Strategic Entity Formation

There is no one-size-fits-all as it pertains to a business entity. All the available tax vehicles have their strengths while also having weaknesses. As is a common theme in our preparation and our planning services, entity formation should look at management’s short and long-term goals to ensure the best outcome in both scenarios.

We advise our clients in this area of both the strengths and the weaknesses of all tax vehicles. Our strategic entity formation advisement teams work tirelessly to educate our clients on the structure that most closely aligns all their goals. Items that we consider during this process are asset protection, exposure to risk and the benefits, if any, of passing income or losses through to the ultimate shareholder or member.

There are also certain entities that can be formed in and around special circumstances. For example, these entities can be used to manage insurance risk while also maximizing after-tax dollars as it relates to premium disbursements. Furthermore, our client’s exposure to international customers might also dictate a special purpose entity to handle the complexities of this line of business while also minimizing their exposure to taxes.

In all of our strategic tax planning we are mindful of the complexities of the tax law.

Industry Leading Tax Studies

At White Nelson Diehl Evans, we employ different tax saving strategies tailored specifically to our clients goals. These strategies include, but are not limited to:

Cost Segregation Strategies: our clients who own their buildings and land inside of either their operating entity or other ancillary pass-through entities have been blessed with the benefits of cost segregation. Cost segregation is the process by which assets are specifically identified and classified for federal tax purposes. In this type of study, certain costs which may have been previously capitalized under 39 year depreciable lives, can instead be classified with shorter lives of 5 – 15 years. There are number of benefits to pursuing a cost segregation such as:

  • The ability to “catch up” depreciation expense and deductions from prior years without having to amend returns.
  • A short-term reduction in current tax liabilities.
  • Increased cash flow

Interest-Charged Domestic International Sales Corporations (IC-DISC’s) – Over the years, Congress has attempted to incentivize domestic companies to allow them to be more competive abroad. With the expansion of our clients operations domestically and ultimately internationally, this vehicle has become commonplace. This type of entity allows our exporting clients and their shareholders a permanent deductible commission in their operating entities with respect to foreign sales. The deduction they receive in their operating entity can yield a tax benefit as high as 39.6%. The IC-DISC is allowed to accumulate this commission income while paying no US tax. Ultimately, tax is paid at the preferred qualified dividend rate of 20% when distributions occur from the IC-DISC. We have found that many eligible clients are unaware of this tax break.

There are number of credit and incentives programs available to many businesses. These credits and incentive programs were put into place to incentivize the behavior of businesses. For example, Congress wanted to incentivize businesses and encourage investment in the United States. For this reason, the research and development credit was created. Currently in extender form, this credit is very common for manufacturing businesses and any business that improves a product or process. A number of credits have been instituted in and around job creation and/or providing affordable housing. We are very fluent as it pertains to these credits. These credits can be industry agnostic and can be available to manufacturers, the service industry, and the retail industry.

Transactional Consulting

 

The transaction tax professionals at White Nelson Diehl Evans recognize that, for many companies there will come a time when an exit strategy is executed whether through a sale, merger or inheritance. Every transaction has tax implications, particularly for the seller as gains from the sale are subject to an increasing rate of tax at both the state and federal levels. Understanding and planning for the tax implications from any such transaction is critical in order to mitigate transaction risk and provide critical negotiation insights. For example, we identify tax issues and risks to evaluate alternatives to address material tax issues with the ultimate view of the client's exit.

At White Nelson Diehl Evans, our diverse and seasoned team has strong local, state and federal tax knowledge across a broad range of industries. We help our clients make informed decisions and effectively address any potential deal threats immediately. From due diligence to post deal close, we assist clients through the the transaction life-cycle to provide expertise in key areas of the deal. We offer both buy-side and sell-side tax due diligence services and identify the many areas of tax and deal structure that result in a successful transaction.

We also help improve prospective earnings to increase returns on investment for the many clients that retain a stake in the post deal company. Making sure any tax attribute carryovers are maximized, proper allocation of purchase price is made, identifying sales and transfer taxes are just a few of the key areas we help our clients manage in a transaction. Our approach gives clients a quality, integrated approach to their transaction.

Perspectives
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Reminder for Parents, Students: Check Out College Tax Benefits

10/10/17

With back-to-school season in full swing, the Internal Revenue Service reminds parents and students about tax benefits that can help with the expense of higher education. Two college tax credits...

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annual govt seminar wnde

2017 Government Tax Seminars

10/06/17

White Nelson Diehl Evans LLP is pleased to present its annual Government Tax Seminars.  This program has been well attended by local government finance professionals throughout...

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2017 Tax Planning Guide Available

10/06/17

We’re nearing the end of 2017, and to help you with your tax planning for the year, we’re pleased to present to you our Tax Planning Guide.  It shares helpful information about ways...

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For strategic tax services contact White Nelson Diehl Evans by filling out our short contact form or calling us at 714- 978-1300.

Tax Planning Guide

At White Nelson Diehl Evans, we know how difficult it is to stay ahead of the complex and dynamic tax laws. From new standards changing revenue recognition rules to the impact of the Affordable Care Act, our goal is to help our clients stay in front of tax issues that impact your bottom line. To help in this effort, we have put together a comprehensive tax-planning guide and it’s available to download for free.

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Partner Testimonial

“Corporate and high net worth clients need strategic tax guidance that goes beyond annual tax planning and compliance, to explore alternative tax opportunities, and takes a long-term view. At WNDE, we dig into the details to seek potential deductions, credits and explore strategic tax solutions that may benefit our clients. Additionally, because we are focused on serving privately-held businesses, we strive to deliver benefits to owners, and their families, with a generational perspective."

Paul Treinen Tax Partner