Common Threads from 2019 Tax Planning Meetings
Throughout October and November, our tax leaders have been meeting with bankers across the country to discuss tax planning for 2019 and beyond. There have been a number of common threads emerging from these discussions regardless of bank size or geography. We wanted to share some of the trends we are seeing to help others as they consider their year-end tax and strategic plans.
Common Threads across Community Banks
- Concerns regarding an aging shareholder base and shareholder succession issues
- An increased desire for shareholder liquidity either through dividends, special distributions, share buyback programs, or other means
- Concerns about political uncertainty and the impact of the 2020 election on future tax rates
- The potential for increased state tax filing requirements as a result of economic nexus and increased state tax enforcement
- Opportunities for mergers and acquisitions either as a buyer or a seller
- Branch renovations and IT system upgrades and maximizing tax deductions associated with those costs
Special Considerations for S Corporation Banks
- Issues related to managing a ballooning number of shareholders as stock is passed down from one generation to the next
- Mitigating the risk of inadvertent terminations of an S Election caused by ineligible shareholders particularly for trusts and estates
- The process for calculating shareholder basis and the new basis reporting requirement
Looking Forward
We believe that tax planning and strategic planning go hand and hand. With year-end quickly approaching, now is a great time to sit down to discuss these issues.
CLA is here to help. Please contact us.
Amanda Garnett is a principal in the financial institutions practice of CliftonLarsonAllen (CLA) from Peoria, Illinois. She currently leads the firm’s Midwest financial institution tax team and serves institutions ranging in size from $15 million to $3.5 billion in total assets. In addition to tax compliance, Amanda assists clients in the areas of tax consulting, mergers and acquisitions, and regulatory reporting. She also routinely teaches courses for banking associations across the country.
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