Deferred Tax Assets & Credits
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With the economy recovering in some areas, companies are starting to re-invest in their operations. These investments (such as software upgrades and head count increases) may qualify for state tax credits. Unfortunately, some companies may not have the income tax liability capacities for these tax credits in the near term. But in many cases, state tax credits earned can be carried forward (up to 10 years) and may show up as Deferred Tax Assets on the balance sheet.
Depending on a company's tax structure, there may be benefits to these carried forward tax credits:
- C Corporation: the tax credits will increase the company's assets on the balance sheet. This will be beneficial to investors and bankers that consider assets for valuation purposes. In addition, acquiring companies may be able to leverage these tax credits in the future.
- Pass-through (such as S Corporation , LLC, LLP, and others): individual equity participants could benefit from personal "deferred tax assets" that could be utilized to off-set future income tax liabilities (i.e., spouse income increases, their business is sold, and other items). Include this in discussions with the client's wealth management team.
So remember to reach out to your clients to discuss their company and personal asset planning. A deferred tax credit today may cover a tax liability tomorrow!
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ACA Feedback
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We have done a non-scientific sampling of our clients and their plans for ACA (Affordable Care Act, or Obamacare). Check out this feedback: - "The implementation of the ACA is still in limbo to some degree...we see no need to change, but if our costs do go up significantly, then we may rethink this approach."
- "We have been somewhat relaxed with part time employees' hours in the past but can't be going forward. 30 hours is the threshold for part time employees, so we are monitoring this closely."
- "We have 250 seasonal workers who we will try to keep under 30 hours. Typically we don't earn tax credits for this group of employees, but are aware now they need to average 24 hours if the (Retraining Tax) credit can be applied."
- "We used to cover 100% of health insurance but have now had to ask employees to contribute due to a large increase in premiums."
What are your clients telling you? How will their plans (or lack thereof!) affect their businesses and your relationships with them?
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About Us------------------------------------------------------------------------- Alpharesults has assembled a team with the specialized knowledge and approach required to obtain Georgia income tax credits. We are not a public accounting firm. Rather, our services complement those of public accounting firms and do not create conflicted loyalties, because our professionals do not perform attestation work or other external audit functions. We focus on small to medium-sized businesses and work exclusively in Georgia with a wide variety of in-state and out-of-state accounting firms. For more information on our services, follow this link. |
