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MS150 Bike Tour
Estate Tax Quandary
Last Year for Energy Property Credit
Small Business Health Care Credit
Hiring Incentives
Gala Awards
Roth IRAs
Homebuyer Credits
Longterm Residents
Haiti
Strong Balance Sheet
MS 150
H1N1
Congratulations
Seal the Deal Seminar
OBCPA
Peer Review
Minimum Distribution Relief
College
Standard Mileage Rate
Ezines is monthly newsletter delivered to your email account with valuable information about tax, finances and business. If you would like to receive Ezines from us contact Marianne Biangardi at meb@obcpa.com.
On September 11th and 12th Mark O'Donnell will participate in the MS150 Bike Tour for the 12th consecutive year. Since 1999 Mark and his wife Jane have raised over $35,000 for the Multiple Sclerosis Society. The funds raised through this event go towards vital medical research needed to find a cure for Multiple Sclerosis. Your generosity is appreciated not only by me, but also by the thousands who are victims of this terrible disease.
If you are interested in donating please make checks payable to the National MS Society. Mail checks to Mark O'Donnell at 11457 Olde Cabin Rd., Ste. 310, Creve Coeur, MO 63141-7139
(June 2010)
What is the estate tax?
The estate tax, commonly referred to as the “death tax”, is a tax imposed on the transfer of “taxable assets” of a deceased person. This property can be transferred via a will, in accordance with state law, or as an incident of death.
How does it work?
A husband or wife can leave any amount to a spouse free of any estate tax. Transfers of “taxable assets” to others that exceed the exemption amount are subject to estate tax. For 2009 the exemption amount was $3.5 million with a federal estate tax rate of 45%.
2010:
2011:
What next?
Congress is expected to retroactively reinstate the federal estate tax in a similar form to 2009. The exemption amount is expected to be within the $3.5 million to $5 million range with a federal estate tax rate of 35% to 45%. This new law will retroactively apply to 2010.
(June 2010)
If you have been thinking about putting in new windows or installing a new water heater within the next couple of years it might be best to do it before December 31, 2010. 2010 is the last year for the nonbusiness energy property credit. This nonrefundable credit applies to qualified energy efficiency improvements to a primary residence in the United States. The credit is 30% if cost of the qualifying improvements up to $1,500.
Qualified energy efficiency improvements that qualify for the tax credit (not including installation costs) are the following:
Qualifying energy efficiency improvement that qualify for the credit along with installation costs are:
There is no phase out range of the tax credit so anyone can take it. There are requirements for each energy efficiency improvement to qualify for the tax credit. Please review the following link for details on these requirements.
http://www.energystar.gov/index.cfm?c=tax_credits.tx_index
(May 2010)
New Small Business Health Care Credit May Reduce Your Cost of Health Insurance
The new Health Care Act contains a provision that allows a tax credit to certain qualified employers that provide health care coverage to their employees. In general, the employer must have fewer than 25 full-time equivalent employees, and the average annual wages of its employees must be less than $50,000 per employee. The employer must pay at least half of the premium cost for the employee enrolled in the employer’s plan. The credit can be up to 35% of the employer’s premium cost in 2010.
There are transition rules for 2010 that make it easier for employers to qualify, and phase out rules that affect the credit for employers with average wages between $25,000-$50,000 and 10-25 employees. For more information, or to discuss if your business qualifies for the credit, please contact us.
(May 2010)
The Hiring Incentives to Restore Employment Act (HIRE Act) exempts an employer from paying the employer portion of the Social Security Taxes (6.2%) on new hires who had been unemployed for at least 60 days. This exemption applies to wages paid between March 19, 2010 through December 31, 2010.
As an additional incentive, for any qualifying worker hired under this initiative that the employer keeps on the payroll for a continuous 52 weeks, the employer is eligible for an additional non-refundable tax credit of up to $1,000 after the 52-week threshold is reached, to be taken on their 2011 tax return. In order to be eligible, the employee's pay in the second 26-week period must be at least 80% of the pay in the first 26-week period.
Workers hired after the date of introduction of the legislation (February 3, 2010) are eligible for the payroll tax forgiveness and the retention bonus, but only wages paid after the date of the new law's enactment receive the exemption for payroll taxes.
There are a few restrictions which include:
The IRS is drafting a form for the individual to sign to indicate that he or she has been out of work for 60 days and are clarifying procedures for concerning this issue.
(March 2010)
This year the 17th Annual ASA Awards Gala is Saturday, April 10, 2010 at the Hilton Ballpark. ASA will present a classic Kentucky Derby evening. Make plans to attend this event where the top general contractors, subcontractors and others in the construction industry are honored.
For more information please visit the ASA website at www.asamidwest.com or call Reba Gillick at (314) 214-1664 for more information.
(February 2010)
There is a new rollover opportunity available in 2010. Regardless of your adjusted gross income, amounts in your regular IRA can be rolled over into a Roth IRA. Previously, individuals with more than $100,000 of adjusted gross income were barred from making such rollovers.
A Roth IRA has several advantages:
The rollover is taxed, but since your regular IRA has been funded with after tax dollars through non-deductible contributions, you will be taxed only on the difference between the value on the date of conversion (rollover) and your basis in your IRA. The tax you owe as a result of the rollover can be paid in 2010, or you can elect to pay half in 2011 and half in 2012.
If your IRA is increasing in value, it is better to complete the conversion as soon as possible. If you change your mind later there is a way to undo the conversion before the 2010 return is due.
(January 2010)
There are two types of homebuyer credits available; the First Time Homebuyer Credit and the Long-term Residents Treated as First Time Homebuyers.
First Time Homebuyer Credit
The First Time Homebuyer Credit is available for purchases after 2008. A refundable first time homebuyer tax credit is available for qualifying principle residence purchases in the U.S. prior to May 1, 2010 or July 1, 2010. The credit is equal to the lesser of 10% of the purchase price or $8,000.
Eligibility
A person is a first time homebuyer if he has no present ownership interest in a principle residence in the U.S. during the 3-year period before the purchase of the home to which the credit applies. This applies to either spouse.
Limitations
Buy price limitation- For purchases after November 6, 2009 the credit cannot be claimed for a residence if its purchase price exceeds $800,000.
Income Phaseout- For qualifying purchases the phase out for taxpayers with modified adjusted gross income is between $75,000 and $95,000 ($150,000 - $170,000 for joint filers).
Long Term Residents Treated as First Time Homebuyers
The Long-term Residents Treated as First Time Homebuyers is available for purchases after November 6, 2009 to any individual (and, if married, the individual’s spouse) who has maintained the same principle residence for any five consecutive year period during the eight year period preceding the date of the purchase of the subsequent principle residence. The maximum allowable credit is the lesser of 10% of the purchase price or $6,500.
Limitations
Buy Price limitations- For purchases after November 6, 2009 the credit cannot be claimed for a residence if its purchase price exceeds $800,000.
Income Phaseout- For qualifying purchases the phase out for taxpayers with modified adjusted gross income is between $125,000 and $145,000 ($225,000 - $245,000 for joint filers).
(January 2010)
The Long-term Residents Treated as First Time Homebuyers is available for purchases after November 6, 2009 to any individual (and, if married, the individual’s spouse) who has maintained the same principle residence for any five consecutive year period during the eight year period preceding the date of the purchase of the subsequent principle residence. The maximum allowable credit is the lesser of 10% of the purchase price or $6,500.
Limitations
Buy Price limitations- For purchases after November 6, 2009 the credit cannot be claimed for a residence if its purchase price exceeds $800,000.
Income Phaseout- For qualifying purchases the phase out for taxpayers with modified adjusted gross income is between $125,000 and $145,000 ($225,000 - $245,000 for joint filers).
(January 2010)
Congress has passed a bill and it is expected to be signed by the President.
The text of the House Bill follows;
A Bill to accelerate the income tax benefits for charitable cash contributions for the relief of victims of the earthquake in Haiti.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. ACCELERATION OF INCOME TAX BENEFITS FOR CHARITABLE CASH CONTRIBUTIONS FOR RELIEF OF VICTIMS OF EARTHQUAKE IN HAITI.
(a) IN GENERAL.-For purposes of Section 170 of the Internal Revenue Code of 1986, a taxpayer may treat any contribution described in subsection (b) made after January 11, 2010, and before March 1, 2010, as if such contribution was made on December 31, 2009, and not in 2010.
(b) CONTRIBUTION DESCRIBED.-A contribution is described in this subsection if such contribution is a cash contribution made for the relief of victims in areas affected by the earthquake in Haiti on January 12, 2010, for which a charitable contribution deduction is allowable under Section 170 of the Internal Revenue Code of 1986.
(c) RECORDKEEPING.-In the case of a contribution described in subsection (b), a telephone bill showing the name of the donee organization, the date of the contribution, and the amount of the contribution shall be treated as meeting the recordkeeping requirements of Section 170(f)(17) of the Internal Revenue Code of 1986.
(January 2010)
It is time to start preparing for the end of 2009. As most of our income statements are "challenged" by this year's economic environment, we need to plan for the strongest financial position (aka balance sheet) for December 31. A strong balance sheet will improve our position with banks, sureties and other creditors as well as prepare the company for the demands of 2010.
First things first, pull out your September financials and take a close look at accounts receivable, inventory, and prepaid assets. Specifically;
Accounts receivable - focus on the over 60-day items, and retainage. Can you get them collected by December 31? Are there items in the earlier columns that may slip into the over 90 by year end? If so can you take action to prevent that from occurring?
Inventory - Take a close look at the slow moving and obsolete items and prepare an action plan to move them out before December 31.
Prepaids - Other than income tax, prepaid expense at any year end should be avoided. Renegotiate you insurance plans and subscriptions to minimize the amount of prepaids.
By cleaning up these assets, you will
a) maximize cash on hand and
b) improve the "quality of assets" in the eyes of your creditors. You can use that cash to pay down your line of credit or accounts payable.
Second, set attainable financial targets for December 31. A good place to look for targets is RMA, a resource that publishes financial information by industry. Many banks use it as well.
As an example, if you are an electrical contractor you may target these financial ratios for December 31, 2009;
Median Upper Quartile
Current ratio 1.6 2.3
Debt to equity 1.7 .9
Average days in accounts receivable 66 44
The closer you can get to the "Upper quartile" the stronger you will be considered by outsiders. We can help you with that information and how to manage these for your best positioning.
Unlike tax planning, this planning process takes time so starting early will greatly improve your results over starting late, like in December.
(October 2009)
Your contribution and support of my participation in the MS 150 is greatly appreciated. Thanks to you and others, I have collected over $2,500.00 in donations.
Your generosity is appreciated not only by me, but also by the thousands who are victims of this terrible disease.
On September 12th and 13th Mark ODonnell participated in the MS150 Bike Tour for the 11th consecutive year. Since 1999 Mark and his wife Jane have raised over $35,000 for the Multiple Sclerosis Society. The funds raised through this event go towards vital medical research needed to find a cure for Multiple Sclerosis.
If you are interested in donating please make checks payable to the National MS Society. Mail checks to Mark ODonnell at 11457 Olde Cabin Rd., Ste. 310, Creve Coeur, MO 63141-7139
(October 2009)
Mark J. ODonnell, CPA
The economy is stressing most of our businesses, and everyone is taking appropriate action to survive and to prosper once this recession is finally over. Yet there is a new threat to your business that can cause significant economic and personal damage underrated by the media, the H1N1 virus (aka "swine" flu). I believe it may cause a significant portion of your workforce to simultaneously miss at least a week's work, maybe two weeks. Since most of us have lean staffs in reaction to the recession, a substantial absence of key personnel could easily mean problems for our daily business operations. I am a business advisor not a medical professional, but I recently experienced the "flu" and found that it disrupted our business. I believe there are 3 reasons you should take it very seriously;
It is very contagious. On Sunday, August 2, 2008 I went out early for a fifty mile bike ride with some friends. Sure I woke up coughing the night before but I felt fine, in fact after the ride I picked up a dishwasher and arranged to meet my brother in law Doug at my home to install it about 3:00 -pm. Doug and his family planned to help out and stay for Sunday dinner. I started feeling bad about 4 pm and was in bed by 6:30. What I initially thought was a cold coming on hit me like a "ton of bricks." On Monday my wife Jane became as ill as fast as I did, and on Tuesday Doug and his family were infected as well. His daughter (10 yrs old) tested positive for H1N1 the next day. Here's the scary part, from my research you can start spreading the virus one day before symptoms become present! Either Jane or I could have infected Doug and his family even though at that time Jane was experiencing no symptoms. Can't imagine how many others I infected, I have no clue, but I have confidence that at least a few were infected on the ride, and at the store by having come in contact with me.
It is a very difficult flu. It was very incapacitating. I missed the entire work week beginning Aug 2nd. All the greatest hits of the flu are present; headache, fever, body ache, upper and lower GI issues, upper respiratory infection, and by far the worst feature lower respiratory infection. Constant coughing and wheezing are so awful sleep is nearly impossible. It was so bad that I pulled muscles in my back and chest from fits of coughing. Our physician prescribed what he could to relieve the symptoms and prevent other problems, but I understand there isn't much that can be done with a virus. Know this; I have never been that sick. Monday to Thursday was very terrible for me. In addition to a high fever and body aches I coughed so frequently and hard I thought I would cough up my feet.
It is persistent. I could not work from home for the first seven days. I am a workaholic, and proud of it. I love my practice. For those that needed me those seven days you have my apologies. I was out of it. In fact, I did not leave the lazy boy in our family room for any reason unless absolutely necessary. Same for my wife and my brother-in-law's family...the entire week was lost. The next week I struggled to work half time (more or less quarantined myself in my office) and even now a month later I still cough and my chest wall muscles are still sore.
Consider the impact on your business (and family) from the combination of a contagious, persistent and difficult flu. I suspect it could run through our office in days and take out most of my work force for at least a week. Add more don't forget lost time from employee - parents forced to stay home with their children. Client / customer service and work production could grind to a halt. My partner jokes I may be the only person at the office and might need to answer the phone. Not a very good joke, even from an accountant. But he may be absolutely correct! No matter it's a very expensive possibility. For some, this could be an even more serious medical event, which will of course have a more serious impact on our personal lives as well as our business.
Clearly, I am not a physician and I have no business providing any sort of medical advice. However I am strong recommending that you prepare for the H1N1 virus immediately. Please take a look at the following resources as soon as possible.
http://www.cdc.gov/h1n1flu/
http://www.webmd.com/cold-and-flu/flu-guide/swine-flu-faq-1
http://www.ct.gov/ctfluwatch/lib/ctfluwatch/h1n1/h1n1_
factsheet_english.pdf
And the video at;
http://www.youtube.com/watch?v=0wK1127fHQ4
These websites and many others will give you expert advice on how to deal with the H1N1 virus both at your workplace, and at your home.
The virus is here and it's spreading through some St Louis area school districts as well as the general population. We know that a vaccine is not going to be available for a month or more. That may be too late. There are procedures we can take to help reduce our risk to H1N1, the first of which is to become aware of its immediate and real threat to our family's and employees' personal health and our company's financial condition.
(September 2009)
Nathan G. Laurentius passed the Certified Public Accounting (CPA) exam last fall. The CPA exam is one of the world’s leading licensing examinations, as it serves to protect the public interest by helping to ensure that only qualified individuals become licensed as Certified Public Accountants (CPAs). Way to go Nathan!
O’Donnell, Bonebrake & Co., P.C. celebrates 15 years in business!
August 1, 2009 ODonnell, Bonebrake & Co., P.C. celebrates its 15th anniversary. This celebration is as much about our partnership with our clients as it is about us.
Over the years, we've collaborated with clients across a wide range of industries to find practical and innovative solutions to their financial issues. We have been honored to develop deep and lasting relationships with many of our clients.
ODonnell, Bonebrake & Co., P.C. began in 1994, when the principals dissolved a former practice, and along with most of the personnel, formed this new practice. Our predecessor's practice began in 1981 when the partners purchased the St. Louis office of a national firm (Lester Witte & Co.). Including predecessor firms, the practice was founded over 30 years ago.
The success of the firm is due largely in part to our ability to work effectively with our clients and help them meet their significant business and tax related challenges.
In short, it's our relationships with our clients that have made us successful. So, this year, we'll be celebrating more than a 15th anniversary. We'll be celebrating our partnership with our clients.
Thank you for your confidence in our work and your trust in us. We look forward to working with you long into the future.
St. Louis Best Accountants
BEST IN BUSINESS 2009
Our firm is proud to announce that we have been nominated as one of the Best Accounting Firms in St. Louis for 2009! We are featured in the May edition of the Small Business Monthly newspaper.
It is an honor and a privilege to be nominated as one of St. Louis's Best Accounting Firms. This nomination was possible because of our outstanding staff for the service they provide to each of our exceptional clients.
Voting will be held in September of 2009.
ODonnell, Bonebrake & Co., P.C. is committed to serving our clients with quality service.
(September 2009)
ODonnell, Bonebrake & Co., P.C. and the American Subcontractors Association - Midwest Council are pleased to sponsor the Seal the Deal Seminar on May 7, 2009 at the Quality Inn Amphitheatre in Maryland Heights, Missouri.
Seminar Topics:
Cutting Through Tough Economic Conditions
We will be discussing techniques in both sales and marketing to combat the practices used in a tough economy. Companies have to contend with ridiculous pricing schemes, unrealistic demands and inexperience with customers. This topic will deal directly with taking hold of your sales dynamic and working it effectively, regardless of where the economy trends.
Market Thrifty, Sell Strong
Stop blowing money on marketing ideas that don't work! Determine the most effective way to promote to customers while saving money. No need for an expensive campaign, just an intelligent one that's enacted. Properly link the marketing with your sales focus and have them team up to be even more effective. The how to's of doing just that.
Educating Your Customer
Do you have a strategy, system or format to educate your customers on making the best bidding choice? Probably not. You most likely put more effort into getting your "number" than getting your customer. An educated customer is the best customer. It's your job to teach them how to make the best choices in your trade.
Common Errors in Construction Selling
Contractor after contractor make the same mistakes day in and day out. Repeating ineffective selling behaviors will contribute to scratching and clawing for every job. Being untrained, nervous or shy should not be a barrier to success. A few good practices can alleviate the pressure. We will point out many regularly made errors and present counter methods to eliminate them.
Seminar Logistics:
Seal the Deal Seminar
May 7, 2009
Quality Inn Amphitheatre (next to Syberg's on Dorsett)
2434 Old Dorsett Road, Maryland Heights, MO 63043
8:00 a.m. - Noon
(registration begins at 7:30 a.m.)
Continental breakfast included.
Cost: $50 ASA Members; $65 Non-Members
Reservations due before May 1, 2009
NO SHOWS WILL BE BILLED!
Contact Reba Gillick to register
reba@asamidwest.com
(April 2009)
Our firm is required to have a Peer Review performed every three years. The definition of a Peer Review is a review of the auditing and accounting practice of a CPA firm by another CPA firm. The purpose of a Peer Review is to assure that quality controls are being applied in conformity with American Institute of Certified Public Accountants (AICPA) Quality Control Standards.
The accounting firm of Troutt, Beeman & Co., P.C., Certified Public Accountants of Olathe, Kansas reviewed our firm. After reviewing our procedures, Troutt, Beeman & Co., P.C. has concluded that we have met all necessary standards to be in conformity with AICPA Quality Control Standards.
Their report in part reads "In our opinion, the system of quality control for the accounting and auditing practice of ODonnell, Bonebrake & Co., P.C. in effect for the year ended April 30, 2008 has been designed to meet the requirements of the quality control standards for an accounting and auditing practice established by the AICPA and was complied with during the year then ended to provide the firm with reasonable assurance of conforming with professional standards."
ODonnell, Bonebrake & Co., P.C. is committed to serving our clients with quality service.
(March 2009)
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Tax laws generally require individuals with retirement accounts to make withdrawals based on the size of their account and their age every year after age 70 1/2. This rule is intended to prevent wealthy individuals from using retirement accounts as a tax shelter.
Any individual who fails to take a required minimum distribution (RMD) is heavily penalized by the IRS, which taxes the amount not withdrawn at 50%. The new law suspends the required minimum distribution from retirement accounts in 2009. This waiver, which is available to everyone regardless of their total retirement account balances, applies to all defined-contribution plans, including 401(k), 403(b), 457(b), and IRA accounts. Suspending the mandatory withdrawal allows retirees to keep the money in their account if they choose, and possibly recover some of their losses.
Deductions for Energy Saving Home Improvements
Two tax credits are available for taxpayers who make energy saving improvements to residences. They've both been extended by the new law and expanded as well:
(1) A generous tax credit is available to individuals who add solar energy equipment or fuel-cell equipment to their residences. The new law extends this credit through 2016. It also liberalizes the credit in an important way: For 2008, you can claim a tax credit of 30% of the cost of equipment that uses solar energy to generate electricity (photovoltaic property), up to a $2,000 maximum tax credit. For example, suppose you spend $8,000 buying and installing solar heating panels on your residence. If you make the improvement this year, you may claim a maximum credit of $2,000 but if you make the improvement next year, you may claim a credit of $2,400 (30% of $8,000).
Additionally, starting with 2008, the new law makes the credit available for more-exotic energy generating/retaining equipment: wind turbines; and geothermal heat pumps.
(2) For equipment installed before 2008, you could claim a credit for the cost of buying an assortment of energy saving improvements and installing them in your main home. The credit depends on the type of improvement (e.g., 10% of the cost of energy efficient building envelope components, such as insulation and windows, and an up to $150 credit for a natural gas, propane, or oil furnace or hot water boiler) and there's an overall $500 lifetime dollar limit for all home improvements.
The new law does not extend this credit for qualifying
equipment bought and installed in 2008, but it does make it available once again for qualifying equipment bought and installed in 2009. Also, for 2009, the new law makes the credit available for certain types of energy efficient biomass fuel stoves and certain types of energy saving asphalt roofs.
On July 10, 2008 Governor Blunt signed into law changes to Missouri's College Savings Plan. College Savings Plans were established under Section 529 of the Internal Revenue Code, and are exempt from Federal and state income tax. Distributions from the Plan are also tax-free when used for qualified higher education expenses.
Under prior law, each spouse had to contribute $8,000 in order to get the maximum annual deduction of $16,000 on the Missouri return. The new law allows married taxpayers filing a joint return to deduct up to $16,000 of annual contributions regardless of which taxpayer made the contribution.
Also the law expands the tax deduction on the Missouri return to contributions to Non-Missouri 529 Plans. Thus taxpayers have the option to contribute to other state's qualified tuition programs and receive the same tax benefits.
The standard mileage rate will be lower for 2009 business driving. The rate drops to 55 cents per mile next year. The rate for medical travel and moving falls to 24 cents per mile in 2009, while the charitable rate remains at 14 cents per mile.
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