Year-End Tax Planning for Government Contractors

Cherry Bekaert: Government Contractors Guidance

Many of our government contracting clients are taxed as a pass-thru entity, generally an LLC that's taxed as a partnership or an S corporation. It is important to plan at both the entity level and the individual level since in the case of pass-thrus, the income is passed down to the individual owners through a Form K-1 regardless of distributions received during the year.

Year-end tax planning should be done to reduce the taxable income that passes down through K1s to the individual return. In the case of a C Corporation, year-end tax planning is helpful to defer taxes or potentially avoid taxes as much as possible.

Listen to John Ure, Carol Marin and Greg Marx, Tax Partners in Cherry Bekaert’s Government Contracting Industry practice and Private Client Services group, discuss tax-saving steps government contractors can take before the year ends.

Discussion includes:

• Methods of reducing current year income
• Special regulations and thresholds for SBA 8(a) program government contractors, including excessive withdrawals
• How retirement plans can be used to help manage income, including VIP retirement plans
• Research & Development (R&D) tax credit: qualifying activities and types of contracts not eligible for the credit
• New limitations coming back into play for 2021
• New tax legislation pending in the US House and Senate

If you need any help with year-end tax planning, Cherry Bekaert tax advisors are available to discuss your situation with you. We welcome the opportunity to work with you to identify the best tax positions and opportunities for you and the company.

View all Government Contracting Podcasts