Fall 2013 Newsletter
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"There is a harmony in autumn, and a luster in its sky...."
FGMC is enjoying its own harmony as autumn greets us - a dynamic, committed and enthusiastic kind of harmony that melds together the passion of the practice of law with the spirit of collaboration. As the Fall brings new colors and fresh harvests, FGMC has experienced its own kind of harvest over these past few months - a harvesting of new faces, new talent and new projects all designed to better serve our clients. As we prepare for year-end, we are proud of our fantastic "crop":
- FGMC's litigation department, which continues to broaden their scope and proudly welcomes Melanie MacWilliams-Brooks, who joins us after serving as a pro bono Law Clerk to the Honorable Christine M. Arguello of the U.S. District Court for the District of Colorado and will work in the commercial litigation and construction defect practice.
- As the Colorado real estate climate continues to strengthen, so too does FGMC's real estate department who has welcomed Elizabeth Peros. Elizabeth brings with her a passion for being an attorney along with a strong knowledge of the law that drives her to work zealously on behalf of her client's needs to help ensure their pathway to success is paved with the rights and fairness that the laws are meant to ensure.
- And weathering all economic climates, our Family Law department which continues to thrive and expand its bandwidth which, in addition to litigation services, is now offering unbundled consultation services and mediation services.
We hope you will contact us should your legal needs "fall" under one of FGMC's diverse practice areas. As we relish in the last few days of this year's Indian summer, all of the attorneys at FGMC wish you a happy and safe autumn!
--Jennifer G. Feingold, Partner
* Senior Counsel Dan Garfield moderated a panel on "Crisis Management: It's About a Lot More than the Money" at the Turnaround Management Association's Western Regional Conference in Dana Point, California, in July. Dan represents individuals and businesses in a variety of matters, from formation through exit, including mergers and acquisitions, debt and equity financing, contract negotiation and drafting, corporate governance, and financial distress.
* Of Counsel Evan Husney and Elliott Husney are hosting a workshop for the Society of Physician Entrepreneurs (SoPE), Colorado Chapter, titled, "Basics of Biobusiness Law" on October 18, 2013. This half day seminar is designed to familiarize attendees with some basic concepts in biobusiness law, including: Entity formation, recent updates in SEC regulations concerning raising private money, term sheets, what you should know about granting and receiving options, how to raise private money and governance and Board of Directors Issues.
* Several of FGMC's attorneys have been included in the 20th Edition of The Best Lawyers in America
. Congratulations to Jennifer Feingold
for her work in the practice area of Family Law and Gary Lozow
for his work in the practice area of Criminal Defense: Non-White Collar and Criminal Defense: White-Collar.
* Steven Weiser spoke at the Colorado Business Law Institute on October 17, 2013 on the topic of international taxation. Please let us know if you would like a copy of Steven's materials. Steven has also edited two chapters on taxation (on post-mortem tax planning and income taxation of estates and trusts) in the upcoming edition of Wade/Parks, Colorado Law of Wills, Trusts, and Fiduciary Administration.
* Brian Proffitt recently conducted the roundtable discussion "Legalized Marijuana: What Does It Mean For My Business?" at the 8th Annual National Association Of Licensing and Compliance Professionals (NALCP) conference in Savannah, GA. FGMC was a Super Premium Sponsor of the conference. Brian represents numerous local and national establishments for their liquor licensing needs throughout Colorado and Wyoming.
Time For Your (legal) Checkup
By Evan J. Husney and Elliott R. Husney
In a perfect world, your business would have unlimited access to legal counsel from the beginning. Understandably, most small and growing businesses do not prioritize and receive the legal support they need until there are problems or an event requiring a lawyer has materialized. As a result, many businesses miss the opportunity to avoid legal exposure, additional expenses and headaches, and end up dealing with major problems that could have been sidestepped with proper legal assistance at the outset. More importantly, neglecting your company's legal needs can also negatively affect the value of your business when it is time to exit, cause costly delays, or, in some cases, kill a deal altogether.
In an effort to help clients understand their legal health, I am offering a comprehensive "checkup." This would include interviews with key personnel, review of appropriate documentation and the delivery of a report with findings and recommendations about how we might work together to make improvements.
Listed below are some of the areas which often need attention:
- Corporate records, filings and registrations - are your entity and ownership documents complete, organized and current?
- Relationships among the business owners - is this clearly documented and understood?
- Employment matters - are your employees and contractors categorized properly, treated properly and have they signed typical invention assignment, confidentiality and non-compete agreements?
- Contracts used by the business - have they been reviewed? Do they maximize the growth potential for the company and sufficiently protect the company?
- Intellectual Property created or owned by the business - is there protectable intellectual property and, if so, is it protected?
- Insurance and risk management - does the business have adequate insurance and policies in place to mitigate risk?
- Regulatory compliance - is the business compliant with regulatory requirement.
Having worked in large law firms for 9 years, as General Counsel for three different companies and as a co-founder of a start-up, I have a deep understanding of the business legal landscape and have developed a practical, business-minded approach to advising clients. What I have seen time and time again is that taking a proactive approach to legal compliance pays huge dividends down the road and helps businesses and their owners avoid costly, time consuming and sometimes fatal errors. Making sure your legal house is in order is also a necessity if you plan to sell your business and playing catch up in the middle of a due diligence effort will, at a minimum cost you time and money and, in some cases, spoil the deal. Please contact me at the number or email listed above for more information or to schedule a meeting.
Please click on this link for the full article and some of the areas which often need the most a
Qualified Mortgage - The New Mortgage Standard
by Elizabeth J. Peros
You can expect to hear a lot more about "Qualified Mortgages" in 2014 because it is likely to become the new standard in mortgage lending. The Consumer Financial Protection Bureau has created a new category of loans, Qualified Mortgages, which will apply to most mortgage loans and will become effective January 10, 2014.
Under the new rules, the lender will have to determine that the borrower has the ability to repay the loan. The lender will generally have to consider eight types of information:
- Current income or assets.
- Current employment status.
- Credit history.
- Monthly payment for the mortgage.
- Monthly payment on other mortgage related loans.
- Monthly payment for other mortgage related expenses such as property taxes.
- Other debts, including student loans and child support.
- Monthly debt payments, including the mortgage, and an analysis of how much money the borrower will retain after paying all debts.
In addition to these considerations the most important factor in a Qualified Mortgage is that the rules impose a debt-to-income ratio of 43 percent. This means that a borrower cannot spend more than 43 percent of their monthly income paying debts, including mortgages, credit cards and child support.
Furthermore, a Qualified Mortgage cannot have the following loan features:
- An interest-only period.
- Negative amortization.
- Balloon payments - although balloon payments may be allowed in certain circumstances.
- Loan terms that are longer than 30 years.
While the impact of the new mortgage rules is uncertain, mortgage lenders, real estate trade groups and research firms predict that the rules under a Qualified Mortgage will make borrowing more difficult for many individuals. The Consumer Financial Protection Bureau acknowledges that under the new Qualified Mortgage rule, lenders will have to reject more mortgage applicants than before but believes that the total number of those rejected will only grow by 10 percent. The Consumer Financial Protection Bureau also admits that there are many instances in which a borrower can afford a debt-to-income loan above 43 percent but may not qualify under a Qualified Mortgage. However, private research firms indicate that between 10 percent to 50 percent of borrowers who now qualify for a mortgage loan will lose out and many of those borrowers are very qualified borrowers. Those likely to find borrowing more difficult will be:
- First time homebuyers, especially those with student loans.
- Those who lost jobs in the recession or who have had career disruptions in the last five years.
- People who live in high-priced housing markets or places hit hard by the collapse.
- Small businesses or independent contractors whose income fluctuates.
- Retirees with adequate savings but due to lack of income will make borrowing more difficult.
What can you do if you find that you are a home buyer in one of the groups who will likely have a difficult time borrowing due to the new mortgage requirements? Keep saving your money and build up a large down payment. The greater your down payment, the lesser the amount borrowed will be, and you will have a lower debt-to-income ratio. In addition, consider buying a smaller and less expensive home. It may not be the home you previously envisioned purchasing but you will build equity in your own property instead of your landlord's.
2013 Year-End Tax Planning
by Steven M. Weiser, Esq.
2013 presents some interesting tax planning challenges for taxpayers. Higher income tax rates apply to individuals for ordinary income, capital gains and dividends as compared to recent years. Additionally, a 0.9% tax on wages and self employment income as well as a complicated 3.8% surtax on net investment income apply.
There are some tax breaks scheduled to expire that will not be around next year unless Congress takes action. These include the option to deduct state and local sales and use taxes (instead of income taxes), an above-the-line deduction for qualified higher education expenses, tax-free distributions from IRAs for charitable purposes (available to those age 70 or older), 50% bonus depreciation for new machinery, equipment and software, an exceptionally high ($500,000) section 179 expensing limitation, and a 15-year write-off for qualified leasehold improvements, restaurant buildings and improvements and qualified retain improvements, just to name a few.
The new 0.9% Medicare tax may require some action on the part of employers. The tax applies to individuals receiving wages in excess of $200,000 ($250,000 for joint filers), which means employers should take a close look to ensure they have been withholding tax, and self-employed persons need to make sure the tax is taken into account when computing estimated tax payments.
Here are some additional items to consider as the year comes to a close:
- Examine your flexible spending account elections for 2013 and consider whether you need to modify your elections for 2014. Also, make sure you have submitted documentation for all of your eligible reimbursement requests.
- If you have a health savings account (HSA) make sure to get your contributions in before year end.
- Realize losses on investments in securities to offset some of your taxable income or capital gains.
- Of course it is always nice if you can postpone income to 2014 and accelerate deductions to 2013. However, you should always consider what your effective tax rates will be for each year so be careful.
- If you converted assets from a traditional IRA to a Roth IRA and the assets have declined in value, you may wind up having to pay a higher tax on the conversion than is necessary. You can back out of the transaction and later reconvert to a Roth IRA.
- If you are expecting a 2013 bonus from your employer, you may want to arrange to defer payment of that bonus to 2014.
- Consider using a credit card to prepay expenses that can generate tax deductions (but please be sure that you can pay that balance off in 2014!).
- If it is looking like your estimated tax payments were too small in 2013 and you may be facing a penalty, consider taking an eligible rollover distribution from a qualified retirement plan in 2013. Income tax will be withheld on the distribution and will be treated as if paid pro rata over the full 2013 (to reduce any underpayments of estimated tax and lessen or eliminate penalties). A timely rollover of that distribution (as increased by the withheld tax) to a traditional IRA will avoid income taxes and penalties on the distribution.
- If you are a homeowner, consider making energy saving improvements that can qualify for a tax credit (if installed prior to 2014).
- For estate and gift tax planning purposes, make sure to take advantage of the gift tax annual exclusion of $14,000 in 2013. You can make these $14,000 gifts to as many donees as you like.
- For businesses, if a large expenditure for depreciable assets is being considered, 2013 might be an excellent time to get this done to claim a large section 179 tax deduction. Additionally, you may qualify for the 50% bonus first year depreciation.
- If you are self-employed consider setting up a retirement plan to defer taxation on some income that you set aside.
This list is by no means all-inclusive. If you would like to discuss your year-end tax planning we would love the opportunity to meet with you.
FGMC & Brian Proffitt would like to congratulate our new liquor licensed establishments:
Hurricane Grill & Wings
8025 W. Bowles Ave., Littleton, CO, 80123
Federal Bar & Grill
2544 Federal Blvd., Denver, CO, 80211
Monument Hill Country Club
18945 Pebble Beach Way, Monument, CO, 80132
Pagosa Springs Valley Golf Club
1 Pines Club Place, Pagosa Springs, CO, 81147