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As a resident of Orange County or Los Angeles County, you understand that your financial transactions are often replete with complicated tax issues that must be addressed if the individual wants to avoid the potential for a nasty tax surprise. The tax surprise could be an IRS letter requesting an additional payment with interest and penalties. Alternatively, the IRS agent may decide that he or she needs to engage in a broader audit that looks into other related transactions. Few prudent taxpayers would ever invite the IRS or U.S. government to analyze their finances. And yet, engaging in even seemingly relatively straightforward transactions without fully considering and accounting for tax considerations can open the door to an audit or investigation.
Therefore, before completing an estate plan, business merger or acquisition, business entity selection process, or other important financial transactions consult with an experienced tax attorney professional. Having the guidance of an experienced tax transaction attorney can help minimize the amount of taxes paid in such transactions, saving you, your family, or your business money in the long run. Simultaneously, he or she can work to ensure that your handling of the transaction does not run afoul of the tax code or relevant informational reporting laws.
Tax Planning for Wills, Trusts, and Estate Plans
Planning for the future can be a great strategy to ensure the financial well-being of your loved ones after you are gone. Establishing an estate plan can also allow you to contribute to a charity, foundation, and pursue other goals even after you have passed on. However, one often overlooked aspect of estate planning is tax minimization. Taking steps to minimize the taxes paid by the estate and beneficiaries means that your loved one’s or favored causes will be able to retain more assets.
After analyzing your finances and goals, we can develop an application of legal strategies that will limit the amount of your estate lost to estate taxes during the transference of assets to your intended beneficiaries. Through trusts, charitable giving mechanisms, and charitable trusts, you may be able to reduce your estate tax liability. However, there is a fine line between legal tax minimization and illegal tax fraud. Working with a tax attorney can help you walk this fine line.
Learn more about tax planning for wills, trusts, and estate plans.
Tax Planning for Business and Corporate Transactions
Regardless of the size, scope, and market position of a business certain events and transactions can have profound tax impacts. For instance and for a partnership, capital contributions by a partner, the cashing-out of a partner, exchanging property with the partnership and related parties, are all transactions that can have a profound tax impact.
In a different context, tax considerations regarding the entity structure are also essential. For example, a corporation will receive significantly different tax treatment from a partnership or another type of pass-through entity. That is, corporations are separate entities that are taxed in their own right while a partnership will pass through liability for tax to partners. Recognizing the entity type and correct tax treatment that the entity should receive is merely a first step in transaction planning. Other steps that may be included in tax planning for a partnership, corporation, or another entity include:
- Assessing capital investment opportunities — Investing in capital expenditures can reduce an entity’s tax burden while building the infrastructure it needs to thrive.
- Liquidate stock or assets that have not sold – If certain products have been on the shelf for years, carrying this inventory is probably costing your company more than its worth. Selling the product for a significant discount could permit a large tax write-off. Alternatively, you may consider using the item or product for a charitable gift to reduce tax liability.
- Consider international governmental agreements and tax treaties – If your company is foreign-owned or a domestic corporation doing business in foreign nations, opportunities for tax savings likely exist.
- Whether IRC Section 1031 applies – A properly structured IRC Section 1031 transaction can allow an investor or entrepreneur to sell the property and defer taxation on capital gains while building a portfolio. The section authorizes non-recognition of gain or loss” …on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like-kind which is to be held either for productive use in a trade or business or for investment.”
- Business mergers and acquisitions — Business owners need to be aware of the importance of advanced tax planning when negotiating a merger or acquisition. Tax planning knowledge can assist you in avoiding tax-related missteps, saving valuable time and money in the long term.
- Business entity selection — Certain business entities offer business owners protection from personal liability when legal issues arise. Tax and entity planning can protect you from liability, creating a “firewall” between your personal assets and your business assets in the event of litigation and to a certain extent where a tax controversy or audit arises. Tax planning can also lower your business’ tax liability, allowing you to invest more of your profit into the advancement of your business or corporation.
The above only covers some the basic elements of tax transaction planning. Consulting with a tax professional can help you apply these and other tax planning strategies to your transaction or business situation.
Tax Planning for Real Estate Transactions and Developers
The U.S. Tax Code offers substantial opportunities for tax savings for real estate developers and others with financial interests in real estate. Understanding the tax code provisions concerning capital gains, depreciation, tax basis of acquired property, passive losses and credits, installment sales, and other concepts are but a few relevant concerns. Furthermore, one must also understand the interplay among these and other important considerations. In certain situations, real estate firms and developers may be able to utilize losses to offset tax obligations for years to come.
Offering More than 20 Years of Combined Tax Transactional Experience as an Attorney and CPA
At the Orange County and Los Angeles Tax Law Offices of David W. Klasing, we provide tax transaction guidance to individuals and businesses. Mr. Klasing is dually certified tax attorney and CPA who offers more than 20 years of experience in tax planning matters. Mr. Klasing has the skills and experience level to provide comprehensive tax planning and preparation services. His background as a CPA, masters’ degree in taxation, and experience as a tax attorney provides him with unique insights into the intricate tax planning details involved in highly complicated matters. Mr. Klasing and all of the tax professionals at the Tax Law Office of David W. Klasing are committed to helping you avoid excessive tax payments and potential tax-related legal issues.
Contact the Tax Law Offices of David W. Klasing today to learn how our tax professionals can address your tax transaction needs during a reduced rate initial consultation. Call 800-681-1295 today to schedule a reduced rate initial consultation at our Los Angeles or Orange County law firm.
