the United States
Calculating the Domestic Production Activities Deduction (of 9%) can be either ridiculously simple or enormously complex, depending on the nature of the business. Let the experts at SVA guide you through this process as this is the last year you can utilize this deduction, it has been repealed for 2018.
IC-DISC (Interest Charge Domestic International Sales Corporation)
BUSINESS IMPACT: Reduce Tax Rate
IC-DISC is a powerful tax saving opportunity for U.S. exporters who export a minimum of $1 million in goods annually. Companies who export less than $1 million may also benefit from this tax savings opportunity, with a review of costs vs benefits to determine the best options. It is available to manufacturers and distributors and it offers them permanent tax savings primarily resulting from a reduction in the tax rate on qualified dividends. In previous years, this benefit resulted in a tax savings of approximately 15.8%, which was the difference between the marginal rate of 39.6% and the qualified dividend rate of 23.8% (20% plus the 3.8% net investment income tax).
Based on the Tax Cuts and Jobs Act, starting in 2018 the top marginal rate is reduced to 37% and pass-through entities can now deduct 20% of its combined qualified business income. In effect, the lower marginal rate combined with the 20% deduction will shrink the effective arbitrage to be around 10.56%. Although the IC-DISC benefit will reduce for pass-through entities as compared to previous years, there is still great potential for companies to benefit from this tax-planning tool.
International Tax Strategies
BUSINESS IMPACT: Meet Requirements
In today’s business environment, conducting business around the globe is as common as doing business across town. Our professionals are dedicated to ensuring your business will benefit from the most tax-efficient structuring of cross-border business activities.
Businesses and individuals have certain foreign reporting requirements and in some cases, U.S. withholding is required on payments made to a foreign entity or person. Significant penalties can apply if you are not aware of these requirements and fail to meet these reporting and withholding obligations.
Through our network of specialists and international affiliates, our professionals can assist you in meeting these obligations and in international tax planning.
Aliens and Expatriates
We have staff trained in preparing individual tax returns for both U.S. residents working abroad as well as foreign expatriates working in the U.S. We prepare these returns according to current IRS rules and ensure that all credits and deductions that are available to our clients are correctly reported in their return. In addition, we advise clients making payments to such individuals as to their withholding requirements for foreign residents working in the United States.
Choice of Entity
We evaluate and discuss the best type of entity to use when clients begin to do business internationally. This planning can allow the use of the international losses in the United States or minimize the U.S. tax on the international business.
Structuring of Transactions
We develop and evaluate ideas and planning for the structure of international transactions to minimize taxes. This can involve research, analysis and preparation. We also have contacts in many countries to assist on the foreign side of the transaction.
The IRS has power to reallocate income, deductions and other tax items among commonly controlled businesses in order to prevent evasion of taxes. The IRS is especially alert to situations where income is being shifted outside the United States. The transfer pricing rules are extremely complicated and it can be difficult to determine when and how they apply to specific transactions. We advise our clients of issues to consider when examining and determining their inter-company pricing policies in order to minimize the risk of challenge. We can also assist clients in arranging for a transfer pricing study to be done by a third party, which can further reduce the risk of challenge.
Multistate/Nexus Tax Planning
BUSINESS IMPACT: Required Reporting
Many companies do business in states other than where they are located – it’s part of growing your company, competing in a larger marketplace and making smarter business decisions.
How do you know when you have reporting requirements in other states for state income tax? Nexus, also known as sufficient physical presence, is the determining factor of whether an out-of-state business selling products into a state is liable for collecting sales and use tax on sales into the state. Nexus is required before a taxing jurisdiction can impose its taxes on an entity. Congress enacted Public Law 86-272 which protects companies with only minimal activities in the state from being taxed.
Our professionals can assist you in determining your company’s multistate tax situation, take steps to insulate your activities from overzealous states, and minimize your overall state tax liability