Game Planning for Success
By Chris Felice, CPA
Shareholder, Maloney+Novotny LLC

With 2011 halfway behind us, it is a good time to look at where your business is and where it will end up for the year. There are various opportunities to preserve the value that has been accumulated if proper planning and prudent analysis are performed. The following are a few of the items that could be beneficial to business owners:

If you have foreign sales, (sales outside of The United States of America), you should determine whether an in Interest Charged Domestic International Sales Corporation (IC-DISC) makes sense. The use of an IC-DISC may allow a business (or its owners) to substantially reduce the tax rate it pays relating to the net income derived from these sales.

Given the nature of many businesses' diversifying their operations, you may be able to benefit from research and development (R&D) credits. These credits, which for many years were thought to be hard to obtain, have proven to become very valuable to business's who have taken the time to further examine their operations.

If applicable, make sure you are maximizing the Domestic Production Activities Deduction (DPAD). A business can help itself in the way of a larger deduction by making sure that all of the required data for the respective calculation is complete and accurate. The DPAD is generally 9% of the smaller of a) The Company's qualified production activities income or b) The Company's taxable income. Generally, the DPAD cannot be more than 50% of the Form W-2 wages the Company paid to its employees (including Form W-2 wages allocated to a shareholder on their Schedule K-1).

These are just a few of the items that may prove to be very beneficial to business owners. Although these opportunities exist today, with the uncertainty that remains in Washington, there has been discussion of removing these items (or portions thereof) from the tax code in the future. Should you have any questions or would like to discuss these items further, contact Chris Felice at Maloney + Novotny LLC at 216-344-5249 or cfelice@maloneynovotny.com.