Planning

Techniques to Provide Ready Cash Flow

Companies experiencing cash flow and profitability problems can use a number of tax planning techniques and procedures for ready cash.

"In many cases, the Internal Revenue Service itself can provide help in the form of refunds and extension of payment due dates," said Thomas C. Parsons, national director of tax practice, Alexander Grant & Company, Chicago, Il. "Considering current high interest rates, any return of money can represent a critical source of cash for the corporation."

Here are some specific suggestions offered by Parsons for corporations to consider to combat the problems of a sluggish economy:

Quick refund of overpayment of estimated taxes. By filing a Form 466 with the IRS, a corporate taxpayer may receive a refund of overpayments of estimated taxes within 45 days. The application must be filed after year-end, but prior to the earlier of the time for filing the return or the 15th day of the third month after year-end. The refund must be at least l09o of the total expected tax and at least $500.

Extension of time for tax payment by corporations expecting net operating loss carrybacks. A corporation expecting a net operating loss for the current year can file Form ll38 to extend the time for payment of at least part of its income tax for the preceding year. The amount of tax postponed may not exceed the amount of refund expected to result from carrying back the net operating loss.

Quick refund resulting from net operating losses. Filing of a Form ll39 generally will result in refund of tax resulting from a net operating loss, capital loss or investment or jobs credit carryback, to be paid within 90 days. Undue delays in filing Form ll39 should be avoidedso file it as soon as the tax return is filed.

Planning corporote estimated tox payments. If calendar year 1982 profits and taxable income are expected to decrease, adjustment of estimated tax payments can improve cash flow. Estimated tax payments should be based on a carefully prepared estimate of actual expected tax liability. If payments equal at least 8090 of the actual til( liability, an underpayment penalty will be avoided.

Exception 3-tax on annualized income-should also be kept in mind for avoiding an underpayment penalty. This exception provides that no penalty will be imposed if the estimated tax paid is equal to at least 8090 of the tax that would be due if the tax was figured on annualized taxable income at the months preceding installment dates. The rules for annualization are very liberal. Companies should be aware that the new rules effective as of last year for those having taxable income of $l million or more in any of the three preceding years. The Revenue Adjustrnents Act of 1980 provides that any corporation having $l million or more of taxable income in any of the three years prior to taxable years beginning after 1980 must make estimated tax payments totaling 6090 of current year liability to avoid underpayment penalties.

(This information was provided by the Independent Business Institute, Akron, Oh. - ed.)

The extension period ends on the last day of the month in which the return for the loss year is due, or upon the grant or denial of the carryback refund request. A refund grant resulting from the carryback will be used to offset taxes due. Interest on deferred payment is 1290.

Tax planning to avoid minimum tax. The minimum tax on items of tax preference could result in minimum tax liability in years of

Manville Corp. (formerly Johns-Manville), overwhelmed by 16,500 lawsuits from persons exposed to asbestos, has filed Chapter I I bankruptcy despite its strong financial condition the lawsuits will be frozen as a result of the filing, which is expected to pressure Congress to aid injured workers

Ten sawmills and467,ffiO acres of timberlands formerly owned by Masonite Corp. have been transferred to The Timber Realization Co., a new firm, owned by Masonite shareholders on a proportionate basis; it is anticipated that TRC will sell the properties over the next 5 years and distribute the proceeds to the TRC partners. .

Louisiana-Pacific has lost a U.S. District Court suit that accused it of conspiring to hold down the price of Fibreboord Corp. stock prior to L-P's acquisition of Fibreboard in '78; L-P settled the case for $5.3 million before the jury fixed damages . . L-P chairman & pres. Harry Merlo says no one was guilty of fraud, "We got outlawyered."....

The U.S. has rejected the Loukisna-Pacy'lc proposal to settle the Redwood National Park debt to L-P by exchanging gov. timberland in No. Ca. for the money owed; L-P says it is still owed $284 million from the park condemnation more American businesses failed last mo. than at any time since the early 1930s . .

Firestone Tire & Rubber Co. will expand its roofing business with a new multi-million $ plant, site to be announced Potlatch Corp. is coping with declining profits with a volunteer earlY retirement program . . . a U.S. coalition of lumber producers is expected to petition for a countervailing duty on Canadian lumber imports into the U.S. to the International Trade Administration and the International Trade Commission.

Housing starts nationallY leaped i3Vo in July (latest figs'), the second largest jumP in 23 years . . multifamilY buildings iose 135.690; single family units declined to a seasonally adjusted annual rate of 614,000 Building permitsremain low with 522,700 issued through JulY . . permits issued in the West were uP as builders took out permits before the strict new Ca. residential energy standards became effective.

American Forest Products Co. has merged its Stockton and Newark, Ca., distribution facilities at Stockton . . . Parr Lumber Co., Chino, Ca., is celebrating its 6th anniversary . . St oc k t an Who lesa le Lumbe r Co., Stockton, Ca., has revamPed its sales facilities, added office space and a new dispatching office

C a I ifo rnia C as cade Indust ries has moved to 7701 lTth Ave., Sacramento, Ca., to occuPY the old Black Diamond facility. . Gene Strindield Lumber qnd Building Supply Co., Eugene, Or., had an estimated $300,000 fire of unknown origin . .

Montague L. MeYer PLC and International Timber PLC, both U.K. multi-national wood firms, have agreed to merge as MeYer Internqtional PLC . EmPire Building Moterial, Clackamas, Or., is being sold to Mutual Materials of Bellcvue, Wa., bY its parent co.,Allied Equities CorP.; Lumberjack is building a new unil in Stockton, Ca.

Louisiana-Pacy'rc has phased out operations at Phoenix, Az., with Albuquerque, N.M., continuing operation. . . Wickeshas closed its Midway and Oracle Rd. operations in Tucson, Az., continuing operations at the contractor-rail yard (see related story on p.29)

Pay 'N Pak which is preParing to open a new store in Portland, 0r., has opened a combination drug and home center in Rocklin, Ca. Dismond Internationalis relocating its Broomfield, Co., store in Lafayette, Co. . Angels has closed its oldest unit, Whittier, Ca. Genstar Building Materials has closed facilities in West Sacramento and Concord, Ca....

Willis Cashway Lumber, Montebello, Ca., has celebrated 25 yrs. in business with an oPen house . Spindler Lumber Co., Holyoke, Co., is building an addition . The Miller Lumber Co., Bend, Or., is among firms protesting an overpass which will cut access to their businesses . . ' Harley Lumber Co., Denver, is purchasing land for exPansion and marking the lst anniversarY of its satellite yard in Grand Lake . Southern Colorado Lumber Co. is closing with its Blende store becoming a Santa Fe Trail Home Center . .

Mid-Pqcific Lumber Co. has moved to a distribution Yard operation in Woodland, Ca., from Sacramento, Dan Rue and Bob Reed, owners . . Southern California Prestoin CorP. celebrated moving to South Gate, Ca., from Long Beach with an open house Paramino Lumber Co. has moved to 1537 Webster St., Oakland, Ca., from San Francisco where it had been located since l9l8

Brava Lumber and Hardware is a new firm in Clayton, N.M., Carl Durbin, owner . . Stor Lumber Co., Clayton, has closed . . . Calhon Lumber Co., Simla, Co., is celebrating its lst anniversary . . . Timber Town is a new wholesale and retail lumber and home products center in Honolulu, Hi. (see p. 1l for more details)

Rex

I reckon you shouldn't place total blame for your high electric bills on the Arabs and your utility company. The Sierra Club, the Wilderness Society and other self styled "conservationists" should get a lot of the blame. They have long opposed dams, hydroelectric plants, nuclear power plants and coal f ired generators-all sources of low cost electricity.

Write your congressman.