Cherry Bekaert & Holland L.L.P. (CB&H), one of the nation’s largest accounting and consulting firms, is pleased to announce the addition of Daniel G. Jackson as a Principal in the Firm’s Tampa office.

In his new role at CB&H, Jackson will work closely with clients to fully understand their needs and ensure excellent service delivery. He will also focus on providing leadership, management and guidance to foster practice development and enhance client service.

In addition to being a driven client service professional, Jackson spent several years navigating all aspects of start-up business growth. From capital accounting needs to complex compliance requirements, he has first-hand experience addressing the challenges facing our clients.

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Effective July 1, 2012, Virginia retailers will be required to use a new single sales factor apportionment when computing state income tax liability. As CCH reports, the method will be phased in over the course of several years.

– for taxable years beginning on or after July 1, 2012, but before July 1, 2014, retail companies are required to use a triple-weighted sales factor;

– for taxable years beginning on or after July 1, 2014, but before July 1, 2015, retail companies are required to use a quadruple-weighted sales factor; and

 

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In the most recent session of the Georgia State Legislature, Governor Deal and lawmakers passed several changes to tax laws that will affect nearly all residents and businesses.

Tax Changes for Individuals

Tax Exemptions Increase for Married Filers
Beginning 2013, married taxpayers filing jointly will receive an exemption of $7,400, a marked increase of the current $5,400 exemption. Those married filing separately will be entitled to an exemption of $3,700. The personal exemption for unmarried individuals remains unchanged at $2,700.

Motor Vehicle Property Tax Phased Out
Vehicles purchased and titled after March 1, 2013 will no longer fall under existing sales and annual property tax regulations. Instead, owners will pay a one-time fee equal to seven percent of fair-market value less trade-in value. The rate is phased in over three years beginning with 6.5% in 2013, 6.75% in 2014 and the full 7% in 2015 and every year thereafter. Individuals purchasing a vehicle between January 1, 2012 and March 1, 2013 may elect either the annual tax or new one-time fee system. Any owner of a vehicle titled before January 1, 2012 will continue to pay annual state taxes as normal.

Retirement Income Exclusion Capped
Beginning 2013, any taxpayer of ages 62-64, or those who are totally disabled, may exclude up to $35,000 of retirement income per year. Taxpayers 65 and older may exclude up to $65,000 of retirement income per year. Qualified retirement income includes interest, dividends, capital gains, pension income, and up to $4,000 of earned income.

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Earlier this month, President Obama signed into law the Jumpstart Our Business Startups Act (“JOBS Act”), which includes a number of provisions aimed at easing access to capital for entrepreneurs with the goal of ultimately creating new jobs.

Crowdfunding from Non-Accredited Investors

The JOBS Act eases restrictions on equity-based crowdfunding to now allow investments by all investors, not just accredited investors. Any non-credited investor can invest up to the lesser of 10 percent of annual income or $10,000. Crowdfunding investments will still need to file with the Securities and Exchange Commission (SEC), and are restricted to raising $1 million annually, or $2 million if they have filed audited financial statements.

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New temporary IRS regulations and transition guidance that will affect virtually all business taxpayers took effect January 1, 2012. While these new regulations, which relate to repairs and maintenance expenses, have been anticipated for some time, one recent development signals a seismic shift in the IRS position on how such expenses are to be handled for tax purposes.

On March 15, 2012, IRS issued a Directive for field examinations on the repair vs. capitalization issue that essentially suspended current examinations. For examinations of tax years beginning before January 1, 2012, examiners are instructed to discontinue current exam activity and not begin any new activity with regard to the “issues,” which are defined as:

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An important new provision in estate tax law may save you or your family from paying significant gift and estate taxes. To receive these benefits, you must file an estate tax return for the decedent, even if the estate is not otherwise required to file.

Each individual has a basic exclusion amount, and that amount can be transferred free of federal gift and estate taxes. The basic exclusion amount in 2011 was $5 million and, adjusted for inflation, the 2012 basic exclusion amount is $5.12 million. Under the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, individuals now have the opportunity to later use the remaining amount from a deceased spouse’s unused exclusion amount (DSUEA), in addition to their own exclusion when making gifts and upon death.

The ability to transfer the DSUEA to the surviving spouse is referred to as “portability.” Portability applies only to married decedents in 2011 and 2012. Under current law, portability will not be available for use by a surviving spouse after 2012. A recommendation to make the law permanent was included in President Obama’s proposed fiscal year 2013 budget.

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The Financial Accounting Standards Board (FASB) announced yesterday a decision against initiating an extensive project to overhaul of FASB Interpretation No. 48, or FIN 48, “Accounting for Uncertainty in Income Taxes.” As reported in Accounting Today:

The report found that the 2006 standard generally meets its goal of increasing the relevance and comparability in reporting information about income tax uncertainties. But the report, which was compiled by an independent committee appointed by the FAF board of trustees, also found from interviews with various stakeholders that consistently applying FIN 48’s guidance may not increase the comparability of information about income tax uncertainties across companies and other reporting entities.

 

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Any profitable taxpayer that exports at least $1 million in products manufactured, grown or extracted in the United States, or even less with high profit margins, should consider using an Interest Charge Domestic International Sales Corporation (IC-DISC). Many taxpayers may not realize they qualify because they only export indirectly by selling to a U.S. distributor or another domestic customer who then exports their product. But in most cases, the exporter knows or suspects that their product is being exported, which would enable the utilization of an IC-DISC.

Moreover, since the enactment of the American Jobs Creation Act of 2004¹, taxpayers can also take advantage of the 15-percent capital gains rate on dividend distributions, which provides a permanent tax benefit of 20 percentage points compared to the highest individual tax rate, and up to 35 percent if the exporter is a dividend-paying C corporation.

Taxpayers could save as much as 35 percent on net income from export transactions. For example, if the export sales of a C corporation are $1 million and the profit percentage² is 40 percent, export profits are $300,000. Combined taxable income (CTI)³ is $200,000 and federal tax savings alone will be at least $70,000. Usually profits from export transactions are significantly higher than from domestic sales.

Why is this tax benefit so underutilized? In my opinion, the reasons range from lack of integration of federal government resources for exporters to complicated technical aspects requiring specialization on the part of tax advisors. I recently attended an export summit in Richmond, Va., that aimed to educate exporters about the many government agencies and services available to help them “go global.”

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Cherry Bekaert & Holland L.L.P. (CB&H), one of the nation’s largest accounting and consulting firms, is pleased to announce the addition of James W. Dawson as Partner and the Firm’s National Director of International Tax.

In his new role at CB&H, Jim will direct the specialized international tax services of the Firm, including global tax strategies, transfer pricing, indirect tax, expat tax, and general international consulting and compliance services. In addition he will be responsible for directing the global resources of the Firm, through Baker Tilly International, to meet the international tax needs of clients worldwide.

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On February 24, 2012, the IRS issued Notice 2012-22, which outlines changes to the energy savings percentages that taxpayers can use when qualifying energy-efficient commercial buildings for the Section 179D deduction. Effective for property placed in service from the date of the notice through December 31, 2013, the following percentages apply:

• 25% for interior lighting systems
• 15% for heating, cooling, ventilation and hot water systems
• 10% for the building envelope

What is Section 179D?

Intended to offset some of the costs of qualifying energy-efficient improvements to commercial buildings, the Section 179D deduction allows taxpayers to take an immediate expense for the cost of property that would normally be recovered through depreciation over as many as 39 years.

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