In This Issue
News & Resources

A recent Indiana Tax Court decision could ultimately impact all Indiana companies and contractors entering into real property improvement agreements. The Indiana Tax Court has ruled against the distinction between the sales tax treatment of time and material and lump-sum contracts in Lowe's Home Centers, LLC v. Indiana Department of State Revenue (IN Tax Ct. Dec. 19, 2014).


The issue was whether Lowe's properly self-assessed and remitted use tax on construction materials used in its real property improvement contracting work. Lowe's served as general contractor on home improvement work, such as new roof and kitchen cabinet installations, where it routinely furnished customers with both construction materials (typically pulled from inventory) and labor. Relying on tax regulations promulgated in the 1980s, the Department assessed Lowe's sales tax on the retail cost of the materials it claimed should have been collected from Lowe's customers.


Read the full article here.

EVALUATING THE ESOP: IS IT RIGHT FOR YOUR COMPANY? (Paul Esche, Published in Construction Accounting and Taxation, July/ August 2014 issue.)

Succession planning is one of the most important and monumental decisions a business owner will ever go through. Many business owners who have successfully transitioned their companies would argue that it can take up to 10 years to effectively sell or transfer one's business. With generational changes and the baby boomers moving into retirement, every year more and more owners are faced with the decision of how to transition their businesses. The most common ways to transfer business ownership are typically by sale or gift to family members, sale to key employees of the company, or sale to a strategic partner or private equity group. Another business transition option gaining more and more popularity is an ESOP transaction or sale of one's business to one's employees. An ESOP (employee stock ownership plan) is an ERISA qualified retirement plan and, for this reason, has many tax advantages. According to the ESOP Association, there are currently about 10,000 ESOPs across the country, including many construction, architectural, and engineering firms.


Read the full article here.

The Internal Revenue Service (IRS) continues to remind taxpayers who receive Letter 5071C to use the website for the "fastest, easiest" way to provide the requested information (IR-2015-54) to the IRS. The IRS issues a Letter 5071C when they have stopped processing what it considers to be a suspicious return that has indications of identity theft but contains a real taxpayer's name and/ or Social Security number. The website will ask a series of questions that only the real taxpayer can answer. Because of the high-volume on the IRS toll-free numbers, the IRS-sponsored website is the safest, fastest option for taxpayers with web access.     


Tax Extenders.

Tax extenders will need to be addressed as the Tax Increase Prevention Act of 2014 merely extended the incentives through 2014. Democrats and Republicans generally agree that the research tax credit should be made permanent, but they split on things such as tradeoffs from enhancing the earned income credit (EIC) and other credits aimed at families. Extension of enhanced Code Sec. 179 expensing, as well as bonus depreciation, is also discussed frequently. 


Small Business.

In February of this year, the House passed America's Small Business Tax Relief Bill (HR 636), which would expand and make permanent enhanced Code Sec. 179 expensing. President Obama has proposed to permanently extend the 100 percent exclusion from tax by a non-corporate taxpayer for capital gains realized on the sale of qualified small business stock.    
Because Harding, Shymanski & Company, P.S.C. is committed to providing quality service to our construction, real estate, and mineral industry clients, we have selected a team of dedicated professionals to serve as your industry's consultants.  These individuals under the language and key issues unique to your industry and posses the drive and determination to help you manage your company on a proactive basis.

Harding, Shymanski & Company, P.S.C.

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Harding, Shymanski & Co. stays at the leading edge of current and upcoming legislation that might have an impact on how we do business or how we structure certain business transactions. In these times of tight credit and low margin work, we need an accounting and consulting firm that we can trust is giving us the best available advice so that we can make the right decisions to propel our company into the future.


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