Trucking company case study

THE ADVANCED PLANNING STRATEGIES (APS) PROGRAM

Case study

The following summary was an actual case installed by THE APS PROGRAM Specialist.

Company names and participants have been changed to protect client confidentiality.

Transportation Company

Coast sand and gravel company INC.

• Coast Sand and Gravel, Inc. is a trucking company and supplier of Sand & Gravel

construction materials

• It is affiliated, via ownership, with 11 other companies, five of which (MJ & Associates,

Dawes Financial Corp., Coast Sand & Gravel, Coast Materials, Engel Enterprises)

constitute a controlled group

• Three Companies (Dawes Financial, MJ & CS&G) are to be managed as operating

entities. All are C Corporations, 100% owned and controlled by the Grossman Family

• Taxable income for 2000 was $3,147,350 - Salary and K-1 income to Officers = $1,266,363

• Needed to purchase new trucking companies: $750,000 in deposits and $58,000 per

month on an on-going basis = $1,436,841

• All CSG affiliates have over 200 Employees. A Profit Sharing 401(k) exists

GOALS

• Purchase competing business enterprises (Bud & Sons and CA Bulk Transport) with

Pre-Tax dollars

• Reduce corporate and personal tax bills

• Defer income for retirement

• Reward and motivate key shareholders

• Bring other entities into management structure in the future

Financial summary

• Total tax savings = $1,152,000 ($2.304 MM X marginal Federal and State

combined rate of 50%)

• Total pre-tax  compensation set aside = $2.304 MM

• Pre-tax Dollars set aside for acquisitions of trucks  =

$1,436,830

• Annual pre-tax contribution se aside as split Dollar arrangement

) = $862,000