Tax Planning 2020: Not your average year!

June 9, 2020

The GrowthLab Weekly Jump is an information session hosted every Monday that tackles relevant issues in today’s trying times. Jumpstart your week with practical advice in times of uncertainty.

In case you missed this week’s Jump session, you can find the slide deck & recording below:

This week’s focus is on Tax Planning 2020: Not your average year! We are discussing the “Usual Subjects” of tax planning, potential “Quick Wins” for COVID-laced 2020, and the impact of PPP on tax & tax planning.

The “Usual Subjects” of Tax Planning

The “Usual Subjects”

  1. Basics:
    • Entity type
    • Cash vs. Accrual Taxes
  1. Cash Flow & Year End Profit (esp. for Pass-through Entities)

What to do now?

  1. Review your Plan
    • 6-month cash
    • risks & opportunities
  2. Ensure solid monthly bookkeeping
    • Monthly cadence of close
  3. Talk with your tax professional
    • Cash
    • Planning
    • Ensure they know your situation

Quick Wins and Pitfalls for COVID-laced 2020

Potential “Quick Wins”

  1. Tax Loss Carry Back
  2. Offset Taxable Income with Strategic Investments
    • Acquihire / Strategic hire
    • Accelerated depreciation

Potential “Pitfalls”

  1. PPP Loan Forgiveness
  2. Limited cash for tax liabilities

What to do now?

  1. Consider with your tax professional if a tax loss carry back is an option if 2020 yields a net loss.
  2. Plan for forgiveness impact on tax
  3. Consider strategic investments
  4. Plan for cash needs for estimated taxes & payroll taxes, esp if delayed

Impact of PPP on Tax & Tax Planning

Overview

  1. Loan forgiveness
    • Treated as income
  2. Corresponding Expenses
    • Deductible as regular expenses

With these as a 1:1 match, you need to be thinking of tax implications your net income is going to be higher than “usual”. 

What to do now?

  1. Plan. Plan. Plan.

Let’s take a quick look to visualize…

https://docs.google.com/spreadsheets/d/18hO5-yeNNM_ffEmNbasUuZXXbAAecqFpS3TFqGmNLW4/edit?usp=sharing

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