January 15, 2016
The Boston Business Journal published an article by Tax & Business Services Director Patrick Rowland, offering tips to banks for reducing tax expense and improving their institutional tax risk profile in 2016 and beyond.
With 2015 now closed and in the books and the 2016 first quarter closing not yet in process, now is a great time for banks to consider alternatives that might help improve their tax positions. While tax planning is not limited to these particular strategies, the following suggestions provide a foundation for reducing tax expense and improving the institutional tax risk profile for 2016 and beyond.
- Low Income Tax Credits (LITC) are not widely used in community banks, but the somewhat recent FASB ASU 2014-01 directive allows the entire investment to run through tax expense. This is profoundly different from how other credits impact your financial statements, which more closely aligns the accounting with the economics of the investment.
- Solar and Investment Tax Credits (ITC) can be combined with recent improvements in the "Section 179" accelerated expense to make solar very attractive to a bank. It is now even more feasible for banks to invest in their own solar projects or to consider participating in syndications of large solar credit projects.