Critical Tax Points – Part 2

by | Dec 21, 2020 | Blog

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Tax Relief Strategies: Uncover Tax Relief Opportunities

These additional tax strategies extend beyond the typical income tax planning steps:

  • Uncovering missed opportunities for savings: Look for items that have the potential to reveal significant savings.
    • R&D tax credit studies: Many businesses are leaving money on the table. The money companies spend on technology, process changes, software updates, and innovation can offset payroll and income taxes via R&D tax credits. These credits benefit a broad range of companies across industries.
    • Property tax assessment appeals: Due to the pandemic, some jurisdictions are reevaluating their property tax processes; i.e. via disaster relief and conducting assessments at an earlier date. Assessed property values tend to lag true market value in a recession. Property tax appeals can generate cash savings by challenging assessed values, thus reducing property tax liabilities.
    • Cost segregation studies: Cost segregation studies can help owners of commercial or residential buildings increase cash flow by accelerating federal tax depreciation of construction-related assets. The extension of bonus depreciation for assets with a useful life of 20 years or less, including qualified improvement property as corrected by the CARES Act, will substantially enhance the benefit of these studies. Depending on the type of building and cost, the value benefits are often significant.
    • Like kind exchanges: This applies to real property not primarily held for sale. It’s a strategy where a taxpayer can defer the gain on the sale of real property through the purchase of another property of like kind. This is just another way to protect your cash flow/liquidity during these challenging financial times.
    • State and local credits and incentives projects: Examine existing programs, and those implemented because of COVID-19. These programs help companies maintain payroll, manage business costs, such as utilities, and facilitate capital investment.
    • Opportunity zone program: This federal program is structured to encourage investors to shift capital from existing assets to distressed, low-income areas, and in doing so, deferring and even reducing taxes. While investment in opportunity zones has slowed recently, COVID-19 and additional guidance has created renewed interest in using this program.

Let Us Help

Our professionals understand these tax nuances. If you have questions, please contact the Bronswick Benjamin team member you currently work with or our office at (312) 629-8300.[/vc_column_text][/vc_column][/vc_row]

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