Electrical Wiring Contractor Connects

International Tax Advisors, Inc. (ITA) was engaged to provide tax planning services to an electrical wiring contractor which provides services to commercial construction projects. The company is 100% union and offers a comprehensive benefit package and health insurance to all employees. The company had gross receipts of $1.8 million.

The client is nearing age 65 and looking toward retirement. The company was previously owned by his sister-in-law so that he could maintain his union card. It also benefited the client to be a woman owned business in the bidding process. The company is currently worth $2 million and the contractor wanted a transfer of ownership to his name.

ITA developed a succession plan to accomplish the client wishes which also included a trust and gifting strategy which incorporated certain beneficial interests and ownership transfers.

Without ITA’s succession strategy, at the death of the client’s sister-in-law, the entire value of the corporation would have been included in her estate. This would have resulted in an estate tax obligation in excess of $400,000.

The first year tax savings for the business was more than $12,000 with a five year total savings of more than $61,000. The first year tax savings to the client was more than $19,000 with a five year total savings more than $99,000. Estate planning and recommendations created a potential estate tax savings of more than $488,000.

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