Tax
Because of Steve’s passion, education, and experience, Tax is the Kauffman Group’s strong suit. Steve has over 30 years of relevant tax experience, and has carefully selected a team of attorneys and CPAs who have nearly a century of combined experience in Tax Planning, Return Preparation, and Tax Controversy (i.e. representing clients in disputes with taxing authorities).
Think of the Kauffman Group’s Tax Practice as you would a medical practice.
Tax Planning is like seeking and following your doctor’s advice. You eat a healthy diet, don’t smoke, drink, but only in moderation, and exercise.
Return Preparation is like your annual physical. You should have a CPA prepare and file your return every year. The reason it’s important to hire a CPA is that they may notice planning opportunities that can help you reduce your overall tax burden. My accounting partner, John Kim, CPA, oversees our Return Preparation Practice.
Finally, think of Tax Controversy like seeing a specialist after experiencing troubling symptoms, like an IRS Revenue Agent sending you a letter, or two Special Agents coming to your office and reading you partial Miranda Rights.
Tax Planning
Justice Oliver Wendell Holmes, Jr. one of the preeminent American jurists of the early 20th Century is reputed to have said “I enjoy paying taxes, with them I buy civilization.” Maybe so, but as his equally eminent contemporary, Judge Learned Hand observed, “anyone may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes. ” We tend to side with Judge Hand.
Tax planning involves structuring one’s affairs in a fashion to minimize tax costs. Taxes come in many different flavors, none of them particularly appealing. They include income , payroll , sales and use , transfer , property, estate and inheritance , gift, and excise taxes. In the income tax context, tax planning tools include deferring to a later year or accelerating into the current year the recognition of income or deductions depending on income projections, taking advantage of available exclusions, deductions and credits, converting ordinary income into capital gain.
Examples of some common tax planning opportunities include organizing a business as a flow-thru entity in order to avoid double taxation, electing S corporation status to reduce self-employment tax, treating workers as independent contractors as opposed to employees, structuring a sale of real property as a like-kind exchange under IRC §1031, investing capital and IRC §1231 gains into an
Opportunity Zone fund, transferring property via inheritance as opposed to by gift in order to obtain a stepped-up basis, establishing and making contributions to a retirement plan, and electing bonus depreciation under IRC §179.
The Kauffman Group’s attorneys and CPA have extensive experience structuring and implementing customized and innovative tax planning strategies. Contact us to schedule an appointment to discuss your situation.
Individual Example
Bill and Jeni Post (the “Parents”), a married couple, own a valuable parcel of investment real property that they purchased 30 years ago for $100,000, and which is now worth $2,000,000 (the “Property”). They want to make plans to pass the property to their children, Junior and Kunigunda Post-Digger (the “Children”). If the Parents make an outright gift of the Property to their Children, then the Children will have a tax basis equal to their Parents’ tax basis (i.e. $100,000), which means if, after receiving the Property as a gift, the Children sell it for its fair market value of $2,000,000, the sale will generate a capital gain of $1,900,000, which will be subject to tax. On the other hand, if the Parents were to leave the Property to their Children in their will, their Children’s tax basis would be equal to the fair market value of the Property on the date of death (i.e. $2,000,000). Now if the Children sell the Property, there would be no capital gain. Of course, there are also many other legal and practical considerations that need to be addressed as well. The Kauffman Group is ready to help.
Business Example
Willie Gee (the “Seller”) is the sole stockholder and founder of Enter Prize, Inc., a C corporation (the “Business”) that he started from scratch 40 years ago, and which is now worth $4,000,000. Gi Wili (“Prospective Purchaser #1”) has offered to purchase the Business for $3,500,000, and is willing to structure the sale as an asset purchase or a stock purchase. Latte Kummer (Prospective Purchaser #2) has offered to purchase the Business for $4,500,000, but only if the transaction is structured as an asset purchase, and only if the Seller is willing to provide carry-back financing of $1,000,000. The Kauffman Group is uniquely qualified to provide counsel in all aspects of this complex transaction.
Return Preparation
Our accounting team provides guidance and insight through each step of the tax return preparation process for both individuals and businesses. Tax law can be complicated, which is why our team works to ensure you have extensive knowledge of your tax deductions and credits, so you can save time and money.
We offer both in-person and virtual consultations, in which we will discuss your finances in detail, minimize tax liability and provide a secure online web portal for document submission. Once your tax returns are completed, our team will send an e-file authorization form to help you receive your return quickly and efficiently.
Tax Controversy
Our accounting team provides guidance and insight through each step of the tax return preparation process for both individuals and businesses. Tax law can be complicated, which is why our team works to ensure you have extensive knowledge of your tax deductions and credits, so you can save time and money.
We offer both in-person and virtual consultations, in which we will discuss your finances in detail, minimize tax liability and provide a secure online web portal for document submission. Once your tax returns are completed, our team will send an e-file authorization form to help you receive your return quickly and efficiently.
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