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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At the recent Georgia Technology Summit, the annual flagship conference for the Technology Association of Georgia (TAG), CB&H’s Matthew May (pictured center) appeared as a guest on Atlanta Business RadioX. Matthew joined hosts Lee Kantor and Stone Payton to discuss the opportunities and dangers facing early-stage, entrepreneurial technology firms.

It is important for young companies, especially those just in receipt of a financing round, to examine their deductions and credits via their tax returns. For many, this can free cash assets at crucial growth phases.

Click here to listen to or download the podcast.

Repair and maintenance expenses are currently tax deductible. Capital costs are not. Through a Repair and Maintenance Study (also known as a Sec. 263(a) Study), you may be able to achieve significant tax savings by reclassifying assets improperly treated as capital expenses.

In particular, companies operating in a number of industries may benefit from a Repair and Maintenance Study. These will include many in the banking, retail, hospitality, manufacturing, pharmaceutical, warehouse, auto retailers, distribution and utility industries who regularly refurbish or freshen their stores or facilities. These rules will benefit virtually all capital-intensive companies that invest significant dollars on recurring and incidental repairs and maintenance expenses, and capitalized rather than depreciated such costs.

By taking a current deduction of previously capitalized repair and maintenance costs, taxpayers can accelerate deductions that otherwise might not have been available for years. This could lower a company’s tax liability for the current year and possibly generate net operating losses that can be used to obtain a refund of taxes paid in prior years.

How Does It Work?

The purpose of a 263(a) study is to analyze the taxpayer’s business operations, determine appropriate “Units of Property” for purposes of capitalization and depreciation, and identify routine repair and maintenance expenditures that may have been capitalized and depreciated incorrectly instead.

Companies of all sizes are developing paths to global markets and supply chains that reach across continents. No longer are markets in Asia and South America just for Fortune 1000 companies. Our panel of experts from Dubai, Singapore, Luxembourg and Netherlands will explore various structuring best practices that can make the management of intellectual, human and financial capital more efficient.

This is a roundtable discussion that will allow you to understand the drivers that give Google a 2.4% tax rate, and Microsoft a 5% tax rate. It provides a unique opportunity to hear first-hand, up to date overviews of the incentives for basing your company’s international operations in Luxembourg, Netherlands, Dubai or Singapore. Each provides incentives that are better suited for different types of business models and activities. We will also discuss how these jurisdictions can complement each other. We will demonstrate how the legal and regulatory environments in these countries can be combined to provide efficient, sustainable, flexible, global treasury and operational models. We have brought together experts in tax incentives and best practices from Dubai, Luxembourg, Singapore and Netherlands to discuss how their regimes best fit your business models.

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Cherry, Bekaert & Holland’s Matthew May was recently interviewed by Venture Atlanta about Benefit Corporations and the business of getting B Corp certified:

Six states (California, Hawaii, Maryland, New Jersey, Vermont and Virginia) each have their own variation of Benefit Corporation status. New York is also considering the status.

I expect that most states are watching to see what Delaware and the other C-Corp friendly states do. Delaware still has the critical mass of C-Corp formations in the U.S.  For better or for worse, states have conformed to Delaware’s rules for C-Corp, so until Delaware makes a move in this area, companies will have to navigate the individual state standards for the nuances.

 

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Cherry, Bekaert & Holland, L.L.P. (CB&H), one of the largest regional public accounting and consulting firms headquartered in the Southeast, is pleased to announce the promotion of Matthew May to the position of Audit Partner with the Firm.

May is a Certified Public Accountant with 14 years of experience. He specializes in managing financial statement audits and consulting projects for publicly and privately held clients in the Technology & Life Sciences industries. His clients range from venture backed pre-revenue stage companies to multinational public companies with revenues up to $200 million.

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The House Ways and Means committee is currently debating The Life Sciences Jobs and Investment Act of 2011 (the Bill). The bill would offer life sciences businesses the option between a significantly enhanced R&D credit or drastically cut repatriation tax for foreign earnings.

Designed to respond to the global competitive business threats to the United States, the Bill seeks to benefit small- to medium-sized U.S. based firms to spur them to invest the capital needed to undertake complex and expensive R&D. The Bill defines “life sciences industry” very broadly, including life sciences R&D, pharmaceutical and medicine manufacturing, surgical appliance and supply manufacturing, medical and diagnostic labs, and blood organ banks.

The Bill offers one of two means of tax credits to spur investment.

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The Financial Accounting Standards Board (FASB) has recently approved a revision to its goodwill impairment testing guidance to simplify how an entity tests goodwill for impairment. You can use the new approach immediately.

Current guidance requires an entity to test goodwill for impairment on an annual basis at a minimum. Testing requires the entity to compare the fair value of a reporting unit with its carrying amount, which is more commonly known as Step One. If the fair value of a reporting unit is less than its carrying amount, then the second step involves measuring the amount of the potential impairment loss.

Under the new guidance, you have the option to first assess qualitative factors that could result in avoiding even the Step One test. Only after assessing the entirety of events or circumstances that may indicate potential impairment would an entity determine whether impairment is more likely than not and proceed to perform the Step One test.

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The Small Business Jobs Act of 2010 (the Act) was one of several laws enacted to aid businesses through the recession. Provisions focus on smaller businesses, but many breaks and incentives apply to all companies.

Bonus Depreciation
Retroactive to January 1, 2010, the Act extends the 50-percent first-year bonus depreciation that previously expired at the end of 2009, giving businesses an important opportunity to reduce their tax burden. The bonus depreciation is available for certain longer production period property placed in service on or before December 31, 2011.

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