Corporate & Tax Partner Michael Wiener shared his expertise on how businesses, CFOs, and financial professionals are adapting to the evolving economic landscape and shifting tax strategies with the Los Angeles Business Journal in their Taxation Roundtable Discussion.
Below are Michael's excerpts from the feature:
Are there any big changes to tax laws in 2025 that businesses should be aware of?
Given the results of the November 2024 election and the looming expiration of key provisions of the Tax Cuts and Jobs Act, tax legislation will likely be a high priority this year. It is too soon to know what the contents of this legislation will be, but I think it is reasonable to expect that matters like the SALT Cap, QBI deduction, bonus depreciation and qualified opportunity zones will be addressed.
In the wake of the recent devastating wildfires, what top-level financial advice would you give to businesses that suffered significant losses?
Be aware of the tax relief options that are available. The IRS and Franchise Tax Board have both issued relief extensions. For affected taxpayers, most tax deadlines that fall between January 7, 2025 and October 14, 2025, are extended until October 15, 2025. The deadlines that are extended include both the identification deadline and the acquisition deadline for affected taxpayers engaged in 1031 exchanges. The application of the 1031 extensions is not always clear, and businesses should consult their tax advisors, but they should be aware that these extensions exist. Businesses may also take advantage of the benefits provided by Section 1033 of the Code, which allows taxpayers to defer gains realized due to property destruction.
What strategies can businesses employ to optimize their tax liability while remaining compliant with tax regulations?
I often tell clients first and foremost, do what makes the most business sense. Minimizing tax liability is important, but you should not make a bad business decision solely in order to reduce your tax liability. Businesses should first decide what course makes the most business sense and then work on structuring to reduce tax liability. The Treasury Regulations account for business realities and often provide sufficient flexibility for businesses to reduce their tax liability while complying with the regulations.
Can you discuss the impact of tax planning on a business’s financial performance and long-term sustainability?
Prudent tax planning can boost any business’s bottom line. Tax planning allows businesses to defer their tax liabilities, which allows them to invest – and generate additional returns from – the money they would otherwise use to pay their taxes.
What considerations should businesses take into account when planning for succession or ownership transfer in terms of tax implications?
One consideration that is often overlooked in succession planning is property taxes. When property is contributed to a legal entity in a proportionate transfer that is exempt from reassessment, the so-called “original co-owner” rules apply. If the original co-owner rules apply, a transfer of more than 50% of the ownership interests in the transferee legal entity will cause a reassessment of the property. The ownership interest transfers referred to in the previous sentence include transfers made upon death or for estate planning purposes. Taxpayers need to be mindful of these rules and plan accordingly.
*This roundtable was originally published in Los Angeles Business Journal on February 14, 2025
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