Different Fiscal Years

In our previous example, why did we set up your home state corporation with a calendar year ending 12/31 and your Nevada Corporation with a fiscal year ending 6/30?

We have already established that your home state corporation is going to contract out all services it can to your Nevada Corporation or corporations. You are making sure that you have legal and binding contracts for these services and that these are billed and invoiced accordingly. When you reach the last quarter of the calendar year and you find your home state corporation is making too much money, you can renegotiate the contracts thus allowing for a lump sum payment, higher payments, etc., which are to be paid before the end of the year. By using this strategy, you have transferred the income to your Nevada Corporation and created a legal business deduction and saved state taxes and federal taxes. Since the Nevada Corporation is on a fiscal year ending 6/30, this income will not be reported in the Nevada Corporation’s federal taxes for at least six more months. Of course, you can then implement other strategies to reduce the federal taxes on your Nevada Corporation.