Q:

Subject:  s versus c article

I read your article with some interest and have a question about your tax splitting.

Lets say the C-corp does a split and takes $50k in a 15% bracket. Now what? A C-corp doesn’t have to buy food or put a kid through college. Why is it helpful for the C-corp to have 50k in the bank, especially if you are an individual with small company and just want all your money in your pocket so you can buy cocaine?

A:

The effective use of C corps to shift and smooth out income is a multi-year process; so looking at one year’s end result isn’t the best way to evaluate it. Any experienced professional tax advisor should be able to assist you with implementing these tactics in the best way for your particular goals and situations.

So, in addition to your particular financial priorities, be sure to budget enough money to pay for the services of a good professional tax advisor.

Good luck.

Kerry Kerstetter

Q:

Subject:  C Corporations

How do I find an accountant in my area that is comfortable with C corporations. It seems like each one I talk to wants to continue to steer me away from them?

 
A:

That is frustrating; but look at the good side of that situation.  Any tax pro who doesn’t understand how to utilize C corps effectively is doing you a huge favor by admitting his/her shortcomings up front, saving you from wasting a lot of time.

As I have repeatedly said, C corps are not automatically a one size fits all solution for everyone any more than S corps are.  Any tax pro who can’t logically explain his/her rationale for recommending any particular strategy, including the fact that all of the pros and cons that I have spelled out have been evaluated, is to be avoided.  Anyone who automatically rules out C corps without asking you a ton of questions and tries to assume that an S corp is automatically the right approach is too lazy and/or ignorant to be trusted.

Unfortunately, we don’t have anyone specific to whom we could refer you. I did recently post some names and links for some like-minded tax pros around the country.  

If you haven’t already done so, you should check out my tips on how to select the right tax preparer for you.  

You should note that geographic location should not be the main criterion for selecting a tax pro.

I wish I could be of more assistance; and I wish you the best of luck.

Kerry Kerstetter