Meet the Client
CLIENT: The company is an oilfield service company engaged in supporting energy exploration and production services, including excavation of well sites to place equipment below grade, installing pumps, tanks, and pipes, painting equipment, and providing clean-up, maintenance and equipment rental services.
OWNERSHIP: Our clients are two active shareholders who work full-time in the company and a passive shareholder.
WHAT OUR CLIENT WANTED: Our clients felt as though they had outgrown their tax preparer, who was not a CPA. We entered into the engagement performing compliance and tax return preparation for the entity and the two active shareholders. The client was advised on the distinct benefits of strategic tax planning in addition to their necessary compliance work and became eager to learn about possible tax savings, asset protection, entity structuring, and estate planning review.
HOW WE MET THEIR EXPECTIONS: TAVAS devised a plan for our client that offered substantial tax savings for both the active and passive shareholders. In particular, we recommended amendments to prior year tax returns to take advantage of their excavation activities, which constituted 70 percent of the company’s revenues and qualified for the old §199 deduction. The reorganization plan will protect their depreciable assets by segregating them into a new entity structure that includes a holding company and a separate equipment-leasing company. Additionally, we provided estate planning recommendations that would allow the shareholders to further reduce their potential estate tax liability and probate costs.