Business Tax Planning
We take an active role in the reduction of your business taxes.
Saving taxes while also limiting the risk of going through an IRS tax audit is what drives most business owners’ tax decisions. Dugan & Lopatka CPA’s approach is to take an active role in the reduction of federal, state and local taxes. We do this by bringing various tax strategies to your attention. This includes an obligation on our part to educate you on the pros and cons of alternative strategies. From our perspective, paying taxes is part of operating a profitable business. However, paying more taxes than is necessary under the tax law is a waste of your resources.
Dugan & Lopatka’s senior tax people have substantial experience and training in complex areas of business taxation, whether that applies to corporate, partnership, or LLC structures. We keep abreast of the changing tax laws and we keep our clients informed of current tax issues, new regulations and planning opportunities.
Although we are a local firm, Dugan & Lopatka works with many companies that have locations throughout the country and around the world. Because of this, we have developed a high level of expertise regarding state and local taxes. This expertise extends beyond the mere preparation of such tax returns to the planning needed to minimize the total state and local tax burden.
Individual Tax Return Preparation
Save time. Save money.
When we asked our clients why they use Dugan & Lopatka to prepare their tax returns, the answers varied, but two common themes emerged:
Time Savings. Tax returns are complex. They also take a considerable amount of time to prepare when you only do them one time each year. Our clients appreciate the additional time made available to them to spend on other activities by avoiding the time investment needed to accurately complete the numerous tax forms required to file an individual income tax return, at both the federal and state level.
Money Savings. The tax laws, regulations and court interpretations are constantly changing. Keeping up with the changes is the key to paying no more in tax than is required under the tax law. Our clients want reliable professionals to guide them through the complex and ever-changing tax rules to find ways to reduce their tax burden.
Tax Credit & Deduction Opportunities
Tax credit for increasing research
If your company engages in product development or process improvement activities such as warehouse/distribution, manufacturing process innovation or software creation, you may be eligible for the tax credit for increasing research. The Internal Revenue Service requires that research must be technological in nature, constitute a process of experimentation and intend to result in a new or improved business component. The rules are complex, and no two businesses are the same. Eligibility will differ greatly. However, most companies will benefit from the following:
- A reduction in their current-year effective tax rate.
- Cash refunds from previously filed income tax returns.
- A documented approach to identifying available credits that benefit future years.
The key to identifying your research and development tax credits is obtaining an in-depth knowledge of your processes. You cannot capture available credits by relying only on accounting data. Companies typically spend more money in process improvement than product design. Although many companies do not design their products, they spend valuable resources improving the production process.
There is no easy way to capture process improvement expenditures. They are buried in “manufacturing” accounts. By conducting thorough research and interviewing key personnel, qualifying expenditures can be quantified and documented to support your ability to claim this beneficial tax credit. A similar state level research tax credit exists in many states, including Illinois.
Real estate cost segregation services: Valuable tax savings embedded in your commercial buildings!
Real estate cost segregation services are valuable tax savings embedded in your commercial buildings. The IRS permits the acceleration of depreciation of various assets that traditionally would be considered part of the cost of building. Effectively, shorter life assets (qualifying for 5, 7, and 15 year write-off periods) are carved out from a building’s construction or acquisition costs (generally depreciated over 39 years). To meet IRS standards, an engineering-based cost segregation study must be conducted to identify the assets eligible for accelerated depreciation.
A real estate cost segregation study increases your near-term cash flow by utilizing shorter recovery periods to accelerate the depreciation tax deduction on your investment in property. With the Tax Act reinstating 100% bonus depreciation, the potential cash flow increase is even greater. Learn more about cost segregation here.
A cost segregation study overseen by Dugan & Lopatka is potentially beneficial in any of the following scenarios:
- New buildings presently under construction.
- Existing buildings undergoing renovation, remodeling, restoration, or expansion.
- Prior purchases of existing property.
- Office/facility leasehold improvements and build outs.
- Post-1986 real estate construction, building acquisitions, or improvements where no cost segregation study was performed (even though the statute of limitations previously closed on the property construction/acquisition year).
179D Energy Certification
Section 179D allows a deduction to a taxpayer who owns, or is a lessee of, a commercial building and installs property as part of the commercial building’s interior lighting systems, heating, cooling, ventilation, and hot water systems, or building envelope. Certification must be obtained to verify that the property installed satisfies the energy efficiency requirements of section 179D.
Potential Candidates for this deduction include:
- Upgrades, Renovations and Retrofits
- New Construction
- Private or Public Commercial
- Commercial Residential (4+ stories)
- LEED Certified Buildings
- Green/Energy-Efficient Buildings
- Types: Schools, Government, Office, Retail, Hospitality, Industrial, Manufacturing, Health Care, Parking Garages
- Architects, Engineers and Contractors
The energy savings must be certified by a qualified person, who is defined in Treasury guidance as an engineer or contractor who is licensed in the jurisdiction where the property is located and is unrelated to the party claiming the deduction. The certification is done using a software program that is approved by the IRS for making the 179D energy savings calculation. Section 179D was extended in early 2018 through December 31, 2017. Currently, we are waiting to see if Congress extends this provision into 2018 and beyond.
Succession & Ownership Transfer
You put a lot of thought into operating your business, but have you thought about how you are going to get out? Too many business owners fail to plan for their exit and as a result, are not successful in doing so.
Whether your successor will be a family member, a key employee or an outside buyer, Exit Planning helps you maximize your financial return, avoid legal pitfalls and minimize your tax liability when you transfer your business. If you die or become disabled before you retire, Exit Planning will help the business survive your departure – enabling you and your family to receive its full value.
Creating and implementing an Exit Plan is one of the most important business and financial decisions you can make. Dugan & Lopatka can help you through the process and coordinate your advisor team (accountants, attorneys, financial planners, insurance agents, etc.) to save you time and money.
The Exit Planning Process
- Setting Exit Objectives
- Determining Value/Price
- Preserving, Protecting and Promoting Value
- Converting Business Value to Cash – Sale to Outside Party
- Transferring the Business for a Promissory Note
- Contingency Planning for Business
- Wealth Preservation Planning
Everyone exits their business sometime. To do so on your terms takes planning.