Connect with us

Accounting

Alternative investments tax pros need to know

Published

on

As tax professionals scour for strategies that can save clients money while bolstering their financial positions, among the most innovative options available are alternative investments offering generous deductions. Some even come in at deduction ratios of eight or 10, but watch out for how to dissolve later on to keep the tax benefits. 

For example, one K-1 alternative investment requires a $25,000 investment, producing five times that in deductions ($125,000). Applying the highest personal rate (plus state taxes sometimes) you are looking at $125,000 x.37 as actual dollars saved. That can be more than the original investment netting immediate cash flow. then there are ongoing investment income in some cases

These strategies — ranging from leaseback arrangements to foreign currency investments and structured leveraged ownership plans — are more than just smart tax moves; they’re powerful tools for reshaping financial outcomes. With time running out, these opportunities could be the key to helping clients close the year with a stronger, more optimized tax position.

Leaseback arrangements: Turn assets into tax savings

Leaseback arrangements are like giving an asset a second life. Companies sell an asset — be it real estate, equipment, or intellectual property — and then lease it back from the buyer, freeing up cash while maintaining the asset’s utility. From a tax perspective, these arrangements offer a clever way to convert equity into deductible lease payments.

Tax benefits that count:

  • Deductible lease payments: Lease payments become a business expense, directly reducing taxable income.
  • Enhanced liquidity: Selling the asset generates immediate cash flow that can be reinvested into the business or used for other strategic purposes.

What to watch out for:

  • Fair market value: Pricing must align with market norms to avoid IRS scrutiny.
  • Business purpose: The transaction should have a genuine operational reason beyond tax benefits; otherwise, it risks being reclassified.

For clients with underutilized assets, leasebacks can be a win-win strategy: Unlock cash today and save on taxes tomorrow.

Foreign currency investments: Diversify and deduct

Foreign currency investments bring an adventurous twist to tax planning. Whether hedging against domestic currency fluctuations or seeking exposure to international markets, these strategies come with unique tax advantages.

Tax advantages:

  • Ordinary income treatment: Gains and losses on most foreign currency transactions are recognized as ordinary income or loss, making them easier to offset against other income.
  • Section 988 deductions: Transactions falling under IRC Section 988 provide clear guidelines for deductibility, simplifying compliance.

Smart planning tips:

  • Detailed records: Precision matters. Record the exchange rates and transaction details meticulously.
  • Strategic hedging: Use hedging strategies to manage risk while preserving potential tax benefits.

For clients already operating internationally or with exposure to multiple currencies, leveraging foreign exchange transactions could be a natural fit for year-end tax optimization.

Structured leveraged entity ownership

Structured leveraged ownership plans turn the power of debt into a tax-savvy advantage. By financing investments through borrowed capital within an entity, clients can amplify returns while benefiting from interest deductibility.

The tax play:

  • Interest deduction: Interest payments on the debt used to fund investments can significantly reduce taxable income.
  • Entity flexibility: Different ownership structures — such as partnerships or LLCs — can be tailored to maximize deductions while minimizing liabilities.

Stay in compliance:

  • Reasonable debt levels: Keep debt-to-equity ratios reasonable to avoid the IRS treating the debt as equity.
  • Passive activity rules: Ensure that activities meet IRS guidelines to avoid limitations on loss deductions.

Clients looking to scale their portfolios or businesses can use this strategy to multiply their financial impact while keeping taxes in check.

Seize the moment: Year-end tax planning

With December 31 looming, now is the time to act. To ensure your clients reap the benefits of these alternative investment strategies:

  1. Evaluate opportunities: Identify clients with underutilized assets, international exposure, or capacity for leveraged investments.
  2. Assess tax scenarios: Pinpoint where these strategies align with your clients’ broader financial goals.
  3. Act quickly: Execute transactions before the year closes to lock in deductions for this tax cycle.
  4. Partner up: Work closely with legal and financial advisors to navigate the complexities of these strategies while ensuring compliance.

By implementing leaseback arrangements, foreign currency investments, and leveraged entity ownership plans, tax professionals can offer clients not just compliance but meaningful financial transformation. As we head into a new tax year, there’s no better way than by helping clients achieve a stronger, more tax-efficient financial footing.

Continue Reading

Accounting

PwC AI agent acts proactively to preserve value

Published

on

Big Four firm PwC announced new agentic AI capacities, including a model that proactively identifies areas of value leakage and acts inside the tools teams already use to fix them itself. 

The new solution, Agent Powered Performance, combines continuous AI-driven insight with embedded execution to address the problem of businesses only finding problems when they have already hurt performance. By actively monitoring and working inside the client’s existing systems, though, PwC’s agents can actively and autonomously address such issues. 

The software, which is supported by PwC’s recently released Agent OS coordination platform, is  embedded in enterprise systems to sense where value is leaking, think through the most effective performance strategies using predictive models and industry benchmarks, and act directly in tools like ERP or CRM software to make improvements stick. 

The system connects directly into ERP environments, continuously monitors key metrics, and acts inside the tools teams already use. For example, a supply chain agent might detect rising shipping costs and automatically reroute deliveries to reduce spend. Finance agents can spot and correct billing errors before they reach the customer. Clients typically see measurable efficiency gains in the first quarter, with continued improvements over time as the system learns and adapts.

“Too many transformations still rely on one-off pilots and stale data, stretching the gap from insight to impact and suffocating ROI,” said Saurabh Sarbaliya, PwC’s principal for enterprise strategy and value. “Agent Powered Performance flips the economics by distilling PwC’s industry transformation playbooks into AI agents that turn static insights into compounding gains, without rebooting each time.”

Agent Powered Performance is platform-agnostic and built on an open architecture so it can work across different LLMs based on client preferences and task-specific needs. It works with major enterprise platforms including Oracle, SAP, Workday and Guidewire.

Agent OS Model Context Protocol

PwC also announced that its Agent OS AI coordination platform now supports the Model Context Protocol, an open standard from Amazon-backed AI company Anthropic. 

By integrating this standard, agent systems registered as MCP servers can be used by any authorized AI agent. This reduces redundant integration work and the overhead of writing custom logic for each new use case. By standardizing how agents invoke tools and handle responses, MCP also simplifies the interface between agents and enterprise systems, which will serve to reduce development time, lower testing complexity, and cut deployment risk. Finally, any interaction between an agent and an MCP server is authenticated, authorized and logged, and access policies are enforced at the protocol level, which means that compliance and control are native to the system—not layered on after the fact. 

This means that agents are no longer siloed. Instead, they can operate as part of a coordinated, governed system that can grow as needs evolve, as MCP support provides the interface to external tools and systems. This enables organizations to move beyond isolated pilots toward integrated systems where agents don’t just reason, but act inside real business workflows. It marks a shift from experimentation to adoption, from isolated tools to scalable, governed intelligence.

Research Composer

Finally, a PwC spokesperson said the firm has also launched a new internal tool for its professionals called Research Composer, a patent-pending AI research agent embedded in the firm’s ChatPwC suite, designed to accelerate insight generation by combining web data with PwC-uploaded content. 

Professionals will use the Research Composer to produce in-depth, citation-backed reports for either the firm or its clients. The solution is intended to enhance the quality of client work by equipping teams with research and strategic analysis capabilities. 

The AI agent prompts users through a step-by-step research workflow, allowing them to shape how reports are packaged—tailoring the output to meet strategic needs. For example, a manager in advisory services might use Research Composer to evaluate white space opportunities across industries or geographies, drawing from internal reports and up-to-date market data.

Continue Reading

Accounting

Eide Bailly merges in Traner Smith

Published

on

Eide Bailly, a Top 25 Firm based in Fargo, North Dakota, is growing its presence in the Pacific Northwest by adding Traner Smith, based in Edmonds, Washington, effective June 2, 2025. 

Traner Smith’s team includes two partners and 16 staff members and specializes in tax compliance and advisory services. Financial terms of the deal were not disclosed. Eide Bailly ranked No. 19 on Accounting Today‘s 2025 list of the Top 100 Firms, with $704.98 million in annual revenue, approximately 387 partners and over 3,500 employees. 

Eide Bailly already has offices in Seattle, but hopes to grow further in the Pacific Northwest. “We’re pleased to welcome the talented team at Traner Smith to Eide Bailly,” said Eide Bailly managing partner and CEO Jeremy Hauk in a statement Monday. “Their expertise with high-net-worth individuals, real estate and privately held businesses aligns well with our strengths, and their client-centric approach is a perfect cultural fit. Having an office in Edmonds, Washington, is a great complement to our existing presence in Seattle. Together, we’re poised to deliver even greater value to families and businesses in the Seattle metro area.” 

“Joining Eide Bailly is a natural next step for us — it provides access to deeper technical resources in areas like state and local tax, national tax, succession planning and international tax while allowing us to continue the personalized service our clients value,” said Kevin Smith, a partner at Traner Smith, in a statement. 

“With this expanded support and platform, we’re excited to grow our reach, elevate what we do best, and help more clients than ever before,” said Shane Summer, another partner at Traner Smith, in a statement.

Eide Bailly has announced several other mergers in recent weeks. Earlier this month, it added Hamilton Tharp, a firm based in Solana Beach, California, and Roycon, a Salesforce consulting firm in Austin, Texas. In late April, it merged in Volpe Brown & Co., in North Canton, Ohio. Eide Bailly expanded to Ohio last year by merging in Apple Growth Partners. Last year, Eide Bailly also sold its wealth management practice to Sequoia Financial Group. The deal with Sequoia appears to be fueling the recent M&A activity. As part of the deal, Eide Bailly Advisors became part of Sequoia Financial, while Eide Bailly received an equity investment in Sequoia.

In 2023, Eide Bailly added Secore & Niedzialek PC in Phoenix, Raimondo Pettit Group in Southern California, Bessolo Haworth in California and Washington State, Spectrum Health Partners in Franklin, Tennessee, and King & Oliason in Seattle. In 2022, it merged in Seim Johnson in Omaha, Nebraska, and in 2021, PWB CPAs & Advisors in Minnesota. In 2020, it added Mukai, Greenlee & Co. in Phoenix, HMWC CPAs in Tustin, California, and Platinum Consulting in Fullerton.

Continue Reading

Accounting

BMSS announces investment, collaboration with Knuula

Published

on

Top 100 firm BMSS announced an investment in Knuula, an engagement letter and client documents software provider. The investment from BMSS came after successfully implementing Knuula over the past year to streamline its engagement letter process. It was after doing so that the firm’s leadership came to believe that Knuula could create complex client documents at an enormous scale, which was a huge need for the broader accounting industry. BMSS thought this presented a great opportunity to guide Knuula and help facilitate its growth. 

“We began working with Knuula in Spring 2024 to streamline our engagement letter process,” said Don Murphy, Managing Member of BMSS. “It quickly became clear that Knuula was not only a strong solution for us, but also an ideal partner in advancing industry-wide automation.”

While the specific terms of the deal were not disclosed, a spokesperson with Knuula said that, after this investment, BMSS and a collection of 21 of their partners now own 13% of the company. The investment represents not some passive revenue deal but an active collaboration between the two companies, with the spokesperson saying they will be working closely together on things like product development, new features, improvements, and networking.

The deal comes about a year after Knuula integrated with QuickFee, a receivables management platform for professional service providers, which allowed users to have engagement letters directly connecting to their QuickFee billing platform, tying the execution of the letter directly to the billing process. 

“We’ve long sought to partner with a firm focused on strategic innovation in the accounting space,” said Jamie Peebles, founder of Knuula. “To develop a perfect solution for large firms, it is ideal to have a partner that is willing to work closely together and iterate quickly. This requires constant feedback between our two teams. The IT team from BMSS worked with our development team constantly and helped us iterate rapidly. We also had consistent input from partners, manager, and administrative staff to help us make valuable changes to Knuula. BMSS was a perfect partner for us.”

Continue Reading

Trending