Sharla Bartley, MBA, helps TaxPlanIQ Customers build a tax plan.
March 1st, 2023
No Lab This Week
March 8th, 2023
Tina brought a case that she had presented and sold in 2022. She prepared this plan based on a projection of 2022 activity. When she got their 2022 actual numbers, they were FAR higher and so she brought this case study looking for some things to do retroactively for 2022. I created the plan in TaxPlanIQ to reflect what she had aleady enacted for them. The largest item was the defined benefit plan, which seemed to be rather low based on salary numbers. Turns out the salary did not actually get paid, but was 1099'd to them. It may be worth it to do a late payroll filing, pay the late penalties to get the larger DBP contribution amount. Her next steps are 1 to reach out to actuary, 2 to calculate potential penalties for late payroll, and 3 set a meeting with the client to explain the tax savings they missed out on by not being agile and responsive to her recommendations at the time. But she is an excellent planner and there may be a way to make it work, but there will be penalties. Going forward, they need to be responsive to her recommendations...regardless of travel plans, etc.
March 15th, 2023
Sharla did a lot of discovery to clarify the business structure issue. It became apparent that more information was needed before a plan could be made. This session did not conclude with a neat tax plan. Sharla gave Lisa a list of 5-6 questions that needed to be cleared up before committing to an approach. Will revisit next week.
Lisa's Summary:
Client has a mobile equine cryotherapy company. We have a 40 Foot Mobile trailer that holds a state-of-the-art cryo chamber for horses. We will be attending all major XXX events that is predominantly located in the southwest
The client’s annual sales is estimated at: $1,083,235
Annual COGs is estimated at: $194,087
Annual Expenses is estimated at: $366,462
Net Profit Before Taxes: $522,686
Client and her daughter (age 19) will be working the events. They will have people helping and she wants to issue them 1099s.
She only provides financial support to her only dependent daughter, who is 19 years old and is part owner in the company. The client is married. Spouse works Full-Time.
Right now the company is set up as a partnership LLC. She would like to change it to an S Corp once they get through their first show and actually get revenue going.
NOTES: Large expenses that could possibly be depreciated:
2023 Cimarron Trailer (T.S.S Purchased)
2022 Ford F450 (T. S.S. Purchased)
Cryo Chamber
The client uploaded their Life Insurance Policy as that was required by Bank to obtain her loan to make them a beneficiary. The client believes she should be able to write off the monthly premium since it was a requirement for my business.
Also, as part of the SBA loan, her personal home was taken as collateral with the bank as a lienholder so also wondering if there lies a tax benefit.
March 22nd, 2023
Client is selling his business. Not ready for a complete tax plan yet but we evaluated the buy/sell agreement to determine what amounts of proceeds would be taxed in the year of the sale and what amounts would be deferred. Then tried to get to a rough idea of what the BOOK gain would be, and back the book to tax differences out to determine the taxable gain in the year of sale. Taxable gain will likely equal cash received at the time of sale, but I went to through the calculation. I will update the lab for the progress of this case study as it evolves.
The big play here would be to have the client enter this transaction into a Deferred Sales Trust. This is an early evaluation of the process. There are pieces of information missing including reconciling the $7.25 million stated sales price with the $4.2 million the client disclosed. So Patrice has to guide the client to request a preliminary breakdown of a closing statement to give us these numbers.
Ultimately I would like to present the following to the lab:
1. Journal Entry for the closing statement establishing BOOK gain
2. Treatment of book to tax differences
3. Status of Deferred Sales Trust
March 29th, 2023
Client is currently a S Corporation Trucking company
Planning to buy property in 2023 by June. (was to be multi family. Now looking at condos)
Planning to start a package store in 2023
Two children only one claimed on return
Wife no longer work outside of business. Doesn’t take a salary or paycheck
Will hire a person to drive another truck
Buying a truck in 2023
Wants:
Provide retirement.
Hire child (age 12). Second child too young, doesn’t live with parent
Provide college fund for both children.
What I have done
Propose entities.
S Corporation for Trucking (currently is an S Corporation)
Partnership for Real Estate and Package store (these could be changed to a Sch C)
SCorp
Reasonable comp for husband (probably need one for wife)
FSA and HSA under package store (1065) but HRA (SCorp) under Trucking not sure if this is the correct way to do this.
I have the business funding both FSA and HSA. For the deduction to company
179 truck
401k because they are planning to hire an employee.
Augusta rule
Accountable Plan
Rental partnership Proposed
Not purchased yet:
Cost Segregation
Package store (liquor) Partnership Proposed.
Hire child (he can do something not inside the store if GA has a problem with 12 year working in store)
Roth IRA Contribution
HRA