AAL
CLIENT BENEFITS
The tax and estate planning needs of small and medium-size companies are becoming more important as firms respond to a rapidly changing and highly competitive environment. Now, more than ever, it is imperative to minimize overall risk and maximize both shareholder value and working capital. Our comprehensive services, encompassing tax and valuation services, help small and medium-size companies maximize their "after tax dollars" and ensure a smooth transition to the next generation or new owner.
AAL strategic tax consulting provides specific recommendations for entity structuring, asset protection, tax savings, employee retention, succession planning, retirement planning and estate planning. A key element in each of these areas is business valuation. Effective planning, especially estate, succession, and retirement planning, cannot be achieved without knowing the value of the business. This is primarily because the business is likely a business owner’s largest, most valuable asset. Yes, a quick value of the business asset can be provided, but it won’t calculate a definitive, professional opinion of value. In fact, an inaccurate value could lead to recommending the wrong tax planning strategies; therefore, a business valuation is a logical element in the overall tax planning schemata.
For example, succession planning involves transferring ownership interest or stock to family members, partners or key employees. The transfer must take place as promulgated under the Internal Revenue Code (IRC) and Treasury regulations. Treasury regulations specifically mandate, among other things, an arms’ length transaction at a price for not less than full and adequate consideration. A precise value of the business interest or stock cannot be established without a professional business valuation that abides by IRC and Treasury regulations and is conducted by an experienced, accredited valuator. An inaccurate, understated value of the ownership interest calculated through means other than a professional valuation can lead to underpaid capital gains tax or gift tax. If a professional valuation had been conducted to correctly assess ownership interest value, a strategy that reduces tax consequences may have been recommended, such as transferring stock utilizing the annual gifting exclusion or through a well-structured installment sale, versus a strategy that doesn’t consider tax consequences as much as it does the ease of stock transfer.