The Tax Cuts and Jobs Act creates many opportunities for business owners and investors. The opportunities are like nothing we have seen in the last 30 years. You will need an appropriate structure in place to take advantage of these opportunities. Unlike the prior practice of working your way through the year and meeting with your tax professionals to engage in some planning at year end, you will have to have structure in place soon to take full advantage of the opportunities. Your team really needs to include competent tax counsel and tax attorneys are uniquely suited to assist you. The great news is that your planning will likely be paid for and generate a return in the first year. Your business structure will likely need additional legal structure to take full advantage of these opportunities too. For example:
- Section 199A deduction of income for pass through entities creates an opportunity to reduce income subject to taxation;
- Determining the correct amount of W2 income to select;
- Determining whether to convert or involve a C corporation in your enterprise;
- Increasing the SALT deduction with the use of asset protection trusts;
- Examining the income tax implications associated with having a credit shelter trust in your estate plan (which has been the default planning technique for 20 plus years);
- Life insurance planning opportunities;
- Depreciation deductions have been unleashed – don’t wait till year end to design a strategy for increasing your capital investments as you may not be able to secure the financing in time to grow to the level of your desires;
- Avoiding limitations of interest deductions;
- Planning for business entertainment deductions;
- Involving an entity taxed as an S corporation;
- Determining whether employees can be converted to independent contractors for significant tax and operational savings for both the employee/independent contractor and the employer.
If you are dealing with competent counsel, they will likely be extremely busy implementing these plans and solutions so that their clients receive a return on planning immediately. Therefore, you really should not wait till the end of the year (as you may have done in past years) to get moving on your tax mitigation planning. Call us now and act fast.