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:

Read complete post...

Time is running out to maximize your tax deductions through energy-related building improvements. As CB&H’s Bill Becker writes in the latest issue of Commercial Investment Real Estate magazine, many incentives are currently scheduled to sunset in 2013.

The most common provision in EPAct is the Energy Efficient Commercial Buildings Deduction. This deduction, which is also referred to as the Section 179D deduction, allows a property owner to claim an immediate tax deduction of up to $1.80 per square foot for energy-efficient improvements to a building’s envelope or its lighting, hot water, and heating, ventilation, and air conditioning systems.

Read complete post...

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.

Share:

Read complete post...

To maintain your own physical health, it is wise to undergo a periodic physical check-up. The same holds true for your company. As CB&H’s Bill Ferlita writes in the current issue of Construction Accounting and Taxation, staying on top of your company’s financial health is crucial to winning contracts in a competitive and cash-starved market.

Your financial statements will tell the surety important information about your company such as:

Read complete post...

• Your working capital;
• Liquidity of your company;
• Profitability;
• Profit on your jobs and profitability trends;
• Your backlog of work; and

As recessionary conditions linger, it is more important than ever to get your financial base in order. Small changes like a periodic check-up in tax strategies can help you increase both profits and cash flow. As CB&H’s Bill Ferlita describes in his article from Construction Today, taking care of necessities like bonding, reporting and tax structuring can maintain a strong foundation to weather any economic storm.

“A good way to measure your company’s performance is to benchmark your company’s metrics against past history, industry averages and surety guidelines. Using a ratio analysis, you can compare your company to healthy contractor benchmarks for areas such as working capital, days in cash, under-billing, debt ratios, backlog, accounts receivables and payables, income statement analysis and job fade analysis. This could help identify areas that are potential problems that need special attention.”

Read complete post...

The IRS released the 2012 standard mileage rates for business use of automobiles. Taxpayers driving a car, van, pickup or panel truck can use these rates to determine the deductible costs of that vehicle’s operation.

• 55.5 cents per mile for business miles driven
• 23 cents per mile driven for medical or moving expenses
• 14 cents per mile driven in service to charitable organizations

Rates for business miles driven remain unchanged from the July 1, 2011 adjustment while rates for medical and moving purposes are reduced by 0.5 cents per mile.

Read complete post...

On November 21, 2011, President Obama signed into law the Three Percent Withholding Repeal and Job Creation Act, or H.R. 674 (hereafter, “the Act”). This new legislation repeals a controversial law that would have required federal, state and local government entities with total annual expenditures of $100 million or more to withhold three percent of certain payments for goods and services to government contractors and vendors.

The Act also expands the Work Opportunity Tax Credit (“WOTC”) by creating the Returning Heroes Tax Credit and the Wounded Warriors Tax Credit to encourage employers to hire unemployed and disabled veterans.

Read complete post...

Obtaining and strengthening bonding is an important step for growing construction contractors. Surety evaluations have only become more intensive in recent years, putting even more pressure on contractors to present favorable operating results. While best practices are important in any economic cycle, an economic downturn amplifies how important it is for contractors to have every possible advantage.

Contractors must pay closest attention to the basics, beginning with financial statements. As outlined by CB&H’s Sam Johnson in an article for our RECon newsletter:

A surety’s evaluation of a construction contractor involves a number of factors, such as financial performance, contractor character, a successful track record, a quality management team, a succession plan, and appropriate internal controls. Having a track record of producing timely and accurate financial information, in sufficient detail to allow sureties to apply their underwriting standards, is very important.

Share:

Read complete post...

Cherry, Bekaert & Holland will be hosting its annual Richmond Commercial Business Seminar and Ethics Training on Tuesday, December 6, 2011.

We’ll discuss what you need to know about updates to lease reporting, recent FASB projects and what they mean for your organization as well as the current impairment models including goodwill. We will also discuss what the Budget Control Act means to your organization and how changes on Capitol Hill impact 2011 and 2012 tax filings.

In addition, we will discuss estate planning and the $5 million estate tax exemption set to expire on December 31, 2012, as well as R&D and land conservation tax credits that can benefit your organization.

Read complete post...

Join us on Thursday, November 10, 2011 as we discuss “How to Keep What You Have: Estate Tax Planning with the New $5M Exemption and Protecting Your Assets from Creditors.” For 2011 and 2012, the transfer tax exemption has been raised to $5 million. Mike Kirkman, CB&H’s Director of Estates & Trusts, and Robert Miller, an estate planning attorney with Williams Mullen, will share with you ways to take advantage of this new law while it’s still in effect. Topics to be covered include:

Everyone would like to minimize the uncertainties we all face in a world which seems increasingly complex and litigious. This seminar will also provide you with a better understanding of asset protection planning. Learn how to reduce exposure to some of those uncertainties – and in turn, gain a little more piece of mind. This section will cover:

Share:

Read complete post...