Year End Tax Planning Conference November 29, 2018 Todays Schedule - - PowerPoint PPT Presentation

Year End Tax Planning Conference November 29, 2018

Today’s Schedule

Introductions – Susan F. Matz, CPA TCJA Tax Reform Updates – Jonathan W. Huckabay, MST, CPA Retirement Plans for Small Businesses – Michael Agresti, CPA Charitable Giving Options – Michael Agresti, CPA Bitcoin & Cyber Currency – Mark R. Zimmerman, JD, MRED, CPA Year-End Planning - Sec 199A, Depreciation, Wages– David Myers, CPA International Tax – Yana Weaver, MST, MBA, CPA R & D Tax Credits– Ronald D. Stumpf, CPA Additional Services – Core Value – Gary Cates, CPA

TCJA Tax Reform Update

Jonathan W. Huckabay, MST, CPA Partner, LSL CPAs

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Jonathan W. Huckabay, MST, CPA –Partner, LSL CPAs

• 15 + years of tax & accounting experience
• Master’s of Science degree in Taxation
• Bachelor’s of Science degree in Business Administration
• Areas of expertise:

– Tax compliance – Consulting – Business acquisitions & dispositions – Real estate acquisitions & 1031 exchanges – Debt restructuring

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2018 Tax Cuts and Jobs Act Year End Update

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Individual Changes

• Tax rates
• Standard deduction and personal exemptions
• Expanded child tax credit
• Itemized deductions
• Alternative minimum tax
• Estate Tax

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Income Tax Rate Changes

• Simplified from 7 brackets to….

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Income Tax Rate Changes

• 7 brackets…

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Income Tax Rate Changes

Pre‐Reform 2017 Reform Act

Married Filing Jointly and Surviving Spouses:

10% (Taxable income not over $18,650) 15% (Over $18,650 but not over $75,900) 25% (Over $75,900 but not over $153,100) 28% (Over $153,100 but not over $233,350) 33% (Over $233,350 but not over $416,700) 35% (Over $416,700 but not over 470,700) 39.6% (over $470,700)

Married Filing Jointly and Surviving Spouses:

10% (Taxable income not over $19,050) 12% (Over $19,050 but not over $77,400) 22% (Over $77,400 but not over $165,000) 24% (Over $165,000 but not over $315,000) 32% (Over $315,000 but not over $400,000) 35% (Over $400,000 but not over 600,000) 37% (over $600,000)

Single Individuals:

10% (Taxable income not over $9,325) 15% (Over $9,325 but not over $37,950) 25% (Over $37,950 but not over $91,900) 28% (Over $91,900 but not over $191,650) 33% (Over $191,650 but not over $416,700) 35% (Over $416,700 but not over $444,550) 39.6% (Over $444,500)

Single Individuals:

10% (Taxable income not over $9,525) 12% (Over $9,525 but not over $38,700) 22% (Over $38,700 but not over $82,500) 24% (Over $82,500 but not over $157,500) 32% (Over $157,500 but not over $200,000) 35% (Over $200,000 but not over $500,000) 37% (Over $500,000)

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Capital Gain Tax Rate Changes

Pre‐Reform 2017 Reform Act Short‐Term Capital Gain Short‐term capital gains are taxed as

• rdinary income.

Long‐Term Capital Gain

• MFJ:
• Up to $75,900 of TI pay 0%
• $75,901 ‐ $470,700 of TI pay 15%
• $470,701 and up pay 20%
• Single:
• Up to $37,950 of TI pay 0%
• $37,951 ‐ $444,550 pay 15%
• $444,551 and up pay 20%

Short‐Term Capital Gain Short‐term capital gains are taxed as

• rdinary income.

Long‐Term Capital Gain

• MFJ:
• Up to $77,199 of TI pay 0%
• $77,200 – $478,199 of TI pay 15%
• $478,200 and up pay 20%
• Single:
• Up to $38,599 of TI pay 0%
• $38,600 ‐ $425,799 of TI pay 15%
• $425,800 and up pay 20%

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Standard Deduction and Exemptions

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Standard Deduction and Exemptions

Pre‐Reform 2017 Reform Act

Standard Deduction:

• MF ‐ $12,700
• Single ‐ $6,350

Personal Exemptions:

• $4,050 for taxpayer, spouse and each

dependent

• Phases out begins for MFJ with

AGI > $313,800 (total phaseout at $436,300) and Single with AGI > $261,500 (total phaseout at $384,000) Standard Deduction:

• MFJ ‐ $24,000
• Single ‐ $12,000

Personal Exemptions:

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Child Tax Credit

Pre‐Reform 2017 Reform Act

Child Tax Credit:

• An individual may claim a $1,000

tax credit for each qualifying child under the age of 17.

• Credit

begins to phase

• ut

at $75,000 for single filers (total phaseout at $95,000) and $110,000 for joint filers (total phaseout at $130,000). Child Tax Credit:

• The child tax credit is increased to

$2,000.

• Credit

begins to phase

• ut

at $200,000 for single taxpayers (total phaseout at $220,000), and to $400,000 for joint filers (total phaseout at $420,000).

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Pre‐Reform 2017 Reform Act

Alimony Payments Deduction:

• Alimony payments generally are allowed as

above‐the line deductions for the payor, and are included in the income of the payee. Moving Expense Deduction:

• Above

the line deduction permitted in connection with starting a new job for moves

• ver 50 miles.
• Note

‐ Qualified moving expense reimbursements provided by an employer excluded from the employee’s income Alimony Payments Deduction:

• Eliminates above‐the‐line deduction for payer
• f alimony payments and requirement of the

payee to include alimony payments into

• income. Effective for divorce / separation

agreements, etc. entered into after 2018. Moving Expense Deduction:

• Eliminated
• Note ‐ The Act suspends the exclusion

from gross income for qualified moving expense reimbursements for tax years beginning after Dec. 31, 2017, and before Jan. 1, 2026

Other Income & Deductions

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This makes things easy…you just don’t get to deduct anything… Itemized Deductions

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Itemized Deductions

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Itemized Deductions

Pre‐Reform 2017 Reform Act

Overall limitation:

• The

total amount

• f

itemized deductions is reduced by 3% of the excess over a threshold amount, ($313,800 for MFJ and $261,500 for Single). The limitation does not reduce itemized deductions by more than 80%. Overall limitation:

• The

Act suspends the

• verall

limitation on itemized deductions for tax years beginning after Dec. 31, 2017, and before Jan. 1, 2026.

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Itemized Deductions

Pre‐Reform 2017 Reform Act Mortgage Interest Deduction:

• Interest on up to $1M of acquisition

indebtedness and up to $100,000 of home equity indebtedness. State and Local Tax Deduction:

• Deduction permitted for state and local

government income and property taxes. Mortgage Interest Deduction:

• Interest on up to $750,000 of acquisition

indebtedness incurred after December 15, 2017. $1M limit remains for older debt.

• Interest on home equity indebtedness is

eliminated. State and Local Tax Deduction:

• Deduction permitted for state and local

government income and property taxes up to $10,000.

• Note – limitation does not apply to

property tax on rental properties

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Itemized Deductions

Pre‐Reform 2017 Reform Act Charitable Contributions:

• The limitation on the deduction for cash

contributions made to public charities, private

• perating

foundations, and private distributing foundations is 50%

• f AGI.
• Permitted

deduction

• f

80%

• f

contribution to University in exchange for athletic seating rights. Charitable Contributions:

• The Act increases the AGI limitation on

cash contributions from 50% to 60%, effective for contributions made in tax years beginning after 2017 and before 2026.

• Repealed

deduction

• f

80%

• f

contribution to University in exchange for athletic seating rights.

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Itemized Deductions

Pre‐Reform 2017 Reform Act Medical Expense Deduction:

• Deduction for expenses that exceed

10% of the taxpayer's adjusted gross

• income. 7.5% for taxpayers over 65.

Miscellaneous Itemized Deductions:

• Unreimbursed business expenses
• Tax preparation services deduction
• Investment management/advisor fees

Medical Expense Deduction:

• Deduction for expenses that exceed

7.5% of the taxpayer's adjusted gross

• income. Effective for calendar tax years

2017 and 2018 only. Reverts back to 10% after 2018. Miscellaneous Itemized Deductions:

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Alternative Minimum Tax

Pre‐Reform 2017 Reform Act

Exemption Amount (only AMTI above this amount is taxable):

• MFJ ‐ $84,500
• Single ‐ $54,300

Phaseout of Exemption:

• MFJ ‐ Begins at $160,900
• Single – Begins at $120,700

Exemption Amount (only AMTI above this amount is taxable):

• MFJ ‐ $109,400
• Single ‐ $70,300

Phaseout of Exemption:

• MFJ ‐ Begins at $1,000,000
• Single – Begins at $500,000

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Estate Tax

Pre‐Reform 2017 Reform Act

Unified Credit:

• $5M base ($5.49M in 2017 adjusted

for inflation) Unified Credit:

• $10M base ($11.2M in 2018

adjusted for inflation)

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Corporate and Business Changes

• Tax Rates
• Alternative Minimum Tax
• Fixed Assets and Depreciation
• Business Expenses
• Loss Limitations
• Like-Kind Exchanges
• Accounting Method Changes
• Section 199A Deduction

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Corporate and Business Changes

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Income Tax Rate Changes

Pre‐Reform 2017 Reform Act

C Corporation:

• 15% for $0‐$50,000
• 25% for $50,001‐$75,000
• 34% for $75,001‐$10,000,000
• 35% for excess of $10,000,000

Personal Service Corporation:

• 35% flat tax

C Corporation:

• 21% flat tax

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Alternative Minimum Tax

Pre‐Reform 2017 Reform Act

Corporate Alternative Minimum Tax:

• Applies

to corporations with average gross receipts equal to or in excess

• f

$7.5M

• ver

the preceding 3 tax years. Corporate Alternative Minimum Tax:

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Fixed Assets and Depreciation

Pre‐Reform 2017 Reform Act Bonus Depreciation:

• The amount of bonus depreciation is

50% of the cost of certain “qualified property” placed in service during 2017. Bonus Depreciation:

• 100% expensing for property placed in

service after Sept. 27, 2017. The percentage that may be expensed for property placed in service after Dec. 31, 2022 is slowly reduced between 2023 and the end of 2026 to 20%.

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Fixed Assets and Depreciation

Pre‐Reform 2017 Reform Act

Bonus Depreciation for Non‐residential Real Estate Improvements:

• Property

had to qualify as “qualified leasehold improvement property”, “qualified restaurant property”, and “qualified retail improvement property”. Bonus Depreciation for Non‐residential Real Estate Improvements:

• Consolidates

to “qualified improvement property”. The term means any improvement to an interior portion of a building which is nonresidential real property (does not include enlargement of building, elevator or escalator, or internal structural framework). *To qualify, property must have a recovery period of 20 years or less. An

• versight in the statute did not give

qualified improvement property 15 year life as conference reports suggested.

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Fixed Assets and Depreciation

Pre‐Reform 2017 Reform Act

Section 179 Expensing:

• Businesses may immediately expense up to

$500,000 ($510,000 for 2017) of the cost of any qualified property placed in service each tax year. If the business places in service more than $2 million ($2,030,000 for 2017)

• f §179 property in a tax year, then the

amount available for immediate expensing is reduced by the amount by which the cost of such property exceeds $2 million. Section 179 Expensing:

• Increases the amount that a taxpayer may

expense under §179 to $1,000,000. The Act also increases the phaseout threshold to $2,500,000. These amounts are indexed for inflation for tax years beginning after 2018.

• Expands

the definition

• f

qualified real property to include all qualified improvement property and certain improvements (roofs, heating, ventilation, and air‐conditioning property, fire protection and alarm systems, and security systems) made to nonresidential real property.

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Fixed Assets and Depreciation

Pre‐Reform 2017 Reform Act

Luxury Automobile Limitation:

• A taxpayer may depreciate a

maximum amount of:

• Year 1 ‐ $3,160
• Year 2 ‐ $5,100
• Year 3 ‐ $3,050
• Year 4 and after ‐ $1,875

Luxury Automobile Limitation:

• A taxpayer may depreciate a

maximum amount of:

• Year 1 ‐ $10,000
• Year 2 ‐ $16,000
• Year 3 ‐ $9,600
• Year 4 and after ‐ $5,760

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Pre‐Reform 2017 Reform Act Deduction for Income Attributable to Domestic Production Activities:

• Taxpayers may claim a deduction equal

to 9% of the lesser of the taxpayer's qualified production activities income, which is derived from property that was manufactured, produced, grown,

• r

extracted within the United States, or the taxpayer's taxable income for the tax year. Deduction for Income Attributable to Domestic Production Activities:

Business Expenses

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Business Expenses

Pre‐Reform 2017 Reform Act Interest Expense:

• Business interest is generally allowed as a

deduction.

Interest Expense:

• Limits the deduction for net interest expenses

incurred by a business to the sum of business interest income, 30%

• f

the business’s adjusted taxable income, and floor plan financing interest. Disallowed interest carried forward indefinitely.

• Automobile dealerships that use the “floor

plan financing interest” exemption are will not be eligible for bonus depreciation on qualified asset additions. IRC Section 179 will still apply.

• Businesses with average annual gross receipts
• f $25 million or less are exempt from the

limit.

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Business Expenses

Pre‐Reform 2017 Reform Act

Entertainment Expenses:

• Employers can deduct 50% of expenses

associated with entertainment, amusement,

• r recreational activities directly related to

business.

• Certain employer‐provided fringe benefits

are 100% deductible and excluded from an employees income (eg. de minimis fringes, qualified transportation fringes, and meals that are provided for the convenience of the employer). Entertainment Expenses:

• Eliminates

deduction allowed for entertainment, amusement, or recreational activities directly related to business.

• Deduction for 50% of food and beverage

expenses associated with operating a trade or business generally is retained and expanded to include expenses associated with providing food and beverages to employees for the convenience of the employer.

• Qualified transportation fringe benefits

eliminated.

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Loss Limitations

Pre‐Reform 2017 Reform Act

Net Operating Loss Deduction:

• Net operating losses may not be deducted in

the year generated.

• May be carried back two years.
• May be carried forward 20 years.

Limitation on Losses from Trades or Businesses:

• Passive losses are limited to passive income.
• Active trade or business losses limited to tax

basis in the activity. Net Operating Loss Deduction:

• Limits the NOL deductions arising in tax years

beginning after December 31, 2017 to 80%

• f taxable income.
• Eliminates carrybacks.
• Allows unused NOLs to be carried forward

indefinitely. Limitation on Losses from Trades or Businesses:

• Disallows excess business losses attributable

to trades or businesses of the taxpayer, over a threshold amount ($500,000 for married taxpayers filing jointly; $250,000 for all other taxpayers (indexed for inflation)).

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Like Kind Exchanges

Pre‐Reform 2017 Reform Act Like‐Kind Exchanges:

• No gain or loss is recognized to the extent

that property held for productive use in the taxpayer's trade

• r

business,

• r

property held for investment purposes, is exchanged for property of a like‐kind that also is held for productive use in a trade

• r business or for investment.

Property can be real or personal property. Like‐Kind Exchanges:

• The Act limits the nonrecognition of gain
• r loss to like‐kind exchanges of real

property that is not held primarily for sale.

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Accounting Methods

Pre‐Reform 2017 Reform Act Cash Method of Accounting:

• Corporations

and partnerships with corporate partners are prohibited from using the cash method of accounting unless they meet an average gross receipts of less than $5 million for the prior three taxable years.

• Qualified personal service corporations

are generally permitted to use the cash method regardless of gross receipts.

Cash Method of Accounting:

• Taxpayers with average gross receipts of

less than $25 million (indexed for inflation) for the prior three taxable years are permitted to use the cash method of accounting, regardless of entity structure

• r industry.

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Accounting Methods

Pre‐Reform 2017 Reform Act Accounting for Inventories:

• Businesses

where the production, purchase, or sale of merchandise is a material income‐producing factor must account for inventories and must also use the accrual method of accounting.

• Taxpayers with average gross receipts of

less than $10 million for the prior three taxable years may account for inventory as non‐incidental materials and supplies. Accounting for Inventories:

• Taxpayers with average gross receipts of

less than $25 million (indexed for inflation) for the prior three taxable years are exempt from the requirement to account for inventories under §471, regardless of entity structure or industry.

• Taxpayers may either treat inventories as

materials and supplies that are not incidental

• r

conform to financial accounting treatment.

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Accounting Methods

Pre‐Reform 2017 Reform Act Unicap Rules:

• Businesses

must either include in inventory or capitalize certain direct and indirect costs related to real or tangible property, whether manufactured

• r

acquired for resale.

• Businesses with less than $10 million in

average gross receipts are exempt from this requirement with respect to personal property acquired for resale. Unicap Rules:

• Taxpayers with average gross receipts of

less than $25 million (indexed for inflation) for the prior three tax years are exempt from the UNICAP rules, regardless of entity structure or industry.

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Accounting Methods

Pre‐Reform 2017 Reform Act Percentage of Completion Requirement:

• Contractors with average annual gross

receipts of $10 million or less for the three prior taxable years are classified as “small contractors” and are exempt from the requirement to use the percentage‐

• f‐completion method of accounting for

long‐term construction contracts to be completed within two years, and may instead use the completed contract method or other applicable methods. Percentage of Completion Requirement:

• Effective for contracts entered into after
• Dec. 31, 2017, the act amended §460 to

allow taxpayers with average annual gross receipts

• f

$25 million (indexed for inflation) or less for the prior three‐ taxable‐year period an exemption from the requirement to use the percentage‐of‐ completion accounting method for long‐ term construction contracts to be completed within two years, regardless of entity structure

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Qualified Business Income Deduction

There is nothing to fear…

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Qualified Business Income Deduction

Pre‐Reform 2017 Reform Act

• Businesses organized as sole proprietorships,

partnerships, limited liability companies and S corporations are generally treated as pass‐ through entities subject to tax at the individual

• wner or shareholder level rather than the

entity level.

• Taxpayers

who have domestic “qualified business income” (QBI) from a partnership, S corporation, or sole proprietorship are entitled to a deduction of the lesser of 20% of QBI or 20% of taxable income. The deduction reduces taxable income, not adjusted gross income, and eligible taxpayers are entitled to the deduction whether or not they itemize.

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Qualified Business Income Deduction

Qualified Business Income:

• The term “qualified business income” means, for any taxable year, the net

amount of qualified items of income, gain, deduction, and loss with respect to any qualified trade or business of the taxpayer. (Section 199A(c))

• Excludes investment income such as short term capital gains/losses, long

term capital gains/losses, dividends, interest etc. (Section 199(A)(c)(3))

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Qualified Business Income Deduction

Qualified Trade or Business:

• The term “qualified trade or business” means any trade or business other

than a specified service trade or business, or the trade or business of performing services as an employee. (Section 199A(d)(1))

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Qualified Business Income Deduction

Specified Service Trade or Business:

• Section

199A(d)(2) refers to section 1202(e)(3)(A) (exceptions for engineering and architecture)

• Section 1202(e)(3)(A) any trade or business involving the performance of

services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset

• f such trade or business is the reputation or skill of 1 or more of its

employees

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Qualified Business Income Deduction

Limitations:

• The deduction is generally limited to the greater of either:

a) 50% of the W-2 wages paid with respect to the qualified trade or business, or b) the sum of 25% of the W-2 wages with respect to the qualified trade or business plus 2.5%

• f

the unadjusted basis, immediately after acquisition, of all qualified property.

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Qualified Business Income Deduction

Qualified Property:

• Defined as tangible property of a character subject to depreciation
• 1. That is held by, and available for use in, the qualified trade or business

at the end of the tax year

• 2. That is used in the production of QBI, and
• 3. For which the depreciable period has not ended before the end of the

tax year

• Depreciable period is the period beginning on the date the property is first

placed in service by the taxpayer and ending on the later of

• 1. The date 10 years after that date, or
• 2. The last day of the last full year in the applicable recovery period that

would apply to the property

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Qualified Business Income Deduction

Exception to Limitation:

• Exception to the W-2 and depreciable property limitations applies to a

taxpayer with taxable income not exceeding $157,500 ($315,000 in the case of a joint return). These limitations are fully phased in for a taxpayer with taxable income in excess of the threshold amount plus $50,000 ($100,000 in the case of a joint return).

• Exception also applies to specified service businesses.

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Section 199A Proposed Regulations

Additional Guidance on Specified Service Trade or Business:

• Definition of Trade or Business (Prop. Regulation 1.199A-1)

– Must rise to the level of a section 162 trade or business other than the trade or business of performing services as an employee (NOT VERY HELPFUL!)

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Section 199A Proposed Regulations

Additional Guidance on Specified Service Trade or Business:

• Aggregation Rules (Prop. Regulation 1.199A-4)

– Allows commonly controlled businesses to aggregate activity for purposes of applying the limitations described in Proposed Regulation 1.199A-1(d)(2)(iv) (i.e. wage and/or UBIA limitation).

• Available if

– 50% or more common ownership – Must satisfy two of three factors: » Trades or businesses provide products that are similar » Trades or businesses share facilities or centralized business elements (i.e. accounting, legal, manufacturing, purchasing etc.) » Trades or businesses operate in coordination or reliance upon one another.

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Section 199A Proposed Regulations

Additional Guidance on Specified Service Trade or Business:

• De minimis rule (Prop Regulation 1.199A-5)

– Allows businesses to conduct a small amount of services in an SSTB

• Available if

– the business has gross receipts of $25 million or less in a tax year and less than 10% of gross receipts from SSTB activities, or – the business has gross receipts greater than $25 million in a tax year and less than 5% of gross receipts from SSTB activities

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Section 199A Proposed Regulations

Additional Guidance on Specified Service Trade or Business:

• Health (Prop Regulation 1.199A-5):

– Definition provided - the provision of medical services by individuals such as physicians, pharmacists, nurses, dentists, veterinarians, physical therapists, psychologists and other similar healthcare professionals.

• Does not include the operation of health clubs or health spas that provide

physical exercise or conditioning to their customers, payment processing, or the research, testing, and manufacture and/or sales of pharmaceuticals or medical devices.

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Section 199A Proposed Regulations

Additional Guidance on Specified Service Trade or Business:

• Consulting (Prop Regulation 1.199A-5):

– Definition provided - The provision of professional advice and counsel to clients to assist the client in achieving goals and solving problems – Facts and circumstances determination – If a “trade or business provides ancillary consulting services that are not separately purchased or billed, then such trades or businesses are not in a trade or business in the field of consulting.”

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Section 199A Proposed Regulations

Additional Guidance on Specified Service Trade or Business:

• Athletics (Prop Regulation 1.199A-5):

– “The performances of services by individuals who participate in athletic competition such as athletes, coaches, and team managers in sports such as baseball, basketball, football, soccer, hockey, martial arts, boxing, bowling, tennis, golf, skiing, snowboarding, track and field, billiards, and racing” – Does not include services that do not require unique skills such as the maintenance and operation of equipment or facilities used in athletics or the broadcast or other dissemination of video or audio to the public

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Section 199A Proposed Regulations

Additional Guidance on Specified Service Trade or Business:

• Financial Services (Prop Regulation 1.199A-5):

– includes managing wealth, advising clients with respect to finances, developing retirement plans, developing wealth transition plans, the provision of advisory and other similar services regarding valuations, mergers, acquisitions, dispositions, restructurings and raising financial capital by underwriting, or acting as the client’s agent in the issuance of securities, and similar services – “includes services provided by financial advisors, investment bankers, wealth planners, and retirement advisors and other similar professionals, but does not include taking deposits or making loans”

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Section 199A Proposed Regulations

Additional Guidance on Specified Service Trade or Business:

• Brokerage Services (Prop Regulation 1.199A-5):

– “services in which a person arranges transactions between a buyer and a seller with respect to securities for a commission or fee” – “includes services provided by stock brokers and other similar professionals, but does not include services provided by real estate agents and brokers, or insurance agents and brokers”

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Section 199A Proposed Regulations

Additional Guidance on Specified Service Trade or Business:

• Investing and investment management (Prop Regulation 1.199A-5):

– “a trade or business that earns fees for investment, asset management services, or investment management services including providing advice with respect to buying and selling investments;” – “include(s) a trade or business that receives either a commission, a flat fee, or an investment management fee calculated as a percentage of assets under management;” – “does not include directly managing real property.”

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Section 199A Proposed Regulations

Additional Guidance on Specified Service Trade or Business:

• Reputation or skill (Prop Regulation 1.199A-5):

– “(1) receiving income for endorsing products or services, including an individual’s distributive share of income or distributions from an RPE for which the individual provides endorsement services; – (2) licensing or receiving income for the use of an individual’s image, likeness, name, signature, voice, trademark, or any other symbols associated with the individual’s identity, including an individual’s distributive share of income or distributions from an RPE to which an individual contributes the rights to use the individual’s image; or – (3) receiving appearance fees or income (including fees or income to reality performers performing as themselves on television, social media,

• r other forums, radio, television, and other media hosts, and video

game players).”

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Section 199A Proposed Regulations

Additional Guidance on Specified Service Trade or Business:

• Rental Real Estate:

– Each rental must rise to the level of a section 162(a) trade or business (Prop Regulation 1.199A-1) – No aggregation rules provided like those in section 469 regulations for real estate professionals – Wide open for interpretation

• Some believe that anything above a triple net lease would qualify
• Some believe that taxpayers must materially participate in each

individual rental property

• Determined in future guidance or through future case law

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QUESTIONS?

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THANK YOU!

Contact information:

Jon Huckabay, MST, CPA, Partner

1611 E. Fourth Street, Suite 200 Santa Ana, CA 92701 714.569.1000 jon.huckabay@lslcpas.com www.lslcpas.com

Retirement Plans – Options for Small Businesses

Michael Agresti, MST, CPA Partner, LSL CPAs

www.lslcpas.com

Michael Agresti, CPA- Partner

• 20 years of Accounting Experience
• Masters of Science Taxation – Cal State, Fullerton (CSF)
• B.A. in Business Administration – Accounting, CSF
• Clients:

– entrepreneurs / professionals / manufacturers / high net-worth individuals

• Married with children … love to camp
• And … Major League Baseball

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SEP IRA

• Typically used for self employed individuals and entities

with the owner as the main employee

• Maximum limit on individual contribution or benefit is

25% of compensation or $55,000 for 2018

• Plan needs to be set up by the business tax filing

deadline, including extensions

• Contributions can be made for the prior year, up to the

business tax filing deadline, including extensions

www.lslcpas.com

Solo 401K

• Designed specifically for self-employed individuals
• Works similar to a regular 401K, but because funding

can come from personal compensation and business income, annual contributions can be significantly higher

• Max employee contribution for 2018 is $18,500, while

those 50 or older can contribute $24,500

• Additionally, you can contribute up to 25% of your self-

employment income, up to a max of $55,000 or $61,000 for individuals 50 or older

www.lslcpas.com

Defined Benefit Plan

• Often times are used as an add on to an existing

company safe harbor 401K plan

• Max limit on participant contribution is lesser of 100% of

compensation of the three highest consecutive years or $220,000 benefit per year

• Contribution deadline is the business’s tax-filing

deadline, including extensions

• Must be set up prior to business’s year end

Charitable Giving Options

Michael Agresti, MST, CPA Partner, LSL CPAs

www.lslcpas.com

Charitable Contributions

• The TCJA increased the AGI limit from 50% to 60% for

charitable contributions

• Applies to contributions made after December 31, 2017

and before January 1, 2026

• Any excess contributions may be carried forward for 5

years

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Gift IRA fund to charities

• A qualified charitable distribution (QCD) give individuals

at least 70 ½ years old the ability to exclude from gross income from IRA’s of up to $100,000 per year

• Must make sure that the IRA-to-charity transfer goes

directly from the IRA to the charity in order for it to be excluded from AGI

• The distribution isn’t subject to the general percentage

limitations that apply for making charitable contributions

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Donor Advised Funds

• A charitable giving vehicle wherein an individual or family

makes an irrevocable, tax deductible contribution of personal assets to a charity and at any time thereafter can recommend grant distributions to qualified charitable

• rganizations
• A less expensive and hassle free alternative to starting a

private foundation

Bitcoin & Cyber Currency

Mark R. Zimmerman, JD, MRED, CPA Director, LSL CPAs

www.lslcpas.com

Mark R. Zimmerman, JD, MRED, CPA - Director

• 30+ years of Accounting Experience
• Juris Doctor/Master of Real Estate Development - USC
• Bachelor of Arts in Business Administration – CSUF
• California Native and Self-appointed Family “Geek”

www.lslcpas.com

Bitcoin & Cyber Currency

• What is it?
• How is it taxed?
• Why does it matter to you?

www.lslcpas.com

The Short Answers:

What is it? How is it taxed? Why does it matter to you? A digital medium of exchange As property - Not as currency The underlying technology will be disruptive.

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What are Cyber Currencies?

• Bitcoin was the first. (Satoshi Nakamoto, 2008)
• Token v. Protocol
• Looks like money. Smells like money…
• Key differences:

– Not a fiat currency. (Snowden: “No men with guns.”) – Decentralization – Limited supply (21 million) – Pseudonymity – Immutability – Divisibility (100,000,000 satoshi = 1.0 Bitcoin)

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Bonus question: So, how does that work?

• Asymmetric encryption
• Blockchain
• Miners and new block bonus (mining consortiums)
• Transaction fees
• Proof of Work vs. Proof of State
• Wallets, exchanges (Coinbase, Kraken), and

marketplaces

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How is it taxed?

• IRS Notice 2014-21 states that Bitcoin is property, not currency.
• Treated as a capital asset. Normal capital gain/loss rules.
• Subject to NIIT.
• Miners have ordinary income subject to SE tax.
• After TCJA, no Section 1031 treatment.
• Not a security. So, no 1099-B.
• 1099-K currently has a high threshold. Expect it to drop.
• The IRS has successfully pursued exchange records in court.

(Coinbase, November 2017)

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How is it taxed? Page 2

• If your private keys are owned by a foreign exchange, then you must report

a foreign account. (Forms 114 and 8938.)

• Since Bitcoins are property, every transaction is really two:

a taxable sale or purchase of Bitcoins; and, the underlying transaction itself.

• Consider specialized software: Bitcoin.Tax or CoinTracking.Info.
• The IRS requires contemporaneous specific identification for property
• transactions. The AICPA would prefer FIFO. Consider HIFO or LOFO as

your situation requires.

• Coin payments may be subject to withholding in actual dollars.

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Bonus #2: Why did the IRS get interested?

• 1,700% growth in 11 ½ months during 2017.
• Prior to 2017, only about 800 returns per year reported Bitcoin gains.
• On behalf of the IRS, a private company, Chainanalysis, has already

identified about 25% of all Bitcoin owners.

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Bonus #3: Volatility from ccn.com

www.lslcpas.com

From coindesk.com:

www.lslcpas.com

Why does it matter to you?

• All digital currencies will continue to be volatile in the

near-term and there will always be existential risk.

• Being first doesn’t mean Bitcoin will be around forever.
• Bitcoin uses a lot of energy.
• Blockchain will be adopted by the financial industry.
• Blockchain will be applied where security or proof of

authenticity is desired. The cost will be privacy.

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Wrapping up

• Bitcoin is an inherently volatile digital medium of exchange.

– Bitcoin was $15,317 on 1/1/2018. – Bitcoin is under $4,000 today.

• Cyber currencies avoid some regulations and legacy costs.
• However, they add complexity and their own costs.
• And, if you know a gamer, now is finally the time to buy a new

graphics card.

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Questions?

Year End Tax Planning David Myers, CPA Partner, LSL CPAs

www.lslcpas.com

David S. Myers, CPA, MST - Partner

• 30+ years Public Accounting Experience
• Masters of Science Taxation – Golden Gate University
• Industry specialization – Auto Dealerships,

Manufacturing, Real Estate, Service

• Married to Wonderful Wife Darlene
• Deacon at Church
• Love to Travel and Camp in My 1972 Vintage Trailer

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Planning Ideas

• Itemized Deductions

– “Bunching” – Charitable deductions – Employee business expenses – Vacation rentals and second homes

• Real Estate & Depreciation

– Cost segregation – Qualified Improvement Property – Bonus depreciation – Interplay with business interest limitation

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Planning Ideas, continued

• Section 199A – Qualified Business Income Deduction

– SSTBs with significant non-service component – Using aggregation elections – Rental real estate qualification – “Solo S Corps” maximizing deduction – Partnerships and guaranteed payments – Entity Selection

• Estate Planning

– Emphasis on income tax planning

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Itemized Deductions Strategies

• Large standard deduction and elimination and capping of

many deductions highlights the need to “bunch”

– Example: SALT $10,000; Mortgage interest $10,000 and charity

• f $5,000 for MFJ couple – year 1 and year 2. Result is $25,000

itemized deductions for each year. If charitable contribution is bunched into year 2 ($10,000), then year 1 is standard deduction

• f $24K and year 2 is $30K. Total for two years is $54K instead
• f $50K.
• Charity is typically the one controllable deduction as to

timing – so use it as the “on/off” faucet

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Itemized Deduction Strategies, cont.

• Leverage charitable contribution bunching by using

donor advised funds

• Contribute appreciated property to avoid capital gain
• Use Qualified Charitable Distributions – contributing up

to $100K annually of minimum distribution from an IRA

• No reason to accelerate income or real estate tax

deduction unless below $10K limit

• Consider turning 2nd home into rental – all taxes and

interest used to acquire are deductible

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Itemized Deduction Strategies, cont.

• Employee business expenses are no longer deductible.

Outside sales people who own their own car just took a pay cut. Consider adopting an accountable plan and reimbursing for their expenses. Also consider owning the vehicle – can result in large deductions with minimal income for personal use to employee. Adjust compensation plans accordingly

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Real Estate & Depreciation

• Consider cost segregation on any new purchase of real

estate to be rented or used in a business. Bonus depreciation rules now leverage this tactic

• Does Qualified Improvement Property (QIP) qualify for

bonus? Right now no – but almost assuredly yes.

• Like kind exchange on personal property is gone but with

bonus depreciation result is better

• Business interest deduction limitation on real estate –

elect out but no bonus depreciation on QIP

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Section 199A – Qualified Business Income Deduction

• Specified Service Trades and Businesses (“SSTBs”)

cannot utilize the deduction (unless below income limits)

• Accountants, attorneys, stock brokers, health care

professionals, consultants

• Example: Dermatologist – 60% income from treatment

fees and 40% from product sales. Need to establish new entity? Since 40% is above 10% - then it won’t be considered SSTB income. Proper accounting is key!

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Section 199A – QBI Deduction, cont.

• Use of aggregation elections to group related

businesses- 50% common control and 2 of 3 integration factors are met.

– Provide products and services that are the same or are customarily provided together – Share facilities or significant business elements – Interdependence, i.e. supply chain

• SSTBs cannot be aggregated.

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Section 199A – QBI Deduction, cont.

• Example of aggregation:

– TB-A - $1 million QBI $500K wages – TB-B - $1 million QBI $0 wages – TB-C - $10K QBI $500K wages – Without aggregation

• TB-A $200K fully deductible
• TB-B $200K – but $0 deductible
• TB-C $2K – fully deductible
• Total tentative199A deduction = $202K

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Section 199A – QBI Deduction, cont.

• Example, cont.

– With aggregation

• TB-A to C $402K QBI $1,000K wages
• Tentative QBI deduction = $402K

– $402K vs $202K – use aggregation if available

• Does rental real estate qualify?

– Spectrum – Triple Net Lease – definitely not – but 40 properties in which taxpayer makes all decisions, etc. – definitely will – Goal: move from left to right on that spectrum as far as you can – i.e. at lease change from triple net lease to double net lease

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Section 199A – QBI Deduction, cont.

• “Solo S Corporations” with QBI

– To maximize deduction need to pay yourself wages unless aggregating with another business that pays wages – The “magic” percentage is 28.57% (2/7ths) of income to pay in wages – Example $1 million before wages; wages of 28.57% = $285,700; QBI after wages = $714,300; 20% of QBI = $142,860 which is ½

• f wages
• Guaranteed Payments of partnerships aren’t QBI

– Consider restructuring partnership agreement to be “line 1”

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Section 199A – QBI Deduction, cont.

• Entity selection

– High income businesses with large payrolls – S corporations are advantageous; Partnerships OK with large enough “non-owner” payroll. – High or low income businesses with no payrolls – Sole proprietorships – Selection should always consider non-tax factors

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Estate Planning Ideas

• With $11.2 million exemption – concern for most estates

shifts from estate tax planning to income tax planning

• You may want step-up on second spouse to die i.e. all

assets included in estate of second to die

• What if you already have bypass trust set up?

– Consider reforming or decanting existing trust – New CA law for decanting to make it easier

• If no trust set-up – consider utilizing portability and/or

qualified disclaimers on first-to-die – but still use a trust!

International Tax Rules Yana Weaver, CPA

Partner, LSL CPAs

www.lslcpas.com

Yana Weaver, MST, MBA, CPA- Partner

• 20+ years Private & Public Accounting Experience
• MBA, Finance – UC Irvine
• MS, Tax – Golden Gate University
• BS, Business Administration – Russian Economic Academy
• Industry specialization –

– International tax consulting – Manufacturing – Healthcare – Real Estate

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BIG PICTURE

• Complete restructuring of US

international tax systems

• New concepts added to existing

structure

• Desired effects:
• To encourage US companies to

export

• To discourage US companies moving

abroad

• To discourage foreign companies to

use US subsidiaries as “bank accounts”

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FDII

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Foreign-Derived Intangible Income (FDII)

• Essentially an export incentive that effectively reduces the tax on

foreign derived sales and services

• Potentially available to every US corporation that exports property or

provides services to a person located outside the US

• Includes sales and services provided to related parties
• Reduces the newly enacted 21% corporate tax rate on specified

foreign income to:

– 13.125% for January 1, 2018 – December 31, 2026 years – 16.406% for tax years beginning after December 31, 2026

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Foreign-Derived Intangible Income (FDII)

FDII Deduction = DII x FDDEI/DEI x 37.5%

• DII – Deemed Intangible Income = DEI – Deemed Tangible Income
• Deemed Tangible Income = Qualified Business Asset Investment

(QBAI) x 10%

• DEI = Deduction Eligible Income = Gross income reduced by

Subpart F income, Dividends received from controlled foreign corporations, foreign branch income

• FDDEI = Foreign-Derived Deduction Eligible Income = Gross

foreign sales and service income reduced by allocated expenses

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Foreign-Derived Intangible Income (FDII)

FDII Deduction = DII x FDDEI/DEI x 37.5%

• QBAI = adjusted basis of qualified business property computed

under the ADS depreciation system

• Qualified business property is property used corporation’s trade or

business to generate the DEI. QBAI does not include land, intangible property or any assets that do not produce the DEI.

• Foreign-derived = property sold, licensed or leased to a foreign

person, services must be provided to persons located outside of US

• r with respect to property located outside of US
• Reporting - New Form 8993 released September 20, 2018

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GILTI

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Global Intangible Low-Taxed Income (GILTI)

• Effective for tax years beginning after December 31, 2017 for ALL

CFC shareholders (corporate and individual)

• New tax provision that requires US shareholders of Controlled

Foreign Corporations (CFC) to include in their currently taxable income their share of GILTI income

• Does not replace Subpart F income
• Does not include dividends received from CFCs – new Dividend

Received Deduction for CFC dividends for Corporate shareholders

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Global Intangible Low-Taxed Income (GILTI)

GILTI = CFC TI – CFC DTI

• CFC TI = CFC Tested Income = Income determined without regard

to effectively connected income, Subpart F income, dividends received from related person, highest-taxed income, etc.

• CFC DTI = CFC Deemed Tangible Income = Qualified Business

Asset Investment (QBAI) x 10% - Interest Expense

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Global Intangible Low-Taxed Income (GILTI)

• Corporate shareholders are allowed a deduction equal to:

– 50% of GILTI inclusion for 2018-2025 – 37.5% of GILTI inclusion for 2016 forward

• Individual shareholders do not get a GILTI inclusion deduction, are

not eligible for FDII and don’t get a dividend received deduction

• Reporting: New Form 8992 released September 25, 2018

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BEAT

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Base Erosion and Anti-Abuse Tax (BEAT)

• A new mechanism designed to deter US Corporations from eroding

the US tax base by paying tax-deductible expenses to foreign affiliates

• Effective for tax years beginning after December 31, 2017
• Applies to large corporations:

– Average annual gross receipts 500M AND – Base erosion at least 3%

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Base Erosion and Anti-Abuse Tax (BEAT)

• Gross receipts are determined on an affiliate group level (includes

all businesses with common 50% ownership with the taxpayer)

• Foreign corporations are included in affiliated group if they meet the

50% ownership test, but only the gross sales that generate US effectively-connected income are taken into account

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Base Erosion and Anti-Abuse Tax (BEAT)

• Base erosion payment is any amount paid or accrued by a taxpayer

to a foreign related party for which a deduction is allowable. This includes purchases from related parties of depreciable property, but not purchases of inventory. Also excluded are payments for services calculated under services cost method.

• Related party = 25% owner or any other person related to a 25%
• wner. Constructive ownership rules apply

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Base Erosion and Anti-Abuse Tax (BEAT)

• Total Tax = The higher of Regular Tax or BEAT Tax
• BEAT Tax = X% of Modified Taxable Income (MTI)
• X = 5% for 2018, 10% for 2019-2025, 12.5% after 2025
• MTI = Taxable income + Base Erosion Tax Benefits (BETB)
• BETB = Sum of Base Erosion Payments minus payments subject to

US tax withholdings minus payments for depreciable property plus depreciation expense for acquired related party property

• Reporting: New Form 8991 released September 5, 2018

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QUESTIONS?

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THANK YOU!

Contact information:

Yana Weaver, MST, MBA, CPA, Partner

1611 E. Fourth Street, Suite 200 Santa Ana, CA 92701 714.569.1000 Yana.Weaver@lslcpas.com www.lslcpas.com

R & D Credits Ronald Stumpf, CPA

Partner, LSL CPAs

www.lslcpas.com

Ronald D. Stumpf, CPA- Partner

• 40+ years Public Accounting Experience
• Specializations –

– Audits, reviews, compilations – Mergers & acquisitions – Entrepreneurs

• Southland Economic Development Corporation

– 1995 – present, various positions including:

• Member of Board of Directors and Executive Committee
• Chairman of the Board
• Secretary
• Licensed – Registered Representative and Life Agent
• Family, Travel, Golf, and Photography

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Tax Cuts & Jobs Act of 2017

• The qualification and quantification of the R&D credit is NOT changed
• UTILIZATION of the credit is enhanced as a result of AMT changes at both the C‐

Corp and Individual level

• C‐Corps:

– The research credit cannot reduce a taxpayers tax liability below the minimum tax amount – Starting in 2018, C‐Corp AMT is eliminated – C‐Corps can now use the credit to reduce their tax liability to minimum levels subject to the limits in Form 3800

• Credits can offset the first $25k of tax plus 75% of the tax over $25k

– Prior year credits that carryforward are now only limited by Form 3800

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Tax Cuts & Jobs Act of 2017

• Individuals (Owners of Pass‐Through entities) should see positive side effects for tax

years beginning after December 31, 2017 and before January 1, 2026

– AMT

• Married Filing Jointly (MFJ) AMT exemption amount is increased from $83,800 to $109,400

– Similar increases for other filing types (single, head of household)

• AMT Phase‐out level is dramatically increased from $159,700 to $1M for MFJ
• The addback for state and local taxes for AMT will be lower given the deduction limitation of $10,000

for federal tax purposes

– Majority of Individual changes are temporary and are set to expire at the end of 12/31/2025

• Research Expense Amortization: Current tax law includes a provision for amortization
• f research expenses over 5 years starting in 2022

– Large temporary impact to any taxpayers with research expenses which goes against the main premise of incentivizing R&D in the U.S. – A lot could happen in tax law before then…

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Potentially Qualifying Industries

• Food and

Beverage

• Automotive
• Furniture
• Video Game

Developers

• Cosmetics
• Agriculture
• A&E
• Software

Development

• Manufacturing
• Pharmaceutical
• Medical Device
• Custom Machine

Building

• Oil and Gas
• Electronics
• Aerospace
• Chemicals
• Semiconductor
• Financial Services
• Consumer

Products

• Heavy Equipment
• Plastics
• Metals Processing

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Qualification: The Four Part Test

• Permitted Purpose
• Technological in Nature
• Elimination of Uncertainty
• Process of Experimentation

The activity must be intended to develop or improve a business component’s (product, process or software):

• Functionality
• Performance
• Reliability
• Quality

The activity performed must fundamentally rely on principles of one of the following:

• Biological science
• Computer science
• Engineering
• Physical science

The activity must be intended to discover information to eliminate technical uncertainty concerning the capability or method for developing or improving a product or process,

• r the appropriateness of the product design.

Substantially all of the activities must be elements of a process of experimentation:

• Developing one or more hypotheses (design alternatives)
• Designing and conducting experiments to test and

analyze those hypotheses

• Refining or discarding those hypotheses to design the

business component

• Modeling, simulation, trial or error testing

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Qualification: Qualified Research Expenditures (“QREs”)

• Salaries and Wages

– Typically largest component – W‐2 Box 1 Wages – Three levels of research:

• Direct Research
• Direct Supervision of Research
• Direct Support of Research
• Supply Costs

– Used or destroyed during the qualifying activities – Includes costs of prototypes ultimately sold

• Contractor Costs

– 65% of qualifying costs eligible – Must retain rights and risks to the research performed

• Rental or Lease Costs of Computers

– Becoming more and more significant – Cloud‐computing and others services

Salaries & wages Supply costs Contractor costs

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Credit Computation

• Credit is computed as a percentage of R&D spending over a “base

amount”

• Base amount computation based on the credit calculation chosen

– Regular Credit – base period is either 1984‐1988 or determined via the “start‐up” company rules – Alternative Simplified Credit – base period is the three prior years

• Credits generally are 5% ‐ 6.5% of QREs

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Credit Computation – Regular Method

Description Amount

A QREs

$1,000,000

B Average Revenue

$10,000,000

C Base Percentage

3.00%

D Product of B and C

$300,000

E Half of Expenses

$500,000

F

Base (larger of D or E) $500,000 Incremental QREs (A - F) $500,000 Gross Credit R&D Credit @ 20% $100,000 Less: Taxes from addback (assume max corp rate

• f 21%)

($21,000)

Net R&D Credit $79,000

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Credit Computation – ASC Method

Description Amount

A

QREs $1,000,000

B

Total QREs Over Prior 3 Years $2,100,000

C

Base: Half of Avg. QREs (B / 6) $350,000

D

Incremental QREs (A – C) $650,000 Gross Credit R&D Credit @ 14% $91,000 Less: Taxes from addback (assume max corp rate of 21%) ($19,110) Net R&D Credit $71,890

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Computation: Credit Usability

• Federal R&D tax credits are not refundable (i.e. you need to be paying tax in order to

utilize the credit)

• In general, the prior 3 years can be amended – they are considered the “open tax

years”

• Unused credits are carried back 1 year and then carried forward for up to 20 years
• For small businesses, credits carrying forward from 2015 and prior are still subject to

AMT limitations – Carry forward credits are used before any current year credits – If regular tax above minimum tax is due in 2016, the prior year credits will be used first to reduce tax to minimum level and then the current credit will be applied

• For C‐Corps all credits carrying into 2018 and forward will have more value since AMT

is eliminated

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State R&D Tax Credits

• Many states offer R&D tax credits
• Each state has different rules, however many follow the federal definition
• f qualified research (i.e. The Four Part Test)
• Some state credits may even exceed the federal benefit
• Documentation is also important for state computations
• Credit usability differs state to state and some states do not allow the

pass‐through of credits to individuals

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R&D Summary

• The credit has been in place for 30 years, and is now available to all types and sizes of

enterprise

• The credit is now permanent and stronger than ever with the benefits for smaller

taxpayers – AMT offset for all Pass‐Through Entities with less than 50M in average prior year gross receipts – No AMT limitation for C‐Corps starting in tax year 2018 – Start‐up companies can elect to apply credits against future payroll taxes

• Tax Cuts & Jobs Act of 2017 expected to have a positive impact on credit utilization for

both C‐Corps and Pass‐Throughs

• Plan now‐ensure you have the proper documentation to take full advantage of the credit

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R&D Summary

Questions?

Additional Services of LSL CPAs Gary Cates, CPA Partner, LSL CPAs

www.lslcpas.com

Gary Cates, CPA –Partner

• 44 years of public accounting experience
• Specializing in tax planning and business advisory

services

• QuickBooks Online Certified Pro Advisor and trainer
• Cloud accounting evangelist
• Strategic planning facilitator
• Business analytics and profit improvement advisor

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Outsourced Accounting Services

• Cloud‐based technology is changing everything

– Accounting software in the cloud (QuickBooks Online) – Custom application programs that integrate with general ledger software (bill.com) – Checking and credit card bank feeds streamlines data entry and reconciliations

• Benefits of outsourced accounting services

– Streamlined/automated processes – Accurate, timely financial statements and management reports – Real time numbers to enable collaboration and year‐round planning

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Outsourced Accounting Services

• LSL outsourced bookkeeping services include:

– Bill payment and payroll processing – General ledger posting and reconciliation – Financial statement and management reporting – Custom designed accounting system, implementation and training

• LSL Service Packages – Customized to your needs

– Bookkeeper – Compliance services (hindsight): bookkeeping and all the necessary evils – Controller – Performance services (insight): management accounting, budgeting and analysis – CFO – Strategic services (foresight): business growth, exit and estate planning, wealth management

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Outsourced Accounting Services

• Contact me or your LSL partner to find out more about the

services and software that are right for you

• We’ll be happy to schedule a complimentary meeting to

review your current system and explore opportunities to streamline your accounting processes Gary Cates, CPA

gary.cates@lslcpas.com

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CoreValue Discover Assessment

• LSL is Focused on You, our business clients ‐ Helping you plan

for your future

• Business Exit Planning ‐ Here are the facts:

– Approximately 6.5 million closely‐held, private businesses in US – 75% are owned by baby boomers getting ready to exit – 95% have unrealistic expectations of company value and operating issues – A business owner’s largest asset is usually their closely‐held business

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CoreValue Discover Assessment

Four questions every business owner must ask:

• Do you know what your business is worth?
• Do you know when you plan to exit your business?
• Do you have a plan to grow your business and maximize

value?

• Do you have a plan to transition management and ownership

smoothly?

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CoreValue Discover Assessment

• Your first step on the journey – Determine where you are

now?

– CoreValue Discover Assessment – the tool to measure your current position – Assessment is great for exit planning or for business growth and development – Online multiple choice questionnaire that takes only 15 to 20 minutes – Receive executive report that identifies opportunities and risks

• Discover report will provide:

– Ratings that indicate alignment with best practices – Current enterprise value of your company – Potential business value and drivers contributing to value gap (see handout list

• f 18 value drivers)

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CoreValue Discover Assessment

• Free CoreValue Discover Assessment

– Send me an email; gary.cates@lslcpas.com – Receive email from me with a link to the assessment questionnaire – Complete assessment and receive executive report immediately – Contact me or your LSL partner to schedule an appointment to review your executive report

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QUESTIONS??

Year End Tax Planning Conference Thank you for attending

See you at the next Update