CPAs routinely help clients improve tax efficiency, yet one of the most consequential advisory questions is whether the business itself could remain operational after a significant uninsured loss. Tax planning improves after-tax cash flow and strengthens annual performance, but continuity planning determines whether the enterprise can withstand disruption long enough to recover. When an adverse event threatens operations, liquidity and stability often matter more than marginal tax savings. For that reason, the discussion of risk funding deserves to sit alongside traditional tax strategy in any comprehensive advisory relationship.
State Tax Planning with the “80/20 Company” Exclusion
Ted Stotzer
Many multinational groups find that foreign-source dividends and other income earned by domestic affiliates are fully or partially subject to state income taxation, even where the federal system provides an exemption. This state-level “leakage” can be material – particularly in high-tax jurisdictions – and is often overlooked because the income appears sheltered at the federal level. For groups with predominantly foreign operations, a starting structure or a restructuring that causes one or more domestic affiliates to qualify as an “80/20 company” can substantially reduce or eliminate state taxation on that income.
