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TaxPlanIQ Case Study: Owner’s Comp, Entity Structure, and Client Value

March 18, 2022 TaxPlanIQ Support team

Outlining a client’s tax plan can be complicated, and adding on the extra task of presenting your value fuels the fire. 

However, with the help of TaxPlanIQ you can easily do both! It was created by accountants, for accountants, to ensure you are properly demonstrating your value to your clients. 

Below are two case studies to help you better understand how TaxPlanIQ can help you build a solid tax plan and present value to your clients. 

Case Study 1

Luba met with Jackie to discuss a return for one of her clients. She was looking for a few ideas to minimize her client’s tax obligations. 

Client Background

Luba’s client is a dentist with two (or three) employees. He has a wife, who is not working and a 22-year-old daughter. 

They are reviewing the clients’ 1120. In 2020, he paid himself $91,432 and incurred $108,826 in expenses. In distributions, he took $27,000 in 2020.

Jackie suggests running a reasonable comp analysis to see if they can get the salary down, closer to 50/50. That would mean bringing his salary down from roughly $118,000 to closer to $60,000. That would be roughly $30,000 of payroll tax savings. 

In 2021, he took $37,500 in W-2 but Luba does not know the distributions at this point. This means they have already taken Jackie’s original idea of reducing compensation. 

Taxable income is currently $130,000 but it will be less in 2021, even though net income will be around $500,000, because he purchased a new building and depreciation. They are expecting net income to be around $50,000. All of these expenses have been allocated. 

Additionally, the client purchased a building for his office for $300,000. 

Tax Plan Recommendations

Jackie suggests looking at the purchase statement for the building to see how they are allocating their assets and goodwill to see if there is a way to optimize further.  

She also suggests hiring his wife and daughter. Hiring the wife allows her to contribute to a 401K and paying the daughter the standard deduction amount would be ideal because then he doesn’t have to file a return.

Another good idea is to set up a retirement plan for the business. This is always a great way to save on taxes.

Here are a few more tips Jackie suggested: 

  • Section 139 - This covers unreimbursed expenses during covid 
  • Building an accountable plan
  • Deduct medical insurance
  • Workaround for state income tax 
  • Max out on HSA and encourage him to not take distributions from it to keep the money growing tax-free


Because of the way he deducts all of his expenses as a business expense, flag him as an audit risk in TaxPlanIQ

As his accountant, Jackie suggests Luba focus on lowering audit risk from the mistakes and then presenting new strategies for saving. It may look like he has fewer deductions, but at the end of the day, being caught in an audit will cost more.

Finally, with all of the new strategies in place, Luba will be able to present a total saving of anywhere between $30,000 - $50,000. 

Inputting these strategies into TaxPlanIQ will give a more specific number.

Case Study 2

Tina met with Jackie to discuss a prospective client. She is hoping to present a plan to him that will save him the maximum amount. 

Client Background

Tina’s client fixes and flips houses as his primary income. His wife works on and collects a W-2 and he has a 3-year-old and 6-year-old daughter. On the side, they also own a rental property.

In 2020, he had a schedule-C claiming around $2 million and in 2021 it will be closer to $14 million.

Tax Plan Recommendations

Jackie suggested switching the business entity to a partnership with a c-corp management instead of Tina’s original idea of switching to an s-corp. This would be more beneficial in the long run. 

Another listener in the case study suggested shifting from accrual accounting to cash analysis as a way to reduce expenses. This would shift the numbers from looking like they are making money to looking like they are losing money. It would also allow them to expense repairs instead of capitalizing.

A few more recommendations include: 

  • Minimizing his salary as much as possible
  • Figuring out their estate plan
  • Incorporating a retirement plan into their business
  • Running an unofficial cost seg on the rental property. 


Time placed a limitation on determining final results, however, with these strategies in place, Jackie and Tina both agreed a solid plan could be reached. 

By inputting these strategies into TaxPlanIQ, Tina will be able to show her client the exact outline of her plan and provide a projected savings value to her client. 

If you are interested in using TaxPlanIQ to demonstrate your value to your clients, sign up for a free trial today!

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