Waypoints: Ideas and Insights to Navigate Enterprise Complexity

Last week, President Trump released an outline of his tax plan. Many of you have probably seen or heard a few different snippets from it. While it was written very broadly, it is instructive on the administration’s thinking. It follows the House Republican “Better Way” plan in some respects but also has some major differences. 

To close out our series, Top Middle Market CFO Challenges for 2017, we see a key concern for CFOs this year is managing financial strategies in light of the potential changes in tax laws. There will certainly be new changes to tax regulations in the coming years. This is welcome news to the business leaders surveyed by CNBC. Of this group, 73.9 percent of U.S.-based CFOs agree that Trump's principal focus should be corporate tax reform. In response, the new Congress and President have made tax reform a key element of their policy agenda. How these changes impact your business and how you capitalize on them will help drive your success in coming years.

Are you a small- or medium-sized company that exports its USA-made products to foreign countries? If so, are you taking advantage of a tax incentive known as an "interest charge-domestic international sales company" or IC-DISC?

The use of an IC-DISC allows you to significantly increase your company’s after-tax income. For example, profits are taxed at the dividend rate, as opposed to ordinary income tax rates that currently top out at 35 percent.

Imagine this – you are a company with hundreds of thousands of customers. As part of doing business, you also have multi-year contracts with each of your customers.

Now imagine planning for the new revenue recognition standards. I know … it’s daunting. 

In my July blog, I wrote about the likelihood of meaningful tax reform, possibly in 2017. The premise was that such an undertaking is long overdue, and the context was that political reality still will make it exceedingly difficult to accomplish.

It has been 29 years since the last major rewrite of the Internal Revenue Code.  That effort in 1986 was preceded by one in 1954, a 32-year interval.  If we are to see another one, it could happen in 2017 or 2018, interestingly also nearly an identical interval.

Congress over the years has wisely invested in American companies by incentivizing innovation.  You may have heard of the R&D tax credit, as it has been around since 1981. What you may not know is that only one of every 20 eligible companies actually applies for the R&D credit – a mistake that can cost your business thousands or, in some cases, millions of dollars.