Trial Attorneys are caught in an endless cycle of interest free loans to their clients. Worse yet they are using after tax dollars to fund these interest free loans.
If you use your past case profits – your own money – to fund your next case, you’re using after-tax dollars. The IRS sees that money as income, successful growing firms can find themselves trapped in an endless cycle of continually tying up your income in the next case, it’s really operating funds that are not tax-deductible. It is time for contingent fee lawyers to get off this treadmill and reduce their tax burden. This can easily be achieved by utilizing leverage as is common in most other industries . Loan costs are generally tax-deductible as a business expense, so you’re using before-tax dollars to fund your case. In addition, funding ones practice with borrowed moneys eliminates the phantom tax as well as allowing you to utilize the additional capital for firm expansion or to funding partner’s retirement accounts.
That translates to more profit for you to run and expand your business, invest elsewhere, or just to enjoy.
Once a firm has begun to free up its cash flow by using borrowed money another tremendous tax savings opportunity is created. A lawyer can now take the excess cash flow and shelter it by structuring a portion of their attorney fees. The tax benefits of a structured attorney fee arrangement can be tremendous. Structured attorney fees offer the advantage of spreading out your tax burden over the life of your payments. Because the money is taxed as it arrives, rather than in one lump sum, spreading it out offers you the chance to move to a lower tax bracket, taxing the income at a lower rate than it would otherwise have been. Structuring your attorney fees can save you taxes today, smooth out your cash flow as well as provide for your retirement.
Finding the maximum tax advantage in your unique situation is research-intensive, and most trial attorneys are busy.
Let the Amicus Capital Services do that work for you, so you can concentrate on the work you really care about: winning trials.