Marcus Delacroix

HighDraftingProspect

S-CorpW-2Married filing jointlyILJulian RhoSemiannualReturn on file

Est. current income

$610,000

vs $565,000 prior year

Effective rate

24.8%

Marginal bracket

35% ordinary

Dec 31 hard stops

Marcus Delacroix

2026 Year-End Planning Summary

Dec 31 stops

~$12K–$20K of federal tax addressed this year (retirement deferral, Q4 estimate), with a high-stakes asset-vs-stock sale structure to model before any LOI is signed.

Est. income

$610,000

vs $565,000

Effective rate

24.8%

Marginal

35% ordinary

Key changes

flagged

1. Current-Year Action Items

Time-sensitive moves before December 31.

Maximize the company retirement plan before a sale year

Dec 31 hard stop

Client response: "Things are going well and a buyer reached out."

A strong, possibly final pre-sale year is the moment to maximize tax-deferred retirement contributions at the 35% marginal rate. Elective deferrals must run through payroll by Dec 31; the employer portion can follow by the extended due date. This shelters income now and builds basis-independent wealth ahead of a liquidity event.

$11,000–$23,000 of federal tax deferred

Assumes maximizing employer + employee contributions to the S-corp's 401(k) (2026 §415(c) limit $72,000 incl. catch-up where eligible), deductible against the 35% bracket. Accelerates deferral into a strong pre-sale year.

Without action

Deferral room at the 35% rate is lost for 2026 if not funded by the deadlines.

With the plan

$11K–$23K of tax deferred at the top rate in a strong pre-sale year.

DeadlineDecember 31, 2026 (elective deferrals)

OwnerBoth

AuthorityIRC §401(k)IRC §415(c)

Q4 estimated payment to meet the safe harbor

PYR + current estimate: income up ~8%; estimates set to prior-year levels.

Income up ~8% against prior-year estimates leaves a safe-harbor gap. A Q4 payment to 110% of prior-year tax is the cleanest cure for the non-deductible §6654 penalty.

$900–$2,400 of penalty avoided

Assumes the §6654 safe harbor — 110% of 2025 tax ($128,800) = $141,680 — is not yet met; $95,000 paid through Q3 leaves a $46,680 Q4 gap. Figure reflects the §6654 rate on the shortfall.

Without action

~$46,680 short of the safe harbor; §6654 penalty accrues.

With the plan

Safe harbor met; penalty avoided.

DeadlineJanuary 15, 2027 (Q4 voucher)

OwnerBoth

AuthorityIRC §6654

2. Long-Term Opportunities

Multi-year planning to revisit beyond this season.

Asset vs. stock sale — model the structure before an LOI

Client response: "A strategic buyer reached out about acquiring the business."

Deal structure is the single largest tax variable in a business sale and is effectively locked once the LOI is signed. Asset treatment helps the buyer via a step-up but can convert gain to ordinary income and, if the S-corp was formerly a C-corp, trigger §1374 built-in-gains tax within the recognition period. The trade-off must be modeled before terms are committed, not after.

Structure can swing the after-tax proceeds materially

An asset sale (or a §338(h)(10) election on a qualifying 80%+ stock purchase by a corporate buyer) gives the buyer a basis step-up but can convert some gain to ordinary income and trigger built-in-gains exposure for a former C-corp within the recognition period; a straight stock sale favors the seller's capital-gain treatment. The optimal structure depends on buyer type, BIG exposure (§1374), and state effects — modeled per deal.

Without action

Signing an LOI before modeling can lock in a structure that needlessly raises the tax on your proceeds.

With the plan

Modeling first lets you negotiate the structure that maximizes after-tax proceeds.

DeadlineBefore signing an LOI

OwnerCPA

AuthorityIRC §1361IRC §338(h)(10)IRC §1374

3. Open Questions for the CPA

Items to resolve before the client conversation.

QBI/§199A — confirm SSTB status and phase-out

At this income, if the business is an SSTB the §199A deduction is fully phased out; if it is not, a deduction may remain. Confirming the classification determines whether any QBI planning is worthwhile this year.

OwnerCPA

Elan

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