All posts in Tax

Craft Brewing

by cfarmand on August 15, 2012 in Beer Accounting, Brain Mojo, Brewery Accounting, Brewery CPA, Change is coming, Chris Farmand, Firm of the Future, Tax, Technology, Trash the Timesheet with 6 Comments

West Coaster’s bear with me; Midwesterners please be patient.  I know what I am about to say is SO a decade-old for yall, but here I go.  I am excited about craft brewing!!!  This industry is less than 5 years old to my wonderful city, and the momentum is not slowing. While I love beer, my excitement stems from the contribution these businesses are having on the US economy.

Two years ago I was given the awesome opportunity to help open a local brewery.  While I spend most my time in the back office, I can feel the energy.  The smells, employees, fork-lifts, tanks, patrons, all exude positive energy.  What makes craft breweries so exciting?  I came up with a few thoughts:

  1. “Love not War” – While their ingredients may be special, expensive, and exotic, I can promise you blood is not being shed over them.  It is a peaceful product which if you hang around long enough…. will make you smile.  Take that diamonds!
  2. BRIC, be gone – During the last 5 years, the U.S. has taken a slight beating from Brazil, Russia, India, and China.  I meant to say the U.S. (minus) the craft brewing industry.  Communism and slave labor can’t intrude.
  3. Ingredients – This one is my opinion; well actually; all of these are my opinion, but especially this one.  The luscious, succulent ingredients craft breweries are using don’t interest the big boys.  Why should InBev purchase breweries using expensive German hops when they can continue to sell us the watered down, rice filled, cheap crap?   Economics 101 folks: the big boys understand their space.
  4. Communities – Who doesn’t crave a little community in their life? Every time a craft brewery opens, a new community is born.  Whether you lean on the brewery for an afternoon pint or host a fundraiser in the taproom, it brings people together to help a local cause.

Craft Breweries are here to stay.  The economic development they bring to cities is awesome and communities love them.  This excitement is why I love to serve the industry.

Share

Apple Babies

by cfarmand on June 25, 2012 in Brain Mojo, Firm of the Future, Greg Kyte = badass, Jay Shepherd, Tax, Technology, Thriveal with 1 Comment

Does anyone know what happens 9 months after a new Apple device is released?  Ok, me neither but I have a theory.

Last week I had the opportunity to hang with some of the brightest minds in the Advertising, Accounting, Legal, and IT industries.  This was the first “Verasage Fellows and Friends” event since the passing of Steve Jobs, so you can imagine with a group of innovators, Apple was top of mind.  We discussed how Apple creates over $6k per sq ft in each location, compared to Tiffany’s $3k or JC Penney’s $150.  We rattled off some more amazing figures but it wasn’t until we began talking about Apple’s attention to detail that I became emotionally connected.  More specifically, the experience of opening a new Apple product.  I am torn between the beautiful box and that damn cute card that awaits me, reminding me to enjoy.  Enjoy.  Itsmagic delivered on a business card.

That’s deep folks.

I will admit when I open a Apple product, I get the goosies.  The pleasure/comfort part of my brain is firing and it feels good.  And I know I am not alone; I am not alone because Apple activates hundreds of thousands of devices a month and delivers the goosies to all those people.  Now lets take it one step further.  What if I said I believe the pleasure sensation felt from opening a new Apple product had direct correlation to sex.  Could you deny it?  Would you deny it? Just remember the feeling when you opened that iPad.  Yes, one could argue, “Chris, thats like saying a purchase from L.L. Bean could start a baby boom.”  And I would call you a bozo.  The sacred experience begins when you are holding the shrink-wrapped box.  Then comes the unwrapping, followed by the opening.  Finally your product and that damn cute card.
So yes, I believe 9 months after Apple releases a new product we experience an influx of newborns.

Did I mention my wife got a iphone yesterday, enjoy.

Share

IC Opportunities

by cfarmand on February 14, 2012 in Brain Mojo, Change is coming, CPA Fun, Engagement Agreement, Firm of the Future, IC Opportunities, Jacksonville CPA, Jason Blumer, Knowledge management, Tax, Technology, Thriveal, Trash the Timesheet with 3 Comments

I spent the last 48 hour in chilly Chicago with a group of thought leaders who command attention in the accounting arena. Jody Padar organized the first annual (maybe quarterly) IC Opportunities Event which brought together practitioners, vendors, media, marketers, state societies to discuss the direction of the profession. Greg Kyte, our resident comedian, welcomed us with a colorful keynote. Vendors in attendance included representatives from Intuit, Thomson Reuters, Wolters Kluwer, Sharra Chan of Orange Door, Jennifer Warawa of Sage, Kasey Bayne of Freshbooks, Sarah Johnson of Inovautus, Peter Wolf of Azamba Consulting, Kathleen Echeverria of bill.com, Tamera Loerzel of Convergence Coaching and Michael Redisch of Cloudsway. Our media friends were Danielle Lee of Accounting Tomorrow and Rick Telberg of CPA Trendlines. Oh, and how can I forget, Jackie Brown representing the MACPA, only the COOLEST state society in the land.

Jody started the brain dump bright and early with a discuss on “the Gap.” The four areas we focused on were Mobile, Could, Social, and Project Management. In groups, we discussed the external and internal forces that prevent firms from adopting. The discussion moved to suggestions on how the four areas could gain more traction with the traditional firms. In the afternoon Geni Whitehouse, Jason Blumer Kasey, Sharra, and Joe Manzelli moderated deeper round table talks on Social, Cloud, and Project Management.

I was honored to be invited to an event like this. I was so happy to leave the comfort of my office, during tax season, and engage my brain in the future of accounting. My take-aways from the event were; the profession is moving in a direction to offer creative services above and beyond the traditional “tax-man” services. Acceptance of cloud and mobile technology will be a must for these services to flourish.

Jody, when is the next one?

Share

Small Business Jobs Act of 2010

by cfarmand on September 24, 2010 in Gov't Help, Tax with 1 Comment

So, the word on the street is that this Small Business Jobs Act of 2010 is going to make it up to Obama’s office for his signature.  Piggy-backing on what Mr. Blumer blogged this week about the bill, I thought I would chime my two cents in.   The “Small Business Jobs Act” is a misnomer because it carries many tax provisions affecting large as well as small businesses, plus changes that affect individuals, such as eased Roth IRA rules.

Sexy:

  1. Qualifies Real Property Expensing This would be the first time that Code Sec. 179 expensing could be claimed for realty (leasehold improvements).
  2. Startup Expense Deductions Increased. For tax years beginning after Dec. 31, 2009, and before Jan. 1, 2011, the deduction for startup expenses under Code Sec. 195 would be increased from $5,000 to $10,000
  3. Five-year carryback of small business unused general business credits. The general business credit (GBC) generally can’t exceed the excess of the taxpayer’s net income tax over the greater of the taxpayer’s tentative minimum tax or 25% of so much of the taxpayer’s net regular tax liability as exceeds $25,000. Credits in excess of this limitation may be carried back one year and forward up to 20 years. Under the small business jobs bill, the carry back period for eligible small business (ESB) credits would be extended from one to five years.
  4. See Blumer’s Blog

Not so sexy, but important:

  1. 100% exclusion for gain from qualified small business (QSBS) stock. There would be a 100% exclusion of gain from the sale of QSBS stock (a) acquired after the enactment date of the small business jobs bill and before Jan. 1, 2011, and (b) held for at least five years.
  2. Information reporting for rental income. For payments made after Dec. 31, 2010, persons receiving rental income from real property would have to file information returns to IRS and to service providers reporting payments of $600 or more during the year for rental property expenses. Exceptions would be provided for individuals temporarily renting their principal residences (including active members of the military), taxpayers whose rental income doesn’t exceed an IRS-determined minimal amount, and those for whom the reporting requirement would create a hardship.
  3. Increased penalty for failure to timely file information returns. For information returns required to be filed after Dec. 31, 2010, the Code Sec. 6721 penalties for failure to timely file information returns to IRS would be increased. The first-tier penalty would go from $15 to $30, and the calendar year maximum from $75,000 to $250,000. The second-tier penalty would be increased from $30 to $60, and the calendar year maximum from $150,000 to $500,000. The third-tier penalty would be increased from $50 to $100, and the calendar year maximum from $250,000 to $1,500,000. For small business filers, the calendar year maximum would go from $25,000 to $75,000 for the first-tier penalty, from $50,000 to $200,000 for the second-tier penalty, and from $100,000 to $500,000 for the third-tier penalty. The minimum penalty for each failure due to intentional disregard would be increased from $100 to $250.
Share

COD makes me MAD

by cfarmand on August 17, 2010 in Gov't Help, Tax with No comments

sad state of America

While reading Diane Kennedy’s blog post on 1099 A&C problems I happened to nod off into a daze and dream a little dream.  In my dream I had a client, who in a six year period, had acquired a personal residence and four rental homes.  For the sake of my dream, lets say this took place between 2002 -2007.  The five properties combined cost him $260,000.  Over the six years he owned the real estate, he managed to refinance the five properties to over $500,000.  WACK!!  My head hits the desk, there is slober on my keyboard, and I am trying to figure out what happened.  This is the part where I wake up and get really angry.

All joking aside, I am working on a case with very similar facts and I am pissed off about it.  Disclaimer: I am not defending my clients actions of refi’ing at every opportunity that came along.  But the more and more I study what happened, my client was refi’ing a property on average EVERY FOUR MONTHS!!!!  WTF?????  Who were these goons preying on the financial non-savvy?  When I asked my client if he sought out the cash, he said, “they would call me.”  I would imagine this post will attract the brightest of comments toward my client, but there is one thing I would like you to remember before you call my client a $%&^()#%%.  My client is your client.  This is happening everywhere around America.  Noticed those commercials late at night, “Do you owe more than $10k to the IRS, if so call us.”  Check your client list, this does not discriminate against race, color, or class.
I think it goes without saying my client is in the process of losing all his properties.  His primary residence and one rental are gone, the rest will be out in 2010.  What’s the lesson here, I do not want to insult my readers, just needed to share.  Thanks for listening.

Chris F.

Share

Rollover as Business Start-up – ROBS

by cfarmand on May 28, 2010 in Tax with 1 Comment

As the economy struggles to get back to pre-2005 figures, I have encountered the rise of the entrepreneur.  When someone won’t hire you, hire yourself!!  One obstacle that stands in the way of potential entrepreneurs is funding.  A situation recently arose in my office where a client wanted to know if they could use their IRA money to start up a business.  After some research and speaking to the IRS, I am happy to say that it can be done.  Whether it is feasible is a case by case determination.  The funniest part of my research was when I was talking to the IRS, the agent told me to research “rollover as a business” or a ROBS transaction.  I can’t make this stuff up folks.  While the IRS makes it difficult to execute, I am convinced that the bright CPA’s of America can pull it off.  Here is a roadmap I found on a CCH website:

Progressive steps in a ROBS transaction

The following progressive steps make up a ROBS transaction:

(1) An individual establishes a shell corporation sponsoring an associated and purportedly qualified retirement plan. At this point, the corporation has no employees, assets or business operations, and may not even have a contribution to capital to create shareholder equity.

(2) The plan document provides that all participants may invest the entirety of their account balances in employer stock.

(3) The individual becomes the only employee of the shell corporation and the only participant in the plan. At this point, there is still no ownership or shareholder equity interest.

(4) The individual then executes a rollover or direct trustee-to-trustee transfer of available funds from a prior qualified plan or personal IRA into the newly-created qualified plan. These available funds may be any assets previously accumulated under the individual’s prior employer’s qualified plan, or under a conduit IRA which itself was created from these amounts. Note: Because assets have been moved from one tax-exempt accumulation vehicle to another, all assessable income or excise taxes otherwise applicable to the distribution have been avoided.

(5) The sole participant in the plan then directs investment of his or her account balance into a purchase of employer stock. The employer stock is valued to reflect the amount of plan assets that the taxpayer wishes to access.

(6) The individual then uses the transferred funds to purchase a franchise or begin some other form of business enterprise. Note: All otherwise assessable taxes on a distribution from the prior tax-deferred accumulation account are avoided.

(7) After the business is established, the plan may be amended to prohibit further investments in employer stock. This amendment may be unnecessary, because all stock is fully allocated. As a result, only the original individual benefits from this investment option. Future employees and plan participants will not be entitled to invest in employer stock.

(8) A portion of the proceeds of the stock transaction may be remitted back to the promoter, in the form of a professional fee. This may be either a direct payment from plan to promoter, or an indirect payment, where gross proceeds are transferred to the individual and some amount of his gross wealth is then returned to the promoter.


Share