Articles

The VanderBloemen Group LLC has begun publishing / distributing memos dealing with current tax and financial issues affecting both businesses and individuals.

These publications will be sent out periodically as new updates are available and we believe they can be very beneficial to both your business and your individual needs.

We hope you enjoy reading the attached and future memos. If at any time, you should have any questions about anything that is contained within these publications, please do not hesitate to contact us.

VanderBloemen Publications

Jennifer Barber joins The VanderBloemen Group as Senior Tax Manager

The VanderBloemen Group is pleased to announce that Jennifer Barber has joined The VanderBloemen Group as a Senior Tax Manager.

As a CPA, Jenny has over 15 years of public accounting experience in the tax departments with several regional accounting firms in the greater Milwaukee area.

Addressing the excellent reputation of the VanderBloemen Group, Barber says, “In the past I have had the opportunity to work at some of the larger regional accounting firms in the area.  The opportunity to join a smaller firm that provides a level of value consistent (if not greater) than the regional firms is something that is very important to me.   I am excited about this new opportunity and look forward to becoming a part of the VanderBloemen Group.”

“Jenny has extensive experience in estate, trust and multi-jurisdictional taxes along with a strong corporate and individual tax background.  Based upon her business and tax experience, client service and commitment to public accounting, we look forward to having Jenny as a member of the VanderBloemen Group” says Stephen C. VanderBloemen, Managing Partner.

The VanderBloemen Group Expands Business Valuation Practice

Today’s environment has elevated the importance of valuations that support financial reporting, lending, litigation, tax planning and succession planning. The VanderBloemen Group valuation professionals are experts in these areas.

What is it worth - the business, the controlling interest or asset value?  Having an accurate valuation is very important for planning today, tomorrow and in the future.  The ability to understand, identify, manage and maximize your competitive advantage is critical to the success of any business.

Today’s environment has elevated the importance of valuations that support financial reporting, lending, litigation, tax planning and succession planning.  The VanderBloemen Group valuation professionals are experts in these areas.

Our clients, attorneys, bankers and other advisors receive the highest level of support available.  Our valuation staff consists of CPA’s and others who are certified in the areas valuation analysis, financial reporting and financial forensics.

Whether we serve as independent experts, consultants or testifiers, our team has the deep technical skills and experience to assist in many different types of valuations. 

Business and Corporate Planning:

· SBA & Financing Loans

· Strategic Planning

· Estate Planning

· Exit Strategy

· ESOP Valuations

· Employee Options

· Ownership Transfer and Planning

Litigation

· Damage Analysis

· Shareholder Disputes

· Non-compete Covenants

· Lost Earnings

Financial Statement Reporting

· Pension Valuation

· Option Valuation

· Fair Value

 

· Goodwill Impairment

Final regulation to clarify who is subject to 50% limit on meal and entertainment expenses

On Wednesday, the IRS issued final regulations clarifying which party is subject to the 50% limit on deductible meal and entertainment expenses under Sec. 274(n) (T.D. 9625). The final rules adopt proposed regulations issued in July 2012 (REG-101812-07) without substantive change.

Courtesy of the Journal of Accountancy - August 2013

On Wednesday, the IRS issued final regulations clarifying which party is subject to the 50% limit on deductible meal and entertainment expenses under Sec. 274(n) (T.D. 9625). The final rules adopt proposed regulations issued in July 2012 (REG-101812-07) without substantive change.

 

As the IRS emphasized in the preamble to the earlier proposed regulations, only one party is intended to be subject to the limitation, and there has been controversy over who is subject to it when multiple parties are involved. Also, in the preamble, the IRS explained that the proposed regulations were intended to settle issues raised in Transport Labor Contract/Leasing, Inc., 461 F.3d 1030 (8th Cir. 2006), rev’g 123 T.C. 154 (2004), acq. in result, Rev. Rul. 2008-23.

 

Sec. 274(a) limits the amount of entertainment expenses that are deductible, and deductions for meals and entertainment are generally limited to 50% of the expenses incurred (Sec. 274(n)). Under Sec. 274(e)(2)(A), employers are not subject to the limitation to the extent they treat the expenses as compensation to employees.

 

Sec. 274(e)(3) provides two exceptions from the Sec. 274(a) limits for reimbursed expenses. Sec. 274(e)(3)(A) excepts expenses a taxpayer pays or incurs in performing services for another person under a reimbursement or other expense allowance arrangement where the employer does not treat the reimbursement as compensation to the employee. In that case, the employee does not have additional compensation or a deduction for the expense, but the employer deducts the expense and is subject to the deduction limit. If the employer treats the reimbursement as compensation, the employee may be able to deduct the expense as an employee business expense. In that case, the employee bears the expense and is subject to the deduction limit. The employer deducts the expense as compensation, which is not subject to the deduction limit under Sec. 274.

 

Sec. 274(e)(3)(B) applies if the taxpayer performs services for a person other than an employer and the taxpayer accounts (substantiates, as required by Sec. 274(d)) to that person. The Eighth Circuit applied this subsection in the Transport Labor case. In that case, the taxpayer, a leasing company that provided truck drivers to its clients, charged the clients for the wages and the per diem allowance it paid the truckers. Because the taxpayer provided services to its clients under a reimbursement or other expense allowance arrangement and accounted to the clients, it qualified under Sec. 274(e)(3)(B) for the exception from the Sec. 274(n) limit with respect to the per diem expense and instead the clients were subject to the limit.

 

The final regulations contain a new definition of reimbursement or other expense allowance arrangement for purposes of Sec. 274(e)(3), independent of the definition for accountable plan purposes in Sec. 62(c). The regulations also clarify that the rules for applying the exceptions to the Secs. 274(a) and (n) deduction limits apply to reimbursement or other expense allowance arrangements with employees, whether or not a payer is an employer. Any party that reimburses an employee is a payer and bears the expense if the payment is not treated as compensation and wages to the employee.

 

The regulations also permit taxpayers involved in multiparty arrangements involving nonemployees (i.e., independent contractors) to provide by agreement who will be subject to the 50% limit. Absent an agreement, the limit will apply to an independent contractor if he or she does not account for the expense under Sec. 274(d), and to the client or customer if the independent contractor meets the substantiation requirements. The regulations include an example illustrating how the rules apply to multiparty reimbursement arrangements. Multiparty reimbursement arrangements are separately analyzed as a series of two-party reimbursement arrangements.

 

The final regulations apply to expenses paid or incurred in tax years beginning after Aug. 1, 2013 (the date they will be published as final in the Federal Register).

 

Tax Planning for the Future Sale of a Business

Tax Planning for the Future Sale of a Business - A great article about the benefits of working with your accountant with regard to tax planning prior to the sale of your business.

Stephen VanderBloemen to teach AMP class for AGC.

For construction leaders on the rise, no program provides a more comprehensive, uniquely focused program than AGC's Advanced Management Program (AMP). We are pleased that Steve VanderBloemen will be teaching and leading this program.

Held just one time each year, this exclusive six-day program grounds construction industry executives in the essential skills and techniques required to successfully lead an organization.

Link to the class can be found at - http://www.agc.org/cs/advanced_management_program

Course Highlights...

  • Strategic and Finance Management
  • Risk Management
  • Leadership
  • Contract Dispute Resolution
  • Leading Change
  • Construction Ethics
  • Safety Management
  • Reputation and Media Management
  • Construction Productivity

IMPORTANT: Patient-Centered Outcomes Research Fee on Self-insured Health Plans, Health FSA's and HRA's DUE JULY 31, 2013

The Patient Protection and Affordable Care Act (Obama Care) instituted an excise tax on issuers of certain health insurance policies and plan sponsors of certain self-insured health plans to fund the Patient-Centered Outcomes Research Trust Fund (also known as Patient-Centered Outcomes Research Fee) for plan years ending on or after October 1, 2012.

The Patient Protection and Affordable Care Act (Obama Care) instituted an excise tax on issuers of certain health insurance policies and plan sponsors of certain self-insured health plans to fund the Patient-Centered Outcomes Research Trust Fund (also known as Patient-Centered Outcomes Research Fee) for plan years ending on or after October 1, 2012.

The excise tax is reported on Part II IRS No. 133 of Form 720, Quarterly Federal Excise Tax Form, as “Applicable self-insured health plans” and is due July 31, 2013.  For 2012, the tax rate is $1.00 times the average number of covered lives as defined below.

The Form 720 can be found on the IRS website: http://www.irs.gov/pub/irs-pdf/f720.pdf

A health flexible spending arrangement (health FSA) and a health reimbursement arrangement (HRA) is considered a self-insured plan and is subject to the excise tax.

If a health FSA or HRA has the same plan sponsor as another applicable self-insured health plan other than a health FSA or HRA, the two arrangements may be treated as a single plan for purposes of determining the excise tax.

Calculating the Average Number of Lives

Self-insured Health Plan (including Plan Sponsors with a Self-insured Health Plan and health FSA or HRA)

The definition of covered lives is the total number of individuals covered by the plan.  This includes the enrolled participant/employee,  spouse, dependent or any other beneficiary of the participant in the plan.

There are 4 methods allowed for calculating the average number of lives:

1. Actual count method – calculated by adding the total lives covered each day of the plan year and dividing by the total number of days in the plan year.

2. Snapshot method – calculated by adding the total lives covered on one date in each quarter (the date in each quarter must be within 3 days of the date used in the 1st quarter, easiest to use the end of each quarter) and dividing by 4.

3. Form 5500 method

a. If the plan offers only self-only (employee only) insurance it is calculated by taking the sum of the total participants covered at the beginning and end of the plan year, as reported on the Form 5500, divided by 2.

b. If the plan offers coverage other than self-only it is calculated by summing the total participants convered at the beginning and end of the plan year as reported on the Form 5500.

4. 1st year of calculation of tax – For plan years beginning before 7/11/12 and ending on or after 10/1/12, the average number of lives covered under the plan for the plan year may be calculated using any reasonable method.

 

Health FSA or HRA

For a health FSA and HRA, covered lives includes only the participant (does not include spouse, dependent or any other beneficiary of the participant).

There are 4 methods allowed for calculating the average number of lives:

5. Actual count method – calculated by adding the total lives covered each day of the plan year and dividing by the total number of days in the plan year.

6. Snapshot method – calculated by adding the total lives covered on one date in each quarter (the date in each quarter must be within 3 days of the date used in the 1st quarter, easiest to use the end of each quarter) and dividing by 4.

7. Form 5500 method – calculated by taking the sum of the total participants covered at the beginning and end of the plan year, as reported on the Form 5500, divided by 2.

8. 1st year of calculation of tax – For plan years beginning before 7/11/12 and ending on or after 10/1/12, the average number of lives covered under the plan for the plan year may be calculated using any reasonable method.

 

 

Please contact us at The VanderBloemen Group if you need assistance in completing the form.