Lory Kelley, CPA, Partner, was selected as one of the Triad's 40 Leaders Under 40.
Congratulations on this well-deserved honor Lory!
Lory and other team members at the Triad Business Journal's ceremony in honor of the recipients.
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Amanda Patty, JD, CPA, CVA Consultant, recently earned her CVA (Certified Valuation Analyst) designation. Amanda is our second team member to have achieved this professional distinction denoting her depth of expertise in valuations.
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Deep Roots: In business since 1947, we are honored to still work with the descendants of clients who were with us since our doors opened. Thank you allowing us to serve and advise you for over 65 years!
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 Below are some favorite shortcuts Marsha Kunz, Director of Human Resources, uses in Outlook.
- Print multiple emails at once. Print a group of email messages all at once by selecting multiple emails while holding down the Ctrl key and then selecting File, Print, Memo Style, Print.
- Create an Outlook task by dragging a file. Drag and drop a file from an Explorer window to the Tasks button in Outlook's Navigation Pane. A new task will open with the file attached. Fill in the remaining information, and then click Save and Close.
- Connecting email threads. To find related emails, without opening the message, right-click on it, and then on the popup menu, select Find Related, Messages in This Conversation. The Advanced Find dialog box will appear, summarizing all related emails.
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Super Foods for Super Performance: Oranges
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Like advisors, not all foods were created equally, some just deliver more...
Why They're Super Just one medium orange (think tennis ball) supplies all your daily vitamin C, which is a dynamite immunity booster and cancer fighter. And consuming vitamin C is best done in its natural form: Italian researchers also found that test subjects had greater antioxidant protection after drinking orange juice versus vitamin C-fortified water. Plus, this sweet and tangy fruit is a good source of fiber, potassium, calcium, folate, and other B vitamins.
How to Enjoy Them
The tangy taste of oranges makes a great combination with other strong flavors, such as ginger and honey. Put them on salads, or use them in marinades and sauces for meats.
-ABCNewsHealth
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| Direction and Pace of Federal Tax Reform |
 All indicators still point to slow movement on the tax reform front with not much expected to happen this year..or even in the next few years. However, House Ways and Means Chairman, Dave Camp (R-MI) recently released his vision for revamping the tax code that is worth reviewing to see an example of the types of tough choices are being considered to help bring in the amount of revenue needed to make a real difference.
The fact that the proposal itself was not heartily embraced by either party was no surprise given the current political environment and the sweeping reform suggested. However, this proposal has set a bar in an important way. It's specific, transparent fully-realized reform plan challenges others who make make grand claims of tax savings to specifically outline how they would be financed or acknowledge their willingness to add to the deficit.
As stated by Martin Sullivan, Chief Economist at Tax Analysts, in a recent article in Forbes magazine, "The Camp discussion draft has changed the tax policy landscape like no other single document in the last three decades, for two reasons. First, it has burst the bubble of all the feel-good tax reformers who have been wasting our time promoting unrealistic tax plans. The Camp plan is the ultimate reality check on tax reform. It is far more complicated and painful than marketers of tax reform have told the public to expect. It is unlikely that any realistic tax reform would be any shorter or sweeter than the Camp draft." He goes on to add "And as the reality sets in that Congress may be biting off more than it can chew in attempting major reform, it is likely that lawmakers will consider breaking tax reform into parts. Again, the first document to be consulted in any such effort will be the Camp draft." Below is a look at what changes were suggested in the proposal.
Could This Be a Glimpse Into the Future?
Tax Brackets
- Two listed tax brackets: 10% and 25% indexed to inflation. The 10% one would run up to $71,200 for couples, $35,600 for singles). Above that, 25%.
- Tax relief for filing as a head of household would be eliminated.
- A 10% surtax on high-incomers would create a 35% bracket, kicking in on modified AGI over $450,000 for couples and $400,000 for singles. [Note: Modified AGI would be AGI plus tax-exempt interest, the value of employer provided medical coverage, medical premiums for those self employed, 401(k) deferrals, tax free Social Security benefits, excluded foreign earned income and HSA contributions, less donations and any income from domestic manufacturing. Therefore, taxpayers in the 35% bracket would ultimately pay a 10% levy on many items that currently are deductible or tax free.]
Standard Deductions, Credits and Exemptions
- Standard deductions: Increase more than 75% to $22,000 for married filers and $11,000 for singles. Singles with a child could claim as much as $5,500 more.
- Child tax credits: Increase $1,500 per dependent under 18, then $500.
- Personal exemptions for filers and their dependents would be repealed.
Capital Gains and Dividends
- Capital gains and dividends: 40% exclusion for long-term gains and dividends of domestic companies. Thus, the basic tax rate on them would be 6% for folks in the 10% bracket, 15% for those in the 25% bracket and 21% for taxpayers in the 35% bracket. The 3.8% Medicare surtax would remain for upper-income taxpayers, boosting their maximum rate to as much as 24.8%.
- In addition, the 40% exclusion would not apply to gains from sales of collectibles.
- Also. the alternative minimum tax would be permanently repealed.
Additional High Wealth Taxes
- The standard deduction would phase out by $20 for each $100 of modified AGI over $517,500 for couples and $358,750 for singles. ltemizers would lose a portion of their itemized deductions, up to the equivalent amount of their standard deduction.
Itemized Deductions
- Write-off for state and local income taxes would be eliminated.
- Only property taxes incurred in business or investment activities could be deducted.
- Mortgage interest deduction: The interest deduction for those itemizing would cap at deducting the interest they pay on up to $500,000, in four $125,000 annual increment (as opposed to $1 million today) of mortgages used to buy, build or substantially renovate a primary residence and a second home,and on up to $100,000 of home equity debt.
- The deduction for interest on home equity loans would be eliminated, starting with loans taken out in the year after the bill passes.
- Deductions for charitable donations would decrease.
- Only the amount in excess of 2% of a filer's adjusted gross income would be allowed.
- In cases of donations of appreciated property, the write-off would be most likely be limited to the asset's basis.
- The percentage-of-income ceilings for very large gifts would be trimmed a bit as well. However, one easing would give filers the option of treating donations that are made between Jan. 1 and April 15 as if they had been made in the previous tax year.
- Many traditional write-offs would be eliminated: medical expenses, alimony write-offs, employee business expenses. personal casualty losses, moving expenses and fees paid for tax return preparation.
- Fringe benefits and employee achievement awards would be taxed as income.
- The exclusion for employer-provided housing would be limited to $50,000.
- Tax free flights for airline employees who sit in otherwise open seats would be eliminated.
- Tax free employer-provided parking and transit passes would be capped at $250 and $130, respectively.
- Reimbursements for bike commuters would be taxed.
Tax deductions for education
- A single tax credit would be provided for education, with a quicker phaseout. The maximum credit would remain $2,500, but it would phase out for married couples with AGI between $86,000 and $126,000 and singles with AGI from $43,000 to $63,000.
- Other education tax breaks would be repealed: the tuition and fees deduction, interest deductions on education loans, tax free EE bond interest for education costs and the exclusion for up to $5,250 of non-job-related education paid for by employers (Payments for job-related education would remain tax free.)
- Tuition reductions for employees of educational institutions and their families would be taxable income.
Tax credits reduced
- Other tax credits eliminated include the dependent care credit, the adoption credit and various credits for energy efficient home improvements, electric vehicles, hybrid cars, geothermal heat pumps and solar electric property.
- Home sale exclusion reductions: For joint return filers, the $500,000 exemption starts to phase out dollar for dollar when income tops $500,000. For singles, the phaseout of the $250,000 exemption begins at $250,000 of income. Also, the requirements to qualify for the exclusion would be tighter. Filers must have owned and used the home as their primary home for five out of the previous eight years before the sale...up from two years out of five.
IRAs
- Traditional IRAs would be frozen. No new contributions could be made to them, whether deductible or nondeductible. Instead, contributions would go to Roth IRAs. The good news is that the income restrictions on Roth contributions would be eliminated.
- Deductible 401(k) contributions would be reduced. Up to 50% of the contribution limit could be placed in a traditional 401(k). Any excess would have to go into a Roth 401(k).
- Inherited retirement accounts would have to be emptied within five years, except that life expectancy payouts would be OK for surviving spouses, the disabled or chronically ill and any folks less than 10 years younger than the account owner.
Again, this is one plan presented as an example of the hard choices that are ahead. Whatever changes ultimately occur, most everyone is in agreement that significant tax reform is necessary and must occur at some point.
- Genie Petrangeli, CPA, Senior Manager
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| Healthcare Reform Efforts: On the ACA Front |
Keeping Abreast of Affordable Care Act Changes
By Tracey Flynn Martin, CPA, Partner
Below are a few recent changes to the Affordable Care Act:
Delay in "Play or Pay"
Employers who fail to offer minimum essential coverage that provides minimum value and is affordable to its full-time employees under the ACA's employer mandate in 2014 will not be subject to a penalty. This is commonly referred to as "Play or Pay." This employer mandate applies to for-profit companies, not-for-profit organizations and government entities.
Employers within the 50-100 FTE range won't be subject to the mandate until 2016. These employers will need to certify eligibility for this transition relief. This includes certification as to their number of FTEs that they have not reduced their workforce to qualify for this transition relief and have maintained all previously-offered coverage.
Decrease in Coverage Standard for Larger Employers
The 2015 coverage standard has been lowered for larger employers. While the 100 and above full-time/FTE worker employers must still meet the mandate in 2015, to avoid penalties, they will only be required to offer coverage meeting minimum standards to 70 percent (versus the original 95 percent requirement) of full-timers, and their dependents. That threshold will go up to 95 percent in 2016 and later years.
Penalty Lowered for Large Employers Not Offering Group Health Coverage in 2015
For 2015 only, the penalty for applicable large employers offering no group health coverage to full-time employees (as long as at least one full-time employee purchases coverage on an exchange and receives a subsidy) will be $2,000 x the number of full-time employees, less the first 80 employees (as opposed to the first 30 originally proposed).
An extra year for coverage for dependents if you can show you are attempting to gain dependent coverage
The penalty imposed for applicable large employers not offering group health coverage will not apply for their dependents in 2015 if the employer can show it is taking steps to offer dependent coverage in 2016. It has also been clarified that dependents do not include foster children and step children, and that dependent coverage must continue through the last day of the month that contains the dependent's 26th birthday.
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Financial Planning Strategies
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Insurance Planning Considerations Important in Assessing Whether or Not Your Coverage is Right-Sized
By Mike Atkins, CPA, CFP, Manager
Clients often tell us they appreciate our independence in not representing products. Compensated solely for our independent advice, we do not represent or receive commissions for insurance, investment management or other financial products. As an unbiased trusted advisor to clients, we have often provided this checklist as a way for them to evaluate their risk management needs and objectives. If helpful, we would be pleased to review it with you in reference to your individual situation.
Insurance Planning Checklist
- Determine if life insurance will be included in your taxable estate and possibly subject to unnecessary estate tax.
- Consider planning for possible disability: short-term and long-term disability insurance.
- Review the insured's health situation to see if premiums can be reduced.
- Review your beneficiary designation forms. Are all decisions still appropriate?
- Determine if the amount of life insurance in force is sufficient for income replacement if the breadwinner of the family and/or nonworking spouse dies. Both events should be considered.
- Review the entire list of necessary liability insurance policies - home ownership and contents, automobile, professional liability and umbrella liability
- Determine if a Crummey power is part of the life insurance plan and if all notice requirements have been satisfied.
- Review recent premium projections to determine if current premium levels are adequate to maintain the policy for the projected remainder of life.
- Check out the financial strength rating of the insurer to make sure it is among the top performing of all insurance companies.
- Analyze the advantages of the cash value of life insurance as both an asset protection vehicle and as a category of asset exempt from the increased Medicare tax of 2013.
- Generally evaluate the liquidity needs that can be provided by different life insurance products, such as whole life insurance, term life insurance, universal life insurance, variable life insurance and survivorship (second to die) life insurance.
- Address all relevant tax rules, including the grandfathered benefits of pre-1986 policies.
- Determine if insurance is needed in a buy-sell program and evaluate the merits of a cross-ownership situation versus an entity buy-out situation.
- Determine if any business planning with life insurance will raise issues under the transfer for value rules.
- Determine if life insurance in place is owned by a C corporation that will cause problems with the corporate alternative minimum tax.
- Determine if all existing life insurance policies remain necessary and what to do with those no longer needed or desired.
- If in financial difficulty, determine what can be done to preserve their life insurance coverage.
- If acquiring a new life insurance policy to have it owned from the outset in an irrevocable trust to avoid the three-year "look back" rule, review situation.
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| REMINDER: 2014 BRC Programs - Save the dates! |
BRC Privately Held Business Forums -
[ongoing quarterly meetings]
Triad: Tues. Sept. 23, 2014 / (ongoing meetings to follow each first Tuesday of the first month of every quarter)
From family-owned businesses to entrepreneurial start-ups to mature companies in traditional industries, privately held companies today face increasingly complex challenges in the quest to grow in size and profitability. In these quarterly forums, we will be focusing on the issues most relevant to privately held businesses. Whether you attend to discern a new way of looking at a challenging issue, determine actionable ideas for ways to capture opportunities, network with others in similar situations or a myriad of other reasons, we look forward to seeing you!
BRC Not-for-Profit Board Seminars
Triad: Tues., Oct. 21, 2014
Triangle: Thurs., Oct. 23, 2014
Whether interested in maximizing your board's effectiveness through a greater understanding of financial statements or tax forms, attaining a better understanding of your fiduciary responsibilities or networking with other influential leaders on not-for-profit boards with the desire to make a difference, this program has something for you. Advising and serving over 140 not-for-profit entities, this program was client-requested and developed with client input.
BRC Financial Symposiums
Triad: Tues. Oct. 28, 2014
Triangle: Thurs., Oct. 30, 2014
This past December, we conducted full day 8 hour CPE workshops in the Triad and Triangle. Well-received, with participant ratings of 4.8/5.0 and 4.9/5.0, we plan to hit it out of the park again with knowledgeable presenters and relevant topics - delivering high value CPE.
There will be more to come on these programs... Mark your calendars and make plans to attend now! All programs above qualify for CPE credit.
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