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PROPERTY TAXES
Were the property taxes calculated correctly on your property tax bill? Could your property tax bill get reduced? Property taxes often represent a significant operating expense for businesses but opportunities to reduce the property tax bills are sometimes overlooked.
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PROPOSED CHANGES TO FEDERAL R&D CREDITS
By Diane Burek, CPA
In September, the IRS proposed taxpayer-friendly changes to Section 174 to clarify the definition of research and experimental (R&D) expenditures incurred in connection with the development of tangible property, including expenditures to develop a pilot model (i.e. prototype).
The proposed regulations would make the following five changes to the current Section 174 regulations:
- Clarification that if expenditures qualify as research and experimentation expenditures, it is irrelevant whether a resulting product is ultimately sold or used in the taxpayer's trade or business (otherwise qualifying research and development expenditures will no longer be disqualified to the subsequent sale of the resulting product).
- Clarification that the Depreciable Property Rule (which states that R&D costs that result in the creation of depreciable property are disqualified) is an application of the general definition of R&D expenditures under the current regulations and is not to be applied to exclude otherwise eligible expenditures.
- Definition of "pilot model" as any representation or model of a product that is produced to evaluate and resolve uncertainty concerning the product during the development or improvement of a product, which includes a fully functional representation or model of a product, or a component of a product.
- Costs incurred after uncertainty concerning the development or improvement of a product has been eliminated are not eligible R&D expenses for purposes of Section 174. This is consistent with the longstanding rule under the Section 41 R&D credit regulations.
- Introduction of a "shrinking-back" provision, which allows for recognizing eligible R&D expenses for the development or improvement of a component part of a larger product, even though the development of the overall product has passed the point at which uncertainties have been resolved.
The regulations are proposed to be effective for any tax year ending on or after the date they are finalized; however, taxpayers may rely on the proposed regulations until then. A public hearing has been scheduled for January 8, 2014.
To learn more about federal R&D credits and whether or not you're eligible, please contact your professional at UHY LLP in Farmington Hills 248 355 1040 or Sterling Heights 586 254 1040 or visit us on the web at www.uhy-us.com.
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CYBER SCAMS TARGETING MOBILE PHONE USERS & TRAVELERS
By Lucy Marshall, CFE
The FBI recently announced two electronic identity theft scams that are flourishing. The first scam is through your mobile phone. Smartphone users should be aware of scams that target Android operating mobile devices by infecting them with malware programs, leading to identity theft. Fraudsters trick victims to click on links with advertisements which lead them to websites that will embed malware on their device. This information-stealing malware steals personal contact details from address books and telephone numbers. Malware can be disguised as a system update and is capable of taking over the mobile device. Fraudsters are able to remotely control and monitor the device no matter where the target is located.
The following are safety tips to protect your mobile device:
- Read reviews of app developers and publishers before downloading applications.
- Review and understand the permissions you're giving when you download applications.
- Password protect your phone to secure the contents of the device.
- Obtain malware protection by looking for applications that specialize in antivirus or file integrity.
- Be aware of apps that enable geo-location that tracks the user's location anywhere. Fraudsters can use them for stalking and burglaries.
- Don't allow your device to connect to unknown wireless networks.
- Make sure to "wipe" (reset it to factory default) your device if selling or trading in to avoid leaving personal data.
- Don't click on links or download software from unknown sources.
- When using the Internet, use the same precautions as you would on your laptop or desktop computer.
The second scam is on Travelers' laptop. It's reported that fraudsters target travelers when they set up hotel Internet connections on their laptops. Specifically, when travelers run software updates on their laptops they could potentially be installing malware. The malicious malware could lead to loss of personally identifiable information (PII).
Take extra caution before updating software products through hotel Internet connections while traveling:
- Update software on your laptop before traveling. If updates are necessary while traveling, only download software directly from the software vendors' website.
- Be cautious of clicking on pop-up windows appearing to offer routine updates to legitimate software products. Check the digital certificate of any prompted update to see if corresponds to the software vendor.
- If you think you're a victim, promptly report it to the FBI's Internet Crime Complaint Center at www.IC3.gov.
For more information or questions on this topic, please contact your professional at UHY LLP in Farmington Hills 248 355 1040 or Sterling Heights 586 254 1040 or visit us on the web at www.uhy-us.com.
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CLIENTS COMPARE MEMBER FIRMS WITH BIG FOUR IN NEW UHY CAPABILITY STATEMENT
Released annually, the UHY Capability Statement illustrates how we have continued to strengthen our close working relationships with our clients locally, internationally or cross-border throughout sectors, specialisms and geographical regions - and, more importantly, it includes what our clients say about our services. This latest 2014 edition showcases some of the many clients with an international mind-set with whom we have recently worked closely - helping them to succeed and overcome the challenges of going international.
UHY CAPABILITY STATEMENT 2014
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PERSONAL PROPERTY TAX PHASE OUT
By Christopher Sislock, CPA
Subject to voter approval in August 2014 (already passed by legislature in 2012), the phase out of personal property taxes will begin in 2016. By eliminating personal property taxes on property that is 10 years old, as well as new personal property, the personal property tax will be completely eliminated by 2023. If voters approve the measure, a special assessment will be added to real property tax bills starting in 2017 to pay for essential services.
Beginning with the 2014 property tax bills, taxpayers whose commercial or industrial personal property had a combined taxable value of less than $40,000 would be exempt from personal property tax. The taxable value for purposes of the Michigan Property Tax Act will be less than the cost of the property due to the personal property tax values decreasing each year the property is owned.
The phase out would be accomplished by two new exemptions which would be effective in 2016 property tax bills. First the manufacturing personal property purchased after December 31, 2012. Second the manufacturing property that has been owned for ten years would be exempt from personal property tax. Manufacturing property purchased before 2006 will be exempt from personal property tax on the 2016 bills.
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Year Equipment Purchased and Prior Years |
Property Tax Bill Year Exempt | |
2012 |
2023 | |
2011 |
2022 | |
2010 |
2021 | |
2009 |
2020 | |
2008 |
2019 | |
2007 |
2018 | |
2006 |
2017 | |
2005 |
2016 |
For both the new property and 10 year property exemptions, all property located on an industrial parcel will be exempt if it is used more than 50% in industrial processing or certain support functions.
For more information or questions on this topic, please contact your professional at UHY LLP in Farmington Hills 248 355 1040 or Sterling Heights 586 254 1040 or visit us
on the web at www.uhy-us.com.
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PCC & FASB WORK TO SIMPLIFY VARIOUS AREAS OF GAAP FOR PRIVATE COMPANIES
By Greg McEvoy, CPA
The Private Company Council (PCC) has finalized two proposed accounting standards that would provide alternatives within US Generally Accepted Accounting Principles (GAAP) for private companies. These two standards mentioned address accounting for certain interest rate swaps and accounting for goodwill subsequent to a business combination. The proposed standards have been sent to the Financial Accounting Standards Board (FASB) for endorsement as final Accounting Standards Updates.
The first proposed alternative would permit the use of a simplified hedge approach to account for certain types of interest rate swaps when converting variable-rate borrowings to fixed-rate borrowings. This would apply to private companies other than financial institutions.
The second proposed alternative would permit private companies to elect to amortize goodwill recorded as a result of a business combination over a maximum period of ten years. This proposal would also permit these companies to apply a simplified impairment test to goodwill.
In addition, the PCC has issued two exposure drafts that simplify the accounting for identifiable intangible assets in a business combination (PCC Issue No. 13-01A) and that will permit private company lessee/lessor entities under common control leasing arrangements to elect not to consolidate the two entities if consolidation accounting would otherwise be required (PCC Issue No. 13-02). The public comment period has ended for both and the PCC will meet in November to further discuss these issues.
You can visit the PCC or FASB websites for the latest updates, or contact your UHY LLP professional in Farmington Hills 248 355 1040 or Sterling Heights 586 254 1040.
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QUARTERLY ACCOUNTING & SEC UPDATE
UHY LLP is pleased to provide you our recap of new FASB, PCAOB, SEC and other accounting-related requirements and proposals that may soon affect your company. We believe our insights will benefit you, your audit committees, CFOs and senior management.
Q3 2013: UHY LLP QUARTERLY ACCOUNTING & SEC UPDATE
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EVENTS CALENDAR
11/13 UHY LLP Annual Manufacturing Outlook
Join us either onsite at UHY's Farmington Hills office or online anywhere for Manufacturing Outlook 2014! The schedule of events is as follows:
8:30AM-9:00AM EST Registration, Breakfast and Networking
9:00AM-9:15AM EST Opening Commentary / Racing To Gain A Competitive Edge
9:15AM-9:45AM EST Global & Domestic Economic Forecast
9:45AM-10:05AM EST Mergers & Acquisitions
10:05AM-10:15AM EST Refreshment Break
10:15AM-10:45AM EST Automotive Forecast
10:45AM-11:05AM EST "Big Data" Case Study: Driving Operational Efficiency
11:05AM-11:35AM EST Capital Markets
11:35AM-11:45AM EST Interactive Discussion
CPE credit will be offered.
Pre-registration for this complimentary program is required. Breakfast will be provided. Space is limited. Multiple registrations are welcome. To RSVP contact Shannon Gnesda via email sgnesda@uhy-us.com or phone 586 843 2637. Please declare either onsite or online. Webinar instructions will be released at a later date.
12/4 UHY LLP Annual Accounting & Regulatory Update
Save the date for this year's Accounting & Regulatory Update at the MSU MEC in Troy from 8:30AM-6:00PM, with keynote L. Brooks Patterson, Oakland County Executive.
This program is geared towards CFO's, audit committee members and chairs, and others who want to learn more about the latest accounting, regulatory, legal and SEC updates. Topics and speakers will be announced shortly. CPE credit will be offered.
Pre-registration for this event is required. Breakfast, lunch and cocktail reception with hors d'oeuvres are complimentary. Space is limited. Multiple registrations are welcome. To RSVP contact Jessica Bollenberg via email jbollenberg@uhy-us.com or phone 248 204 9356. Formal invitation to follow.
12/4 UHY Advisors Annual Tax Forum
Save the date for this year's Tax Forum at the MSU MEC in Troy from 8:30AM-6:00PM, with keynote L. Brooks Patterson, Oakland County Executive.
This program will cover the latest tax laws, trends and developments impacting both individuals and businesses. Topics and speakers will be announced shortly. CPE credit will be offered.
Pre-registration for this event is required. Breakfast, lunch and cocktail reception with hors d'oeuvres are complimentary. Space is limited. Multiple registrations are welcome. To RSVP contact Shannon Gnesda via email sgnesda@uhy-us.com or phone 586 843 2637. Formal invitation to follow.
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SPECIAL ANNOUNCEMENTS
UHY Hosts Cross-Border M&A Conference in Shanghai
A forum pertaining to cross-border mergers and acquisitions in the United States was held on October 16, 2013, one day prior to the UHY Annual Members Meeting in Shanghai, China. Discussions included M&A opportunities in the US market, what business owners should know from both a China and US perspective including laws, financing, due diligence and tax planning, and post- m&a success stories.
Bill Kingsley, a partner with UHY LLP and Melanie Chen, a managing director of UHY Advisors NY, Inc., co-presented on financial due diligence and tax planning. Michael Mahoney, Chief Executive Officer of UHY Advisors NY, Inc. gave the closing remarks. In addition, UHY collaborated with several Chinese and US commercial banks and law firms who also participated.
The conference was a great success with over 100 attendees and covered numerous transaction topics from knowledgeable presenters. The local Michigan offices are planning to host similar forums here in the States.
As the US remains a primary destination for Chinese companies to access capital, technology and matured markets, UHY LLP's China Group helps clients navigate complex cross-border challenges. The firm's China Group consists of professionals with cultural, educational, and business backgrounds in both the US and Greater China Region. Many of the members have received advanced degrees in multiple countries, and regularly travel to the Greater China Region. As one of the nation's largest professional services firms, we provide customized accounting, tax and business advisory services for entities seeking to originate, pursue, or expand business opportunities in the US, China and beyond.
UHY Advisors MI, Inc. Recognized as One of the "Best & Brightest Companies To Work For" for the Tenth Consecutive Year
Top talent in Michigan is becoming a limited resource. Companies that want to succeed in this economy are dedicated to their employees and best practices in human resources. Only 101 companies that have demonstrated exceptional commitment will be honored by the Michigan Business and Professional Association (MBPA) and named "Metropolitan Detroit's 101 Best and Brightest Companies to Work For™."
The 101 winners were celebrated at a luncheon on Wednesday, October 30 at the Henry Hotel located at 300 Town Center Drive in Dearborn. The winning 101 companies also competed for 12 elite awards; the winners of the awards were announced at the luncheon.
"The selection, recognition and awarding of this year's 101 companies allows our organization to showcase their best practices. The honorees have clearly demonstrated why each of them would be an ideal place for employees to work. Companies that capitalize on their greatest resource-their employees-know how to attract and retain top talent," said Jennifer Kluge, MBPA president.
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Published by UHY LLP News.
Copyright � 2013 UHY LLP. All rights reserved.
Our firm provides the information in this newsletter as tax information and general business or economic information or analysis for educational purposes, and none of the information contained herein is intended to serve as a solicitation of any service or product. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisors. Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
UHY Advisors, Inc. provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of "UHY Advisors." UHY Advisors, Inc. and its subsidiary entities are not licensed CPA firms. UHY LLP is a licensed independent CPA firm that performs attest services in an alternative practice structure with UHY Advisors, Inc. and its subsidiary entities. UHY Advisors, Inc. and UHY LLP are U.S. members of Urbach Hacker Young International Limited, a UK company, and form part of the international UHY network of legally independent accounting and consulting firms. "UHY" is the brand name for the UHY international network. Any services described herein are provided by UHY Advisors and/or UHY LLP (as the case may be) and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members.
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