TaxPlanner Pro
Corporate Income Tax Planning
Effective tax planning for C Corporations requires a strategic balance of timing income recognition and accelerating deductions. This interactive report synthesizes key planning topics relevant to CFOs and tax advisors, focusing on legislative shifts affecting liquidity and Effective Tax Rate (ETR).
Accounting Methods
Determine eligibility for the Cash Method based on gross receipts to defer income recognition.
Check Eligibility →Depreciation
Leverage Bonus Depreciation and Section 179 to accelerate cost recovery on capital assets.
Simulate Savings →R&D Expenses
Navigate the mandatory Section 174 amortization rules and their impact on cash tax payments.
View Impact →NOL Management
Understand the 80% taxable income limitation for post-2017 losses.
Calculate Limit →Accrual vs. Cash Accounting
C Corporations are generally required to use the Accrual Method, recognizing income when earned. However, the "Small Business Taxpayer" exception allows eligible corporations to use the Cash Method, recognizing income only when received. This is a critical deferral tool.
Eligibility Checker
Inflation adjusted threshold (est. $29M+ for 2023/24)
Cash Method Eligible
Receipts below ~$29M threshold.
Decision Framework
Cash Method Pros
- Defer tax on receivables until collected.
- Simpler record-keeping requirements.
- Immediate control over taxable income timing.
Accrual Method Pros
- Matches revenue with related expenses.
- Preferred by GAAP/banks for financing.
- Allows deduction of accrued bonuses (if paid within 2.5 months).
Depreciation & Capital Expenses
Strategic use of Bonus Depreciation (phasing down) and Section 179 (immediate expensing) can significantly reduce current year taxable income. The "Time Value of Money" drives the decision to accelerate deductions.
Asset Simulator
Deduction Schedule (First 5 Years)
Year 1 Deduction
$300,000
R&D Capitalization
Major legislative change: Domestic R&D expenses can no longer be immediately expensed. They must be capitalized and amortized over 5 years (15 years for foreign R&D). This creates a temporary "tax increase" due to deferred deductions.
The Impact of Amortization
Previously, spending $1M on R&D reduced taxable income by $1M immediately. Under current rules, that $1M spend only yields a $100k deduction in Year 1 (mid-year convention applies), leaving $900k of "phantom income" to be taxed.
Cash Flow Drag Calculation
Actionable Strategies
- 1 Review Expense Classification: Ensure generic overhead isn't accidentally classified as Sec 174 R&D.
- 2 Forecast Cash Tax: Adjust estimated tax payments to account for the reduced deduction.
Cumulative Deduction Profile
Comparing Old Law (Expensing) vs New Law (Amortization)
Net Operating Losses (NOLs)
For losses arising in tax years beginning after 2017, the NOL deduction is limited to 80% of taxable income (calculated before the NOL). Unused losses can be carried forward indefinitely, but can no longer be carried back (with limited exceptions).
Limitation Calculator
Income Offset Visualization
Even with massive losses from prior years, you must pay tax on at least 20% of your income.