Video: Impact of Changing Tax Rates on Timing of Income and Expenses

Tax planning for C corporations involves strategizing to minimize tax liability through lawful use of tax laws and regulations while considering the timing of income, deductions, and credits, and the selection of investments and types of revenue.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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Let's talk about the impact of changing tax rates on timing of income and expenses. Now this is not necessarily something you're gonna be able to do every year because guess what, tax rates don't change every year. A lot of things change every year, but the tax rates generally are not gonna change every single year. But here, we're gonna explore a scenario where a business adjusts the timing of its income and expenses in response to anticipated changes in tax rates and legislation. Now, one thing before you say, hey Nick, this is getting creative accounting, you're gonna commit fraud by moving around your income and expenses. This generally, I would say, now this is general, right? This is gonna apply more for cash basis, but also what is tax, right? It's cash basis. We're not really dealing with accrual basis. We know that GAAP, FASB, FAR exam, right? That deals with all of our accrual basis accounting. So if I tell you, hey, don't pay me until next year, but I really did the service this year, I earned that income for accrual purposes, for FAR, for GAAP, for FASB purposes. But if I don't actually collect that cash until the next year, that's not income for tax purposes until the next year. So you see how, again, just the difference there, that's another reason why you kinda wanna take a break between the financial exams and the tax exams, because you've got two different sets of rules. So if I'm running a business and I know tax rates are gonna go up, maybe I say, hey everyone, can you pre-pay me now? Maybe I'll even give you a little bit of a discount. Pre-pay all of the revenues now to me. Now for book purposes, I

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C corporations

Module: 3 Concepts, 30 Videos

Corporations: Consolidated Tax Returns Overview

1:22

Introduction to Consolidated Tax Returns

2:25

Entities Not Able to File a Consolidated Return

3:20

Requirements for Affiliated Groups