Income Tax Planning
We offer sophisticated tax planning services to businesses and individuals that are designed to take advantage of all opportunities to minimize taxes and to avoid future tax issues with the Internal Revenue Service and State and local taxing authorities. Our work in this area includes:
- Development of strategies to defer taxable income
- Development of strategies to maximize and accelerate deductions
- Choosing a strategic tax reporting method for your business
- Like-kind exchanges
Estate and Gift Tax Planning
What is estate tax? Estate tax (also referred to as the “death tax”), is a tax imposed on an estate after a decedent passes. Estate taxes are paid by the decedent’s estate before the assets of the estate are distributed to heirs, and as such, estate taxes are imputed on the full value of the estate. The current federal estate and gift tax rates range from 18 percent to 40 percent. Additionally, many states impose a separate estate and gift, and/or inheritance tax. For instance, in Illinois, estate and gift tax rates range from .8 percent to 16 percent. However, not all estates are subject to taxes since there are exemption limits at both the state and federal level, where estates under a certain set amount will not be subject to any tax.
Currently, the federal estate and gift tax exemption is $11.7m per person or $23.4m per couple. Meaning the first $11.7m for an individual, or $23.4m for married couples, of an estate’s net worth is exempt and may be transferred to heirs without owing any federal estate taxes. Given that over 99% of Americans fall below the current exemption threshold, they therefore do not concern themselves with this topic.
However, what most people do not know is that the exemption is set to be reduced in December 2025, at which time the federal exemption limits will drop to $5.5m per person, or $11m per couple. What most people also do not know is that the Biden administration has proposed not only moving up the expiration of the Tax Cuts and Jobs Act to as early as next year (2022) but it has even proposed lowering the exemption limits to $3.5m per person, or $7m per married couple, which in turn would subject many more estates to estate and gifts taxes on the federal level.
In addition to the federal estate tax, depending what state you live in, you may be subject to state estate taxes. There are currently twelve states that impose their own additional estate taxes, as well as six states that impose inheritance taxes on the beneficiaries.
For instance, in Illinois the current estate tax exemption is $4m per person, or $8m per couple, which is significantly less than the federal exemption limit. Furthermore, it is very important to note that unlike the federal tax laws, which allow for estate tax portability, Illinois does not allow for portability of the unused exemption amounts between spouses. Estate tax portability allows the remaining spouse to use any available estate tax exemption amount that the deceased spouse did not use at the time of the deceased spouse’s passing. Since Illinois does not allow for portability, it is even more important that you have a strategic estate plan in place to minimize your tax liability.
At Wolf & Solovy, our attorney CPAs have years of experience handling estate & gift tax planning. We always stay up to date on the constant changes in state and federal estate & gift tax laws to ensure that we are able to provide our clients with strategic ways to limit their estate & gift tax liability. Some of the ways we assist our clients limit these taxes is through:
- Proper utilization of the annual gift tax exclusion
- Full utilization of the applicable exemption amounts for both federal gift tax and estate tax
- Implementation of planning techniques to proactively take advantage of discounting, including family limited partnerships, qualified personal resident trusts, and many others
- Other advanced planning techniques such as installment sales to grantor trusts
- Postmortem tax planning, including disclaimers
- Preparation of estate and inheritance tax returns
No matter the value of your estate, big or small, estate and gift tax planning is extremely important in ensuring your family and loved ones are well taken care of. Contact our experienced attorneys at Wolf & Solovy for a free consultation.
Business Tax Planning
Mergers and Acquisitions
Mergers, acquisitions, and dispositions are often the most important and complex transactions our clients will encounter. These transactions can take many forms including asset purchases, stock purchases, mergers, split-offs, spin-offs and others. We regularly provide advice on structuring both taxable and tax-free mergers and acquisitions. We address tax issues related to choice of transaction structure, form and timing of payment, employee compensation as well as many other more complex tax considerations that arise in a typical transaction. Planning and understanding the tax consequences, both before and after closing adds significant value.
We provide advice on choosing among limited liability companies, partnerships, “S” corporations and “C” corporations for structuring new businesses, joint ventures, or spin-offs from existing businesses. Our advice is based on assessing what is best for your business based on your plans and on legal, business and tax considerations applicable to the various entity types. Based on the choice of entity we work with our clients in the drafting and negotiation of an operating agreement, partnership agreement or shareholders’ agreement as needed, always taking into consideration both tax and non-tax considerations.
Taxation of Cryptocurrency Transactions
As CPA attorneys, we understand that taxes can be complex, especially when it comes to new areas of taxation, including the area of crypto and other digital currencies. The taxation of cryptocurrencies is rapidly changing as the government determines how to address this up and coming, and revolutionary industry. Whether you just dabble in crypto, are a “hodler”, casually trade, or trade for a living, our seasoned CPA attorneys can help you master your crypto taxes to ensure that you are maximizing profits while also fulfilling your annual tax filing requirement and protecting you under the law.
We handle all aspects of tax resolution, with the IRS, and State and local taxing authorities including:
- Audit Representation
- Reduction or Abatement of Penalties
- Federal Tax Liens
- Notices of Deficiency
- Bank Levy Relief
- Innocent Spouse Relief
- Offers In Compromise
- Installment Agreements
- Claims for Tax Refund
- Tax Litigation
Tax Preparation & Compliance
The benefit of having attorney CPAs is that we are a one-stop shop and regularly handle the preparation and filing of our clients’ individual, family, and business/corporate tax returns on a yearly basis. Our tax preparation & compliance services include:
- Personal Federal 1040 Tax Returns
- All State and Local Tax Returns
- Sub-Chapter (s) Corporate Tax Returns
- Investment Real Estate Cost Segregation Analysis