Critical Capital Mass

A worksheet to determine how much in unnecessary income taxes you are paying

This spreadsheet is most helpful to business owners who have control of their 401(k)/Profit Sharing/Defined Benefit plan(s) or business owners who use or can use captive insurance companies (both qualified plans and CICs help business owners significantly reduce their annual income tax liabilities).

Critical Capital Mass (CCM) The “Loss” Test

A worksheet to determine how much in unnecessary income taxes you are paying

  1. Estimate your annual living expenses (food, clothing, travel, entertainment, automobile, rent, college funding, mortgage (with your mortgage calculate the after tax costs due to the income tax deduction on your personal taxes), etc…

Living Expenses (after tax) $ _______________  (a)

  1. Divide your annual living costs by sixty percent (.6) to calculate how much taxable income you need to take home each month to pay your living expenses.

Living Expenses (a)$ ____________ ÷ .6 = $ ______________ (b)

  1. Estimate your “net” practice or business income after all expenses (do not deduct your personal income (this number should be your take home income before income taxes or matching payroll taxes)).  $ _______________ (c)
  1. Calculate your total pre-tax income.

Pre-tax income from medical practice (c) $ ___________

Any outside pre-tax income (rents, speaking fees) $ ____________

Spouse’s pre-tax income $ ______________

Total pre-tax income (add the above three) $ _______________

(d)

  1. Subtract living expenses from pre-tax income

Total annual pre-tax income (d) $ _______________

Minus annual living expenses (b) $ ___________

“Surplus” pre-tax earnings $  (e) _____________

  1. Multiply “surplus” pre-tax income times 40% to calculate estimated annual losses to unnecessary income taxes.

$ (e) X 40% = $ _______________

 

Scroll to Top