The New Tax Code: Consider Savvy Restructuring

We won’t say we were barraged with questions of concern after the announcement of the most sweeping U.S. tax legislation in more than 30 years, but pretty darn close. At least we’re starting to have “Strategic” conversation about Taxes now instead of it being an afterthought.

The 2017 Tax Cuts Jobs Act And Opportunities

While the new legislation includes many pro-growth features, including a deep reduction in the corporate tax rate, a scaled-back state, and the local tax deduction, full-expensing for five years, and lower individual tax rates, discipline is essential.

It is essential that discipline be practiced at the corporate leadership level:

Integrating Tax Considerations Into Business Decisions

This is where Morris+D’Angelo excels. If there are two enduring certainties for companies, they are restructuring and taxes. And although restructuring, reorganizing, realigning — or whatever other terms you prefer, it is on the top of our minds and our corporate life. Taxes are often an afterthought, and that can be a costly mistake. We can help you avoid that mistake.

Why is such a seemingly simple concept so often missed? The answer is maddeningly simple: The people thinking about restructuring issues are often unconnected to the specialized experts who can properly evaluate tax considerations in today’s complex tax environment.

But, what we hear and guess is the reason people do it for say valuation purposes just ignore taxes at their peril as it isn’t considered “operational” and they can’t be bothered. Too many executives are similar and do not restructure their companies correctly. They choose to cut a percentage of costs across the board instead of focusing on their strengths. And even when executives do restructure in a way that’s smart, they overlook important tax implications. At best, this weakens the impact of a restructuring; at worst, it negates the impact altogether, leaving companies weaker than when they started.

Although executives intuitively know that taxes are important to the company’s ultimate profitability (and income available to shareholders), they often don’t evaluate these costs as part of the restructuring effort. Rather, they treat taxes as a cost of compliance, after the major decisions are made. Consequently, they are likely either to create tax inefficiencies or miss opportunities to put their companies in a better tax position than they were under the old structure.

None-The-Less, we are experts at Wealth Preservation and the implications of the new Tax Codes. We would be happy to visit with you or your Business (Company) to explain new Strategies for you to consider.

Have a question? Contact Daniel Morris.

Your comments are always welcome!

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