The Internal Revenue Code is approximately four million words long, which makes it nearly five times longer than the King James Bible. It is a frightening task for individuals and businesses to attempt to decipher this legislative leviathan. What is even more terrifying is that the Internal Revenue Code is continuously changing. It is projected that the code will increase by another three to four hundred pages. But with great complexity, comes great reward as STA not only has the experience and knowledge in interpreting the code, but also develop advanced strategies for the benefits of its clients. During the comprehensive Strategic Tax Planning process, STA’s team of experts will carefully scrutinize if a client will benefit from the following advanced tax planning strategy:
- The formation of a comprehensive entity structure that will not only protect business and personal assets from unforeseen liabilities, but will also provide the twin benefits of lower graduated personal and income tax rates, and reduction in payroll taxes.
- Examine the buildings and improvements owned by a client, and determine if they may be subjected to accelerated depreciation which will front load one’s deductions to the current tax year.
- Certain clients may take advantage of certain provisions of the tax code that will allow them to avoid recognizing income from receivables until they are collected.
- Clients facing increase prices for their cost of goods sold may elect to use an inventory method prescribed under the Internal Revenue Code that will allow the constant threat of increased costs to actually lower one’s taxable income.
- Exporters of domestically manufactured goods may form a new entity that will enter into commission arrangements with the client’s current entity. As commissions are paid from the current operating entity, its taxable income will be reduced and retained in the newly formed entity which will distribute the income back to the client at lower tax advantageous rates.
- Formation of an insurance company that will underwrite policies to a client’s company that are not typically covered under a normal commercial policy. The operating entity will be allowed to deduct the premiums paid to the sister company; thus, lowering its taxable income immediately. As the Internal Revenue Code supplies provisions that allow for certain levels of income from premiums to avoid taxation, the client will only be responsible for dividends made by the insurance company.