Core Financial™ offers a wide variety of customized services to our small business and personal planning clients. To get a better idea of what we can do to help you and your business we have listed a few case studies that illustrate the diversity and sophistication of our strategies.

  • XYZ COMPANY– An online advertising company

    • Annual Revenue: $22 million
    • Net Income: $1.8 million
    • Number of Employees: 40
    • Owners: Two Partners both married in their 30’s;
    • Founded: 2003
    • Corporate Structure: C Corporation

    Their Story:

    The owners of XYZ Company were in the midst of selling their company when they were first introduced to Core Financial. Referred by another client, they were looking for help reducing their tax liability and managing their personal assets. When their sale fell through–due to the failure of the other party to pay the final installment–the partners re-acquired their company. At that point, they hired us to help with their corporate planning and in less than one year, they have substantially increased revenue and net income, reduced their taxes and are well on their way to achieving their personal financial goals.

    Challenge… Limited Cash Flow:

    XYZ Company buys and sells digital ad space. When we met them their business was booming, but they were running into some liquidity issues. Since they purchased their ad space 60-90 days before it was actually paid for by their customers, net income figures were high—showing significant profitability—but there was limited cash on the balance sheet. For a company attempting to grow at a rapid pace, cash was a key component in their continued success.

    Solution… $2.5 Million Dollar Line of Credit:

    With the credit markets practically frozen in late 2010, banks were not readily lending money even to thriving companies. XYZ Company had previously attempted to secure a credit line on their own but had not succeeded. Using our expertise, we worked diligently to position their company and package their financials in order to present an attractive proposition to potential lenders. We then introduced them to a bank in our extensive network and were able to secure them a $2.5 million dollar line of credit. With this new surge in cash flow they have since been able to grow their business at a much faster rate than before—substantially increasing revenue and net income.

    Challenge… Significant Tax Liability

    With 1.8 million dollars in net income the business owners had considerable tax obligations and no real plan in place.

    Solution… Created a $850k + Tax Deduction

    We advised the partners to use a portion of their credit line to creatively fund a set of new accounts. That enabled them to borrow funds at a rate of below 4% and benefit from a very substantial tax deduction. In 2010, they saved over $387,000 in income taxes alone. However, the REAL savings comes from the fact that they took the deduction at their ordinary income tax rate of 35% and will pay only 15% capital gains tax on all future distributions.

    Challenge… Lack of Personal Planning

    Prior to working with Core, neither partner had worked with a financial planner to maximize their personal wealth or strategically manage their assets. With installments coming in from their planned sale they needed guidance. One partner was looking to buy a home and the other was in the midst of building a new home.

    Solution: Comprehensive Plans Solve Partners’ Unique Needs, Protecting Future Estates

    We negotiated a real estate loan on one partner’s behalf helping him determine how much he could afford to spend on a home purchase. The other partner was facing a slightly different challenge. Counting on the payments from the company’s immaterialized sale, he had exhausted his funds in the process of trying to construct his new home. We worked to convince a bank of his credit-worthiness and enabling him to obtain a construction loan to complete his home. In addition, we have helped both partners put an estate plan in place to protect their personal assets and their families for the long-term.

    Looking Forward:

    We are currently working with XYZ Company to help them design a buy/sell agreement. Again, we set up a sophisticated strategy, which allows them to take advantage of their corporate structure to save money. In order to purchase the insurance they need to fund the buy/sell agreement, they will borrow money from their C corporation (the C Corp is taxed at a rate of only 15%) and use those funds to purchase the insurance instead of using their own after-tax dollars. The buy/sell agreement will protect the future of their business and they will have created it using dollars taxed at the lowest rate.

    Here’s how to contact us.


    Troubled by a potential $4,000,000 estate tax liability, nebulous corporate responsibilities, and substantial – nearly $1,200,000 – income taxes, this family owned and operated chain of restaurants turned to Core Financial for guidance. CLICK TO EXPAND.

    • Annual Revenue: $30 million
    • Net Income: $3.0 million
    • Number of Employees: 300
    • Owners: 6 Partners (all family members)
    • Founded: 1973
    • Corporate Structure: Multiple Entities

    Their Story:

    The owners of this restaurant chain were first introduced to Core Financial in 1997 by their estate attorney who determined they needed more advanced strategies to manage their increasing net worth.  What had begun as a mom and pop-run restaurant had turned into a successful multiple location business. However, the owners did not realize all of the liabilities that their success had created. Also, at the time, the patriarch of the family was facing major health issues and there was no succession plan in place. The family faced a lot of uncertainty about the future of their business, which had taken so many years to build. We shepherded them through several strategic changes that not only ended up saving them millions of dollars, but also set up the business for a strong, sustainable future.

    Challenge: Crippling $4 Million Estate Tax Liability

    In 1997, the father of the family was facing major health issues and estate planning became an urgent matter. Though the family’s four adult children worked in the business, the parents wanted to maintain full control of the operations. The business itself was worth approximately $10 million. At that time, the unified credit for each parent was only $600,000 and, therefore, the family’s taxable estate was valued at $8.8 million. With estate tax rates at 55%, they would have been left owing the IRS approximately $4 million dollars! Since the majority of the family’s wealth was relatively illiquid, taxes of this magnitude would have forced the children to sell some or all of the restaurants in a fire sale.

    Solution: Tax-Free Wealth Transfer

    Our primary goal was to create a tax-free transfer of wealth to the children upon their parents’ future passing. We had to take several strategic steps in order to achieve that goal. First, we converted their S Corporation to a Limited Liability Company, which allowed us to create two segments of ownership: General and Limited Membership Units. General Members maintain operational control while Limited Members have no controlling interest. Next, we created a 10-year GRAT (Grantor Retained Annuity Trust), where we utilized the parents’ collective $1.2 million estate/gift tax exclusion to gift limited membership units to the children. The parents still maintained control of the business through their general membership units. We then developed an annual gifting plan, whereby each parent gifted $10,000 (Max IRS Limit in 1997) to each of the 4 children, thus disposing of $80,000 per annum over a 10-year period. These gifts were directed to an Irrevocable Life Insurance Trust (ILIT), which would create a tax-free transfer of wealth upon the passing of the parents. Today, the parents own only 1% of the business yet maintain complete control of the operations and the children are well-positioned to take full charge of the business at the appropriate time, without being forced to fire sale any of the company’s assets.

    This strategy has had a significant secondary benefit as well. The IRS views a business with multiple ownership interests as worth less than a business where one individual owns 100% of the business; the business is considered to have “limited marketability” and is therefore appraised at a lower value. Now that ownership of the business is split among several family members, it is valued at 30% less than it would have been under one owner. Since 1997, the value of the business has grown from $10 million to $30 million, and as a result of the new structure we created, the majority of that growth has been sheltered from future estate taxes.


    Challenge: Too Many  Cooks in the Kitchen

    As with many family businesses, none of the family members had a clearly-defined role or job description, thus creating problems with accountability and leadership.

    Solution: Delicately Provided Objective Solutions

    We stepped in and functioned as part-time CFO to help the family objectively determine the best course of action with regard to future roles and infrastructure. We interviewed all key employees and partners to obtain objective information, helping the family members understand their strengths and weaknesses and clarifying their positions and responsibilities within the business. In addition, we performed personal planning for all of the partners which enabled us to better understand the family dynamics and ensure that all of them are able to achieve their personal and professional goals. This included working with attorneys to establish living trusts, structuring other business ventures and performing personal tax and wealth management strategies.

    Challenge: $1.2 Million Income Tax Liability

    With $3 million dollars in net income, the owners had considerable income tax exposure.

    Solution: Maximized Corporate Structure to Substantially Decrease Income Taxes

    Our strategy was to create a tax-deductible pension plan that would lower their income tax liability. Since pension plans can be cost-prohibitive if contributions to employees are required, once again, our solution required several steps. It was our intent to identify a revenue stream that did not necessarily require the efforts of employees currently on the payroll. Through our discovery process, we realized that our client generated relatively significant revenue via their catering business, which coincidentally did not require contributions of current employees. All catering was handled by the partners of the organization. We also learned that the family purchased and developed the land for each restaurant. With this knowledge, we created a new C Corporation–a Catering and Property Management Company–in which the owners of the organization were the only employees.  Our goal was to direct all catering revenue and a reasonable amount of net income from the other entities (via a property management fee) into this newly-established C Corporation. We then utilized this revenue to pay the owners the necessary wages to create a Defined Benefit Pension plan.  This allowed the parents and the children to make tax-deductible contributions to the plan—the parents were each able to contribute $220,000 of tax-deductible dollars. In the end, the strategy reduced the family’s income tax liabilities and allowed the parents’ future distributions to be taxed at a lower rate.

    Challenge: Protecting Family Business

    Parents were concerned about protecting their hard-earned family wealth from their children’s current and future spouses.

    Solution: Formed Tax-Efficient Structure to Protect Family Interests

    We worked with their attorney to create an entity-owned buy/sell agreement which would obligate the children’s surviving spouses to sell back his/her shares to the organization through a split dollar life insurance policy. This would allow the business to remain in the family. While achieving the goal of protecting the family business, we were also able to save the family even more money because we funded the agreement through loans from the newly-established C Corporation using discounted dollars—the first $50,000 of income in a C Corp is only taxed at a rate of 15%–instead of monies taxed at regular income tax rates.

    Looking Forward:

    We have been working with these clients for over a decade and have seen their business go through both good and bad times. We have stood by their side, guiding them to make the best decisions for their business and family. We continue to work very closely with their CPA to explore new opportunities for savings when they arise. Today, the parents have peace of mind, the business is thriving, and the children are working together as a team to perpetuate their family legacy.

    Here’s how to contact us.

  • Multi-Tenant Real Estate Owners – A married couple in their 60s that own 8 multi-tenant residential buildings.

    Working together with Core Financial, this retirement-age couple reevaluated their real estate holdings and dropped underperforming assets in favor of alternative, income-producing investments, negotiated new mortgages with historically low interest rates, and saved over $160,000 in annual income tax. CLICK TO EXPAND.

    • Annual Gross Rental Income: $1.5 million
    • Net Income: $1.0 million
    • Number of Employees: 0
    • Owners: 2
    • Date Properties Purchased: 1975-2009
    • Corporate Structure: 5 LLC’s

    Their Story:

    This retirement-age couple owned 8 multi-tenant properties when we met them. They had always considered themselves “do it yourselfers” and had not been receptive to professional advice in the past.  However, their very close friend, who had been a client of Core’s for many years, convinced them to schedule a meeting with our firm. They were searching for advice on how to better leverage their real estate in order to generate a higher level of income. They had worked hard to accumulate these assets over the years and viewed the income from their buildings as their permanent retirement income. They did not have any kids, and at their age, they did not want to be compelled to identify additional revenue sources to sustain their lifestyle.  After our initial meeting and upon obtaining financials on their properties, we informed them via a detailed engagement letter that we could add tremendous value to their case by helping them reduce their tax liabilities and increasing the return on their investments. We have since guided them through important real estate decisions and performed comprehensive personal planning. Today, they manage only 4 buildings, generate substantially more income, and live the lifestyle they so richly deserve.

    Challenge: Unrealized Net Income Potential

    The clients did not understand the true rate of return that each of their properties was generating and, therefore, they were not maximizing their income.

    Solution: Maximized Income Potential Through Education & Alternate Investment Vehicles

    After collecting their LLC tax returns and obtaining specific information about each property, we conducted a real estate analysis that illustrated the true internal rate of return (IRR) on each building. Until this point, the client had been focused on how much free cash flow each building generated.  Therefore, if a property was purchased many years ago and had little to no mortgage balance, they assumed that property was helping them achieve their goal of generating more net income.  They did not factor in the opportunity cost on their available equity, nor did they account for the age of each building, vacancy rates, lack of depreciation, etc.  The analysis gave them a very clear understanding of their IRR net of taxes on an annual basis.  Our findings surprised the client because the property that they had perceived as their “worst” asset was in fact their most valuable.

    Empowered with this new information, we were able to collectively decide which properties made sense to keep, sell, and/or exchange.  We then helped them identify alternative income-producing investments, which included the purchase of distressed commercial real estate debt at significant discounts.  As a result, their new IRR is substantially higher and their level of market risk has diminished.

    Challenge: Significant Income Tax Liability

    Due to the fact that our client owned buildings that were purchased as early as the 1970’s and as late as 2009, they were in a situation where they either had exhausted all of the depreciation they could deduct or they were taking it over a 27.5 year period.  Consequently, they were paying 35% federal and 9.3% state tax on their net income.

    Solution: Saved Over $160K in Taxes Annually

    Based on the fact that the majority of the client’s income was generated via their real estate holdings, we determined that it would be more than reasonable to convert their formerly passive income to active income for tax purposes.  We communicated our findings with their CPA who agreed with our assessment.  With that understanding, we helped them establish an S Corporation, so they could issue themselves a wage of $100,000 each from the net income generated from all of the remaining properties. Having the S Corporation also allowed us to establish a Defined Benefit Pension Plan, where each spouse is able to contribute $220,000 of tax-deductible dollars every year.  This strategy has saved them over $160,000 in income taxes on an annual basis.

    Further, we used a Cost Segregation Study on their newer buildings, which helped us clearly analyze each property and find portions that could be depreciated at a much faster rate.  This study alone saved them over $100,000 in taxes in the very first year.

    Challenge: Expiring & Expensive Mortgages

    Our client had not reviewed their debt on a regular basis and had missed substantial opportunities. In addition, some of their mortgages were due to expire in the following 2-3 years, which would force them to refinance in a potentially much higher interest rate environment.

    Solution: Decreased Interest Paid on Collective Debt, Locked-in Historically Low Interest Rates

    We analyzed the mortgages on each property and determined there was a real opportunity to decrease the current interest rates being paid, increase net cash flow, and reduce rising interest rate exposure.  Despite the credit crisis, we were able to utilize our multiple banking relationships to negotiate cross-collateralized loans for our client’s properties.  This ultimately helped them decrease the interest paid on their collective debt and allowed them to lock in historically low interest rates on all of their properties for the foreseeable future.

    Looking Forward:

    By virtue of all the changes made to their financial landscape, they are no longer concerned with income and have shifted their focus to providing value to a charitable organization that is very near and dear to their hearts.  We are currently helping them devise a more robust estate plan which will allow them to shelter some of their assets from future estate taxes for the benefit of this charity.

    Here’s how to contact us.