Strategies For Reducing Taxes Or Resolving Tax Baggage
The bottom line is that taxes eat into your finances. Reducing your tax burden in transactions and operations is a worthy goal that enables you to be more profitable or reinvest in the business and your key employees.
The tax attorneys of Goldburd McCone LLP provide sophisticated tax structuring strategies and tax due diligence to business owners and investors natonwide. These are not shortcuts or shell games that will come back to haunt you, but legitimate tax mitigation strategies that hold up to IRS scrutiny. In fact, our tax consulting strategies are derived from decades of experience defending clients in tax audits and U.S. Tax Court litigation. We know where the lines are drawn and what actually works.
Tax Structuring For Businesses
We assist startups and established companies throughout the NYC area with strategies to minimize their potential taxation, including:
- Tax implications in forming the business entity (e.g., LLC vs. S-corp or C-corp).
- Structuring stock plans and compensation in the most tax-advantaged way
- Anticipating capital gains taxes in mergers, acquisitions and asset sales
- Structuring considerations for family-owned businesses and succession
- Maximizing business deductions
- Timing and efficiencies in corporate tax payments
- Mitigating international taxes
Tax structuring is a combination of reducing tax burdens in the short term and avoiding common pitfalls that can result in tax “bombs” down the road. We likewise advise owners, partners, executives, board members and investors on related tax planning in their private affairs, such as stock transactions and exit strategies.
Tax Due Diligence: Anticipating Exposures
Business acquisitions are fraught with many unknowns. Similar to having a mechanic inspect a used car before you buy, our lawyers examine the company or business asset for hidden tax burdens. We examine tax returns and other diagnostics to gauge income tax, sales tax, payroll tax, property tax and other taxes, as well as liens, lawsuits, employment contracts, questionable deductions or other baggage that could lead to tax problems. Our attorneys advise on resolving any outstanding issues prior to consummating the deal or accounting for these liabilities in negotiating terms of the transaction.
Comprehensive Tax Planning Counsel
The attorneys of Goldburd McCone LLP can knowledgeably address the tax aspects of many specific scenarios, such as:
- Qualified Opportunity Zones (QOZs): Under the Tax Cuts and Jobs Act (TCJA), those who invest in a designated QOZ property can defer the capital gains tax to December 2026 or sale (whichever comes first). If the property is held for at least 10 years, the capital gains are not taxed.
- Qualified business income (QBI) deduction (199a): Another provision of the TCJA, known as 199a or QBI, allows small businesses to deduct 20 percent of qualified income (the net of income, gain, deductions and losses) from a qualified trade or business. It also applies to qualified income from real estate investment trusts (REITs).
- Cryptocurrency transactions: The IRS has determined that virtual currency is subject to capital gains taxes. In 2019, the IRS began issuing letters informing holders of Bitcoin, Ethereum and other cryptocurrencies that they must declare transactions and file amended returns for previous years.
- Marijuana businesses: Entrepreneurs in the marijuana and cannabidiol (CBD) industry can deduct certain labor, material, maintenance, utility and other costs of business under IRS tax code 280E. Meticulous record-keeping is key to determining what is taxable and deductible.
Arrange A Consultation With Our Tax Lawyers
We provide initial consultation. Call our Manhattan law firm at 212-302-9400, toll-free at 844-653-2873, or contact us by email to discuss our tax structuring services.
Frequently Asked Questions
What’s the difference between tax avoidance and tax evasion?
Tax avoidance involves using legal strategies within the tax code to minimize what you owe—it’s not only legal, it’s smart business. This includes choosing the right business structure, timing transactions strategically, and maximizing legitimate deductions. Tax evasion, on the other hand, involves illegal activities like hiding income, claiming false deductions, or failing to file returns.
How can choosing the right business structure save me money on taxes?
The business entity you choose—whether LLC, S-corp, or C-corp—has massive tax implications that compound over years. The wrong choice can result in double taxation, missed deductions, or unexpected tax bills when you sell.
What is tax due diligence and why do I need it before buying a business?
Tax due diligence looks for hidden tax liabilities. It examines the target company’s tax returns, payroll records, sales tax compliance, and any outstanding issues with federal, state, or local tax authorities. This investigation can save you from inheriting massive tax problems or provide leverage to negotiate a lower purchase price.
Can you really defer capital gains taxes through Qualified Opportunity Zones?
Yes, Qualified Opportunity Zone investments offer one of the most powerful tax deferral strategies available today. By investing capital gains in designated QOZ properties, you can defer those taxes until the end of the following year or when you sell (whichever comes first). Hold the investment for 10 years, and you pay zero capital gains tax on the appreciation. However, the rules are complex and the investment must be structured correctly from day one.
How does the QBI deduction work for small business owners?
The Qualified Business Income deduction (Section 199A) allows eligible businesses to deduct up to 20% of their qualified income—effectively reducing their tax rate by 20%. But the rules are complicated, with different thresholds and limitations based on income levels and business type.
