Tax Data Analytics part 2

Tax planning

involves identifying and minimizing tax liability

• compliance with IRS, that data analytics will help with

Why do we need tax planning?

need to plan appropriately, so the company doesn’t get hit hard with taxes and fees

Things to think about when tax planning

• Impact of a new tax rate on our tax liability

• Tracking eligible deductible expenses and transactions that qualify for credits

• Impact of relocating head quarters to a different territory

• Tax exposure for owners in the case of a change in ownership or mergers

• Impact of transfer price contracts on risk of audit, because of abnormal margins

• Monthly trends to pay attention to

• Reducing assumption

• Tax laws are always changing

What do less assumptions mean on the tax plan?

More reliable, less surprises, but ypou can’t eliminate them all because it’s planning

What do what if scenarios do?

help analyze verious changes to legislation, deductions, credits

Determining whether expenses qualify for R&D credits you must identify:

• qualified research activities

• wages, bonuses, and stock options for employees engaged in, supporting, or supervising qualified research

• supplies used to conduct qualified research

• contract research expense paid for qualified research by a third party

• average gross receipts over a four-year period

• limits on research credit

• carryforward credit balance

Then adjustments of various inputs: research credits

• fixed-based percentage

• ceiling for fixed base percentage

• floor of current QREs

• credit percentage

• current and future levels of qualified research activity