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November 2016
In This Issue
Your BRC Team

We are pleased to announce the promotion of James Connolly and Genie Petrangeli to the Partner Group. As CPAs with over twenty years experience each in pubic accounting, James and Genie are proven leaders with extensive knowledge and skills to guide the growing firm.

Read more about James and Genie on our website
Tax Planning Guide
Access Bernard Robinson & Company's 2016-2017 Tax Planning Guide here!
Employee Recognition
Congratulations to Michael Corum for winning the 3rd Quarter Employee Recognition Award!

NC Sales Tax Law Changes
NC Sales & Use Tax Information for Changes Effective January 1, 2017.
Noteworthy Links
IRS Tax Calendar for Businesses & Self-Employed
How to Avoid a Refund Delay; Plan Ahead
Reminder: Employers Face New Jan. 31 W-2 Filing Deadline; Some Refunds Delayed Until Feb. 15
A Massage? Health Savings Accounts May Cover More Than You Think
Thanksgiving Meal to Gobble up Less Money This Year
Thanks & Giving
By Wade Pack, CPA, Managing Partner

As we come into the holiday season, I want to share a message of thanks and giving. 
Thanks for your business, your trust, and your friendship. Thanks for your feedback, your loyalty, and for helping us grow. And just as importantly, thanks for giving us the opportunity to serve as your trusted advisors.
That relationship is what allows us to give back so much to our communities. Giving is something we do year round at Bernard Robinson & Company (BRC). Whether it is through food and school supply drives at our offices, volunteering on special projects with local non-profits, or sponsoring other community events, our people constantly give back - and I could not be prouder of them for all that they do. Giving is most definitely a core value of our firm.
And so we reflect now and give thanks, but we also look forward.  2017 will mark Bernard Robinson & Company's 70th anniversary.  All of us at BRC know that would not have been possible without you, our valued clients.  We look forward to continuing to serve you, to grow alongside you, and to many more years of thanks and giving ahead.
On behalf of the members of our BRC family in our Greensboro, Raleigh and Winston-Salem offices, we wish you and your family a happy Thanksgiving Holiday!
Are You In Compliance with the New DOL Overtime Rules?
By Robin Redding, CPA, Manager
On May 18, 2016, the US Department of Labor released the Final Rule that raises the white collar overtime exemption threshold under the Fair Labor Standards Act (FLSA).  The Final Rule becomes effective on December 1, 2016 and is anticipated to automatically extend overtime pay eligibility to 4.2 million workers. 
The key provisions of the Final Rule are as follows:
  • Increases the standard minimum salary from $455 per week/$23,660 annually to $913 per week/$47,476 annually (this salary level had been unchanged since 2004)
  • Highly compensated employees (HCE) annual compensation increases from $100,000 to $134,004
  • Includes a provision to automatically update the salary and compensation levels every three years, beginning January 1, 2020
  • Allows up to 10% of the salary threshold for non-HCE employees to be achieved by non-discretionary bonuses, incentive pay, or commissions, provided these payments are made on at least a quarterly basis
  • No changes are made to the duties tests  
Those who may be affected by the Final Rule are salaried exempt employees making $47,476 per year or less.  Nonexempt are employees entitled to overtime pay and exempt employees are not.  For most employees, whether they are exempt or nonexempt depends on (a) how much they are paid, (b) how they are paid, and (c) what kind of work they do.    Businesses should have a plan in place for these employees, since they may become eligible for overtime pay.  Depending on current salary, role, classification of role and the number of hours worked, each employee may have a different outcome.

As this Final Rule may bring up many questions for employers, please consult a tax or payroll professional to discuss the potential impact on you.  Additionally, visit the following website to assist with compliance:
Year-end Capital Gain Planning Pitfall - Wash Sales
By James Connolly, CPA, Partner

As we approach year-end, many of our clients look for planning ideas to help minimize their 2016 tax burden.  The tried and true strategy of harvesting capital losses to offset capital gains can be very beneficial.  However, when doing so, you must keep in mind the wash sale rules in order to avoid the disallowance of the losses.

The wash sale rules can best be illustrated by example.  Suppose you inherit 100 shares of XYZ Corporation from your grandmother with a $50,000 date of death value.  That value now becomes your basis.  Five years later, the shares are only worth $10,000.  Nearing the end of 2016, you have capital gains of $45,000 and are facing a large tax liability in April 2017.  You would like to sell XYZ to offset your gains, but the stock holds sentimental value and you believe that the price will recover.  One of your golfing buddies suggests you sell the shares, realize the loss, and repurchase the shares the next day - the best of both worlds!  Unfortunately, this loss will be disallowed.

When you sell securities at a loss and then reacquire substantially identical securities within 30 days before and after the sale, the loss will be disallowed.  The disallowed loss will be added to the basis of the new shares to offset proceeds in the future, but you will receive no current benefit.

Some have tried to circumvent the wash sale rules by repurchasing the shares in their IRAs.  The IRS treats such a purchase as if the shares were reacquired in the same taxable account and still disallows the loss.  This action is punished further in that the disallowed loss cannot be added to the basis of the shares inside the IRA and is permanently lost.

If you are considering harvesting capital losses at year-end or throughout the year, be sure to consult your tax advisor to manage the timing of any potential reacquisition strategy to mitigate or avoid the above disastrous results.
Does Your Showroom Need an Uplift?
By Judy Hernandez, CPA, Manager

In December of 2015, the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) was placed into effect.  One of the provisions of the PATH Act made the requirements for Qualified Retail Improvement Property (QRI Property) permanent.  This Act also allows bonus depreciation and Section 179 to be applied to QRI Property if improvements are made after December 31, 2015.

Per IRC Section 168(e)(8), the following must be met in order for the improvements to qualify as QRI Property:
  • Must be made to the interior portion of a nonresidential building
  • Such portion is open to the general public and is used in the retail trade or business of selling tangible personal property to the general public, and
  • Such improvement is placed in service more than 3 years after the date the building was first placed in service
The following improvements do not qualify as QRI Property:
  • Enlargement of the building
  • Elevator or escalator
  • Structural component benefiting a common area
  • Internal structural framework of the building
If you are planning to make improvements to your showroom, consider the following:
  • These improvements are to be depreciated over 15 years instead of over 39 years
  • Bonus depreciation is scheduled to decrease over the next few years and then expire by December 31, 2019, according to the following table:                
Tax Years                 
Bonus Depreciation Rate

If your company has made or plans to make improvements to its showroom, please contact your tax advisor to discuss your opportunities. 

Bernard Robinson & Company, L.L.P. | (336) 294-4494 | |
1501 Highwoods Blvd, Ste 300
Greensboro, NC 27410
BRC Strategy is designed to provide information of a general nature and is not intended as a substitute for professional consultation and advice.  The opinions and interpretations expressed should not be construed or used as legal or tax advice, written or otherwise, and cannot be used for the purpose of avoiding any penalties that may be imposed under federal, state or local law.