Richey,
May & Co. Other Products
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Richey,
May & Co. Other Products
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| Other Products Research & Experimentation Credit Study Designed to assist clients in evaluating their compliance with the Federal income tax statutes and regulations for claiming research and experimentation credits and to ensure that all of the subsequent and future supporting documents are in place. This engagement reviews the methods used on prior years’ tax returns with the possibility of amending the returns to save Federal and State taxes. Our professionals will look at the current transactions of the company and compose a memorandum that can be used as a template for future credits to be claimed. This engagement will not only save you money but will also reduce the risk that any adjustments will be made to Federal income tax returns upon an IRS examination. Companies that have frequent process changes, that manufacture proprietary products, that develop internal software, or start-up companies are likely to benefit from this service. The engagement team interviews personnel, collects questionnaires, and reviews the client’s accounting activity to identify potential weaknesses in the documentation of the research and experimentation expenditures and makes recommendations for improvement. The engagement team will identify the types of expenditures that will be eligible for the credit and recommends policies to ensure the proper data collection as well as classifications of future expenditures. Mergers, Acquisitions & Reorganizations For corporations and S corporations planning to sell their business, tax planning is a mandatory part of the process. However, many business owners fail to contact their tax advisor until the sales documents are executed. RMC has the expertise to help taxpayers structure their acquisition in a tax-free merger or in a partially taxable acquisition enabling the company's owners to reap the reward of all their years of development and sacrifice. RMC will advise the client in the proper allocation of the purchase price between assets, stock, covenants, consulting contracts, stock options, and compensation contracts. RMC is available to perform business valuations and negotiation services to ensure that the taxpayer receives just compensation for their business. Like-kind exchanges on real estate can save businesses significant income taxes in an asset sale. These are some of the transactions for which we can assist in tax planning:
For taxpayers with financial difficulties or heavy debt obligations, RMC can aid in reorganizing the company's debt and equity to ensure a more healthy financial future. RMC will aid the client in reorganizing while minimizing income taxes, and will search for investors to increase the company's equity and the right financial organizations to carry the company's debt. For a parent corporation with a subsidiary in financial difficulty, RMC will aid in spinning off or liquidating the subsidiary to rid the parent or affiliated company of future financial burdens. Litigation Support Many taxpayers need tax and accounting support in the form of expert witnesses, business valuations, and supplemental expert assistance to legal counsel. RMC provides these services in our areas of expertise for divorces, shareholder disputes, partner disputes, business acquisitions, and estate proceedings. Please contact RMC to discuss your particular needs to determine how RMC can add a value to your legal team. Deferred Compensation/Retirement Structures A 401(k) plan is a defined contribution retirement plan with employer contributions made at the direction of the employee under a salary reduction agreement. The employee elects to have a certain amount of pay withheld and contributed by the employer on his or her behalf to the plan. The employer may or may not provide matching contributions to the amount deferred, as provided for in the plan. This type of plan can provide tax-deferred retirement benefits for employees at little cost to an employer beyond the costs of administering the plan. There are other types of plans within this general category, including employee stock ownership plans (ESOPs), in which shares of stock in the employer are purchased to fund the plan. Small businesses may adopt a "simplified employee pension" (SEP), and receive similar tax advantages to those of 401(k) plans by making contributions to SEP-IRAs on behalf of employees. A business with 100 or fewer employees may establish a "SIMPLE" (savings incentive match plan for employees) retirement plan. Under a SIMPLE plan, an IRA is established for each employee, and the employer makes matching contributions based on contributions elected by participating employees under a qualified salary reduction arrangement. A SIMPLE 401(k) plan may be set up with features similar to a SIMPLE plan, with automatic passage of the otherwise complex nondiscrimination test for 401(k) plans. The IRS has established laws which set the annual limit for compensation which can be taken into account for each employee in determining contributions or benefits under a qualified retirement plan. For 2004, the limit, as adjusted for inflation, is $205,000. This means that, for an executive earning $250,000 a year, deductible contributions to a profit-sharing plan, for example, are limited to 15% of $205,000 or $30,750. There is a way to avoid this limitation, which you might want to consider. Benefits which are not subject to the qualified plan limitations can be provided through nonqualified deferred compensation agreements and a related "rabbi trust" (one of the first of these plans which received IRS approval involved a rabbi.). These deferred compensation agreements are basically contracts between an employer and an employee for the payment of compensation in the future - after a specified number of years, at retirement, or on the occurrence of a specific event (a corporate takeover, for example), in consideration of continued employment by the employee. Unlike a qualified plan, these "rabbi trusts" are funded at the discretion of the employer and are subject to the claims of creditors. Essentially, the trust is under the employer's control and, structured properly, will result in a deferral of income taxes for the employee on the amount of compensation deferred. Also, unlike contributions to a qualified plan, employer contributions to a nonqualified "rabbi trust" are deductible only when amounts attributable to those contributions are distributed to the employee. One of the important considerations is that "rabbi trusts", as nonqualified plans, are not subject to the nondiscrimination rules under which qualified plans must operate. This means that you are free to provide this benefit to selected management or key executive employees even though you exclude rank and file employees. The IRS has laid down guidelines for these agreements and related trusts, which can be structured to assure tax deferral for any key employees you may want to cover. Uniform Capitalization Consulting Manufacturers and resellers of retail products are required to capitalize certain costs into ending inventory under the uniform capitalization rules of the Internal Revenue Code. The types of costs and the method of accounting used to capitalize these costs depend on whether a taxpayer is a manufacturer or reseller. The uniform capitalization rules can be complex and costly to comply with and can increase a taxpayer’s tax liability if not properly reported. Uniform capitalization rules require capitalization of direct and indirect costs of property produced by the taxpayer and property acquired for resale. Gross receipts exception applies for small taxpayers that acquire property for resale. Costs are allocated to property under various allocation methods. For interest, capitalization is only required during the production period of designated real and tangible property produced by the taxpayer. Various exceptions apply to uniform capitalization rules, including individual's costs of creative property. Intellectual Property Consulting In this age of technology, biotechnology, e-commerce, and scientific advancement, intellectual property is becoming the most valued asset of many companies. For any businesses that have valuable intellectual property, there are always the questions of what to do with it, how to market it, what it’s worth, and how to sell it. This engagement will aid the client in deciding what their intellectual property is worth, as well as the best strategy to getting the most amount of return on the property. It provides your business with strategic plans to develop your property and bring it to market. It will unravel the mysteries of licensing agreements, royalty agreements, valuations, and sales. Once a strategic plan has been developed our professionals will assist in reviewing pertinent documents and agreements and assist the client in negotiations. It is often difficult for companies to put a price on their years of hard work. Business owners come into negotiations everyday without knowing the value of their underlying skills and assets. Intellectual property is often the most undervalued asset in business acquisitions. Examples of valuable intellectual property are:
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