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. 

Want to see what tax credits might be hiding in your business? Let’s start a conversation. 

The post MGO Stories: Thinking Outside the (Tax Credit) Box appeared first on MGO CPA | Tax, Audit, and Consulting Services.

Bill: Let’s start with the fun stuff first: by day, you’re an audit partner but your not-so-secret passion is your band.  Tell me about your gig earlier this week.  

Simon: We were playing at the Harp, a bar in Newport Beach. An Irish bar and pub.  

Bill: So, what kind of stuff do you all play? 

Simon: A little bit of everything — rock, classic rock, country, punk, pop, even hip hop. Yeah, we do a Nelly song. We ended up playing until 12:30 AM that night — which is late for us old folks. 

Bill: Impressive. Now, shifting gears — you work with several manufacturing clients. What are they telling you about how tariffs are now, or could potentially, impact their business? 

Simon: Honestly, it’s one of the biggest disruptors they’re facing. Tariffs throw a wrench in long-term planning. A lot of clients had diversified out of China, moving production to countries like Vietnam, Cambodia, or Bangladesh… only to get hit with new tariffs there, too. It makes supply chain strategy feel like a moving target. One of my apparel y clients was doing great shifting manufacturing across countries. But now their strategy’s wiped. They might not make it through the year.  

Bill: That’s brutal. So, you’re telling me it’s not just a China issue anymore? 

Simon: Exactly. Tariffs have become a much broader, more unpredictable challenge. One apparel client had a solid multi-country sourcing strategy, but when U.S. tariffs expanded beyond China, their margins collapsed. They went from thriving to barely surviving, just like that. 

Bill: That’s rough. How do you advise clients to respond 

Simon: There’s no silver bullet, but flexibility, nimbleness, is key. We’re encouraging clients to build sourcing redundancy. Think “China-plus-one” or “China-plus-two.” It’s also about monitoring policy shifts closely, so they’re not blindsided. We help them plan for every scenario and understand where their risks are concentrated. But as with most things, uncertainty is the biggest challenge. Companies don’t know when or where tariffs will hit, so planning can become almost impossible.  

Bill: Are there clients that are weathering this well? 

Simon: The ones who’ve invested in agility — like tech-enabled supply chains, diverse vendors, adaptable logistics — they’re more resilient. But even they’re feeling the pressure. Tariffs are just one part of a much larger uncertainty picture, and you’ve got to stay sharp. 

In today’s volatile global trade environment, manufacturers need more than a Plan B. Let’s talk about how MGO can help you stay agile, mitigate risk, and drive growth. 

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Bill: You once told me that persistence and resilience are themes for you. How have these themes carried over into your professional life, in the work that you do with your clients? 

Cesar: I’ve always believed that if you’re resilient and persistent, you achieve better fruits in the future. That applies directly to our professional role. Audit engagements, especially with public company clients, can be very difficult to get comfortable with from another perspective. But if we stay persistent, we can deliver results, meet deadlines, and get to the finish line. 

Bill: Let’s talk about how that relates to cannabis. When resilient companies in that space try to raise capital, what are some of the challenges you see? 

Cesar: Investors are cautious. When cannabis companies issue debt, investors often want more than just a high interest rate — they want warrants on top of that. But warrants come with complications. If holders have anti-dilution rights, then when the company raises more capital, those warrants can’t be diluted. That creates liabilities. We understand the derivative activity that results from these structures and how to address them from an accounting standpoint.  

Bill: Beyond financing, many cannabis companies are also growing quickly through acquisitions. They obviously have to be persistent, but what issues come up there?  

Cesar: Smaller operators often start with one or two dispensaries or a single greenhouse and then expand rapidly to 20 or more locations. That triggers business acquisitions. The question is…how do you account for those transactions? Do you observe inventory on day one? Some firms skip that, and it becomes a finding. We focus on doing things right every step of the way. 

Bill: You’ve also worked on some very complex biotech audits, including situations where larger firms struggled. Can you share one of those experiences? 

Cesar: Sure. We were referred to a situation with a larger biotech company that had been audited by a Big Four firm. The Big Four couldn’t trust management on certain foreign transactions. Every question went up to their national office, and it dragged on for weeks. Quarterly reviews stalled, the prior year audit wasn’t completed, and the current year audit was at risk. 

We came in and approached things differently. Instead of sending information up the chain, we sat down with management — CEO, CFO —and made phone calls in front of them, validated the information directly, and often resolved issues the same day. We pulled in legal, transactions, and accounting teams, connected the dots, and identified where the real issue was. 

Over three to four months, thousands of hours, we caught up on quarterly reviews, delivered the prior year audit, and positioned the company for the current year audit. We presented our findings to the audit committee, including material weaknesses and deficiencies, but we got to the finish line. And we did it without shying away from tough conversations. All while still keeping the audit on track. 

Bill: That’s exactly what stands out, Cesar. Whether it’s cannabis companies navigating capital raises and acquisitions, or biotech firms dealing with high-stakes audits, you and your team get results. 

In cannabis and biotech alike, persistence, technical depth, and a hands-on approach make the difference between stalled progress and a successful outcome. At MGO, we combine resilience with practical execution to help clients navigate complexity and move forward with confidence. Contact us to learn more.  

The post MGO Stories: From Cannabis Capital to Complex Biotech Audits appeared first on MGO CPA | Tax, Audit, and Consulting Services.