Meet the Client
CLIENT: The client was an individual who owned and operated a Texas corporation engaged in pipeline construction as a hydroexcavation and directional boring specialist. The company’s services also include right-of-way clearing, salt water disposal, pipe fusing, pipe padding, brush chipping, and removal of brush. All services were conducted through one corporation, and nearly $20,000,000 of land, equipment and vehicles were held by the company. Revenues had risen to approximately $17,000,000 with net profits of $7,000,000.
OWNERSHIP: The primary company was owned solely by one individual.
WHAT OUR CLIENT WANTED: The client was concerned about his total tax liability as well as protecting his personal assets. In discussions with other businessmen in the area, he was aware that there are many tax strategies that companies could potentially implement to minimize taxes, and they felt that their current tax advisors did not have the necessary expertise or experience to advise them competently. He was specifically concerned that his tax prepapers had not recommended any change after the 2017 Trump tax cuts and he felt like he was not taking advantage of them.
HOW WE MET THEIR EXPECTATIONS: TAVAS recommended a substantial reorganization to provide for immediate asset protection for the company’s assets – including protecting both the company buildings and real estate as well as equipment/vehicles. The reorganization could be accomplished completely tax-free. From a tax perspective, TAVAS identified multiple deductions that the client’s tax preparer had not claimed. By claiming the overlooked deductions, the client could gain over $360,000 in tax savings immediately.
TAVAS also recommended longer-term planning strategies to substantially reduce the client’s payroll tax burden. By analyzing the owner’s compensation and comparable compensation rates in the industry for companies of similar size/profits, alternative means to withdraw profits (other than W-2 wage) were recommended. TAVAS also recommended sophisticated techniques to allow substantial income tax savings at the individual level as well as recommending a reconfiguration of the affiliated company’s depreciation methods to accelerate deductions.