We Prepare Tax Returns!

We prepare most type of tax returns:

Individual. 

S Corporation.

C Corporation.

Partnership.

Payroll.

Amended.

Gary Bode, CPA is a Master's Degreed, nation wide accountant offering tax and business services. Member of AICPA and NCACPA. Our virtual office provides excellent service to long distance and international clients. Call (910) 399-2705 for a free phone consult.

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Client Testimonials

I have been using TurboTax for years but encountered an investment situation that TurboTax is not designed to handle. After searching the web for local CPAs/Accountants and chatting with a couple on the phone I was unable to find someone locally with sufficient experience in my particular situation with whom I felt comfortable. Deciding to broaden my search beyond my local area I discovered Gary's website and a detailed discussion with options pertinent to my situation. During a brief phone conversation, Gary answered all of my questions, explained how we would exchange information online and gave me an estimate for preparing my current tax return and an amended return. It was a pleasure working with Gary. He delivered everything he promised with no surprises.

Hank Varno, Purcellville, VA

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Even though Gary enjoys helping colleagues, we no longer provide free consults to other tax preparers. He's happy to consult on an hourly billing basis if our schedule allows.

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Form 1120-S CPA discusses the 2013 factors in Converting C Corporations to S Corporations

Form 1120-S CPA C Corporation conversion to S Corporationn

Gary Bode, CPA: Plan your C Corporation conversion carefully. (910) 399-2705.

Form 1120-S CPAs hear more talk lately from C Corporations that want to convert into S Corporations. Why?

  • C Corporations incur double taxation. In 2013, the total C Corporation tax rate can be up to 51.25%. Ouch.
  • In 2012, up to a 9.75% tax rate decrease was possible (as an S Corporation compared to a C Corporation). But in 2013 it is only 3.25%.
  • C Corporation assets may have less value than the past. This reduces the impact of the built in gains recognition rule, if incurred, after conversion. Talk to your CPA about it.
  • Personal marginal tax rates of the shareholders increased. Remember high salaries to shareholder employees remain a staple of C Corporation tax management.
  • Employee Social Security tax went back to 6.2%, from 4.2%, on the first $110,000 of income in 2013.
  • Gains on C Corporation qualified dividends increased.
  • For a moment in 2013 the built in gains recognition period dropped from 10 years to five years. And then went back to 10 years.

“Some C Corporation issues extend into the new S Corporation upon conversion. Best to plan carefully.”
– Gary Bode, Form 1120-S CPA

Factors Influencing the C Corporation Conversion to S Corporation Decision

Converting from a C Corporation to an S Corporation has consequences.

  • Will S Corporation conversion even be possible? S Corporations have many restrictions.
  • The shareholder’s personal goals.
  • The length of the built in gains recognition period. Shorter is obviously better. For tax positioning I think a C Corporation would use the 10 year time line although Congress could change that in 2014.
  • The highest Corporate tax rate. It’s prudent to extrapolate your C Corporation’s tax position now and in the future.
  • The shareholder’s marginal tax rate. If it becomes greater than the highest corporate rate, converting to an S Corporation may increase the shareholder’s tax liability.
  • The volatility of tax laws makes planning difficult, although trends exist.

When our C Corporation clients want to convert to an S Corporation we generally run an extrapolated tax returns for both scenarios. We run liquidation scearios as well.

We’re a CPA firm that functions as an S Corporation. But we don’t always recommend converting. Discuss your options with your CPA, or, call us for a free initial phone consult at (910) 399-2705. Our virtual office means we serve you wherever your Corporation functions.

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