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A conversation between MGO Tax Partner Michael Silvio and MGO Chief Revenue Officer Bill Penczak on how credits can unlock real cash for clients.
Bill Penczak: Mike, when we talk about MGO's tax strategy for clients, credits come up a lot. Why are they such a focus?
Michael Silvio: Because they're often overlooked, and they can be game changers. Credits like R&D, cost segregation, 179D, and energy incentives can mean real money in clients' pockets. We don't just file tax returns; we look for ways to reduce taxable income through proactive planning.
Bill: Let's start with R&D credits. A lot of people think they're only for high-tech companies. How do they apply more broadly?
Mike: That's a big misconception. We've helped manufacturers, food processors, even auto part designers claim R&D credits. The test is whether you're solving technical problems or improving products and processes, not whether you wear a lab coat. One of my favorite examples: two guys who started an aftermarket auto parts business landed a contract with a major automaker. We found them more than $750,000 in R&D credits over three years, and that helped keep their business alive during the 2008 downturn.
Bill: That's powerful. What about 179D? Can you break that down?
Mike: Sure. 179D is a deduction for the energy-efficient design of buildings and is available to developers, designers and builders that own these buildings. It is also available for the primary designers of government structures — think schools, libraries, hospitals. Most people assume you have to own the building, but if you're the designer, you can also qualify. We had a design-build firm that had no idea this was even an option, and we helped them secure a $250,000 deduction they wouldn't have otherwise seen. Keep in mind that under the "Big Beautiful Bill" this incentive sunsets as of June 20, 2026. Construction must begin before this date to qualify for this incentive.
Bill: And cost segregation. How does that fit in?
Mike: Cost seg accelerates depreciation for real estate owners by identifying components that can be written off faster. We do that work, which is rare for a firm our size. That means we can act quickly when clients buy or renovate a property, and we often tie it into other credit strategies to create more value.
Bill: Sounds like planning ahead is key.
Mike: Exactly, always. I was just on a call with a client who's running out of depreciation and facing big rental income. We didn't just tell them to buy another building; we connected them with passive-loss investments that offset the income legally. It's that kind of strategic, creative thinking that makes a difference.
Bill: So, these aren't just tax tricks — they're real financial tools?
Mike: 100%. And we tailor them to each client. No one-size-fits-all here. It's about understanding the business and finding opportunities others might miss.
Bill: Appreciate the insights, Mike.
Mike: Always a pleasure, Bill. Let's do it again.
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