The knowledge you need

The speed at which the federal government is making changes to how businesses are permitted to operate in light of the Coronavirus pandemic has been lightning fast. These changes touch virtually every aspect of business from offering special disaster loans, unemployment benefits, sick leave policies to tax payment deadline extensions

The impact of the Coronavirus (COVID-19) prevention and containment measures can be seen across the Atlanta area. The closure of area public schools, cancellation of various conferences, limited access to restaurants and the restriction on gathering sizes speak to the seriousness of prevention efforts.

Many Atlanta business owners set time aside at the end of 2019 to review strategy, refine goals and identify tactics needed to reach success. Focus is typically centered on ways to expand market presence, drive sales and increase profitability. However, it’s highly unlikely any discussion was had about managing through a global pandemic.

Many Atlanta businesses pay close attention to tax planning at year-end. There are often easy steps that can be taken to immediately reduce federal and state income taxes. While effective, it’s important to review opportunities throughout the year to identify tax deduction and incentives which can be leveraged based on current or future plans. Atlanta businesses may be surprised to learn there are a number of tax incentives available from the state of Georgia for certain business activities.

When individuals terminate employment, an important question to consider is what to do with the retirement savings account.  If they participated in an employee stock ownership plan (ESOP) or otherwise hold company stock in their investment portfolio, the answer to this question becomes especially important. As company shareholders, they have different options than other employees with 401(k)s or 403(b)s that do not include company stock.

Are tax-free reorganizations possible? Absolutely. Internal Revenue Code Section 368(a)(1) allows for tax-free (or tax-deferred) reorganizations for certain acquisitions, divestitures, bankruptcies, and corporate restructurings. F-type reorganizations, which are a type of corporate restructuring permitted under subparagraph F, allow a single corporation to change their “identity, form, or place of organization” without incurring a tax bill. But F-type reorganizations can do so much more than that.

In January 2018, the U.S. and China became embroiled in a trade war that altered our nation’s economy and upset growth in many industries. President Trump first imposed import taxes on solar panels and washing machines but soon expanded his tariffs to steel and aluminum, including their derivatives.

At the end of 2017, Congress enacted the qualified business income (QBI) deduction to provide owners of pass-through entities with a 20% profit reduction. The deduction is awarded to taxpayers whose individual taxable incomes stay below a certain threshold. If incomes rise high enough, they will be subject to an asset and wage limitation that may prevent them from receiving the full deduction.

At the end of last year, President Trump signed the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which made changes to retirement saving opportunities and benefits for employees and other individuals. There has been a significant concern for some time that American’s are not saving nearly enough to fund their retirement. This is attributed to limited access to retirement plans, plans that lack automatic enrollment, poor plan education, and other saving restrictions.

The start of a new year is a time of renewed vigor, increased energy and broad optimism. Capitalizing on this, many businesses have carefully reviewed strategy, established tactics, set the budget and are now focused on execution. While specific opportunities vary by company size and industry, the goal is almost always the same – to increase growth and revenue.