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November 2016

Depreciation Planning Post Election

The long election cycle is over and we can now start looking at the results and what it might mean for tax planning in the coming years. By now, everyone knows that the Republicans have control in the House, Senate and Executive branches of government. Knowing this, we can look at tax proposals and plan for the future based on the candidate’s plans. We can also use this information to plan not only for future years but also for the 2016 tax year.

While he was a candidate, Donald Trump pushed for lower taxes across all tax brackets, with the highest percentage of cuts coming to the highest earners. Additionally, his tax plan included a reduction of the Corporate Tax Rate from 35 percent to 15 percent. While it is still proposed, we can assume in years to come that many high earners in the U.S. will see a reduction in their tax rates.

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Six Year-End Questions for Economic Incentives

Steve Brunson

Out of habit, businesses tend to only consider the internal mechanisms related to their growth. However, this mindset is lacking a comprehensive view when considering external impacts, such as taxes and economic incentives. But, a year-end conversation about growth opportunities in the following year can go a long way to providing timely insight for planning growth.

Why Is Incentive Planning Important? In the right situations, incentives can be an important factor in location decisions and bring hundreds of thousands or even millions of dollars into a business. Whether a company is relocating or simply looking to expand, there may be valuable state and local incentive opportunities. In the realm of state and local tax incentives and economic development, a business must plan and negotiate before any action takes place.

The Benefit of Establishing an IC-DISC before Year-End

Tedder Schwarz

The fourth quarter is an essential time for clients and CPAs to explore year-end tax planning opportunities. For exporting companies, this is the perfect time to examine whether or not it would be beneficial to establish an Interest Charge – Domestic International Sales Corporation (IC-DISC). Given the prospective nature of an IC-DISC, timing can play a critical role in maximizing tax savings.

By utilizing an IC-DISC, a U.S.-based company can reduce its federal tax liability by converting its export sales income, which is taxable at ordinary income rates, into qualified dividends, taxed at capital gains rates. Generally this creates an effective tax savings of 15 percent – 18 percent.

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