Cal State Fullerton Mid Year Economic Forecast luncheon
Shareholder Maria Arriola hosts clients and referral sources at the Cal State Fullerton Mid Year Economic Forecast luncheon on April 20th at the Hyatt Regency in Irvine. From left to right in photo above are guests Heidi Larkin-Reed, President and CEO of the Orange Chamber of Commerce, Kevin Carter, President of Carter Commercial Group, Jackie Luxenburg of Bristol Park Medical Group, John Somers, also from Bristol Park Medical Group, Debbie Santoro, Community Bank, Maria Arriola, and Linda Boyd and Pian Lau both of the Orange Coast Women’s Medical Group.
Good News Commercial Real Estate Owners
Cost segregation is an Internal Revenue Service recognized application for commercial real estate owners. A cost-segregation study accelerates the depreciation of a building’s components into shorter depreciation categories such as five- seven- and 15-year rather than the conventional 27.5 and 39 year categories. Five and seven year categories may include items such as decorative building elements, electrical for dedicated machinery and computer equipment, and carpet. The 15 year category may include items such as site utilities, landscaping, and paving. For commercial real estate to qualify for this application, it must have been built, purchased, or renovated after 1986.
Here’s the good news! The Workers Homeownership and Business Assistance Act of 2009 allows a one-time three, four, or five year net operating loss (NOL) carryback which can be generated by losses from either the 2008 or 2009 tax year. Since cost segregation generates substantial increases in depreciation expenses, even a qualified business with taxable income may have an NOL after the application of a cost segregation study. This means that it can be used against current taxable income, carried forward up to 20 years, or can be carried back three, four, or five years. Payment is a refund check on taxes paid in prior years. With this temporary and generous NOL carryback flexibility, there has never been a better time to apply a cost segregation study to your assets.
Call your ELLS advisor for further details!
City of Santa Ana attracting clean, energy-efficient companies
Even as it strips millions of dollars from its budget and grapples with biting unemployment, Santa Ana has put a new emphasis on attracting clean, energy-efficient companies.
“We want to position Santa Ana as the clean-tech Silicon Valley of the future,” Mayor Miguel Pulido said in his remarks to the almost 300 business and community leaders gathered for his State of the City speech on June 3rd at the Double Tree Hotel.
He also touched on subjects that ranged from downtown parking to the city’s changing demographics to a stalled skyscraper project known as One Broadway Plaza.
He closed his speech going back to the green jobs of the future, saying he sees “tremendous growth and opportunity” there.
Help Prevent
Identity Theft
Life is better than ever for identity thieves these days. The more assets you have for them to feed on, the more attractive you become. Developing good habits is the key to keeping your personal information truly personal and out of the public domain. We recommend certain actions to take to subvert identity theft before it happens to you.
Check your credit card and bank statements online at least weekly to spot any suspicious activity. Shred papers that include your credit card number, bank account information or Social Security number. Trash bins are a favorite haunt for ID thieves. Consider using an ATM card that does not double as a credit card. Thieves install scanning devices at busy ATM terminals to transmit information from the magnetic strip on your card.
You don’t have to actually lose your card to have the information copied. You can get one free credit report a year from each of the three credit bureaus by going to www.annualcreditreport.com. Stagger your requests
so you get a report from one of the bureaus every four months. Make sure the address on your credit reports is correct. Follow-up promptly on anything that looks suspicious.
Cyber crime is big business. Turn your computer off when you’re not using it, or at the very least, disconnect it from the internet, so they cannot break in and control it from a remote location. When making a payment online or transmitting personal information, look for the https in the URL to indicate you’re on a secure site. Never pay bills or access your bank accounts from a hotel or public computer. Any e-mail purportedly from your bank, credit-card company, or any government agency asking for personal information is almost surely a scam.
Keep personal information off Facebook and Twitter! In the event of death of a loved one, do not mention a woman’s maiden name or exact birth date in an obituary notice. Be sure to notify the Social Security Administration immediately and also alert the DMV.
If you suspect you are a victim of identity theft, file a police report at once. You will need it to dispute fraudulent accounts and debts. It could be as long as two years from the time your identity is stolen before someone eventually tries to use it. Your ELLS advisor can assist you in setting up a routine for following through with our recommendations. Give us a call!
Cost Segregation Studies are known to provide tax benefits to profitable owners, typically on recently acquired or recently constructed business properties.
Envision a scenario where a property sold at a loss could benefit from Cost Segregation. IRS provisions allow a “look-back” study on properties acquired in a prior year, with cumulative benefits for tax depreciation deducted in the year of change. Such deductions reduce the basis of the property and therefore affect the calculation of taxable gain or loss upon sale.
When a property is sold at a gain, depreciation will typically be recaptured which can effectively negate the benefits of the Cost Segregation Study. However, if sold at a loss, depreciation is not recaptured. Potentially a limited capital loss on the property can be converted to an immediate depreciation tax deduction. This scenario works, but the study must be completed and filed with the tax return for the year of sale.
A quick review of the property purchase and sale history, as well as the taxpayer’s overall tax profile, will provide enough information to decide if a study is worthwhile.
For more information about how you can benefit from Cost Segregation Studies, please call Ells CPAS at 714.569.1000 or use our contact form on the right of the page.
New for 2010:Â Tax Credit Helps Small Employers Provide Health Insurance Coverage
For tax years beginning January 1, 2010, small businesses and tax-exempt organizations that provide health insurance coverage to employees qualify for a special tax credit, according to the Internal Revenue Service.
The new tax credit provided by Patient Protection and Affordable Care Act (PPACA) is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees.
An eligible small employer (ESE) generally is an employer with less than 25 full-time equivalent employees (FTEs) whose average annual wages are less than $50,000. Due to the fact that the eligibility formula is based in part on the number of FTEs, not the number of employees, many businesses will qualify even if they employ more than 25 individual workers. The maximum credit goes to smaller employers with 10 or fewer FTEs paying annual average wages of $25,000 or less. Self-employed individuals, including partners and sole proprietors, 2 percent shareholder of an S Corporation, and 5 percent owners of the employer are not treated as employees for the purpose of this credit.
The credit is initially available for any tax year beginning in 2010, 2011, 2012, or 2013. The maximum credit is 35 percent of premiums paid in 2010 by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. In 2014, this maximum credit increases to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible employers that are tax–exempt organizations.
The following three steps determine if you qualify for the small business health care tax credit.
- Determine your total number of employees(not counting owners or family members):
Full-time employees: _________________________________________________
(Enter the number of employees who work at least 40 hours per week)
Full-time equivalent of part-time employees: ____________________________
(Calculate the number of full-time equivalents by dividing the total annual hours of part-time employees by 2080.)
= Â Â Â Â Â Â Â Â Â Â Â total employees
If the total number of employees is fewer than 25, go to step 2
- Calculate the average annual wages of employees(not counting owners or family members):
Take the total annual wages paid to employees: ________________________
Divide above wages by the total number of employees from step 1: _______________________
(Total wages divided by number of employees)
= Â Â Â Â Â Â Â Â Â Â Â average wages
- If the result is less than $50,000, and you pay at least half of the insurance premiums for the employees at the single (employee-only) coverage rate, then you qualify to claim the small business health care tax credit.
The credit is a general business credit, and can be carried back for one year and carried forward for 20 years. The credit is available to offset the regular tax liability as well as the alternative minimum tax.
If you have questions about the PPAC tax credit or to find out about your businesses’ eligibility please call ELLS CPAS 714.569.1000.
Under Section 1603 of the American Recovery and Reinvestment Tax Act, the US Treasury will pay individuals who place energy saving improvements on eligible properties in lieu of tax credits.
Applicants requesting payments upwards of $500,000 will be required to submit an Agreed Upon Procedures (AUP) report prepared by an independent accountant to the Internal Revenue Service.
ELLS Certified Public Accountants offer cost certifications and AUP reports. For more information about our cost certification services please call 714.569.1000 or use our contact form on the right of the page.
Our “busy season” Anniversary congratulations go to Doris Zhu of our Professional Staff who celebrated her 6th year with us on March 1st. Gaby Cervantes of our Admin Team rang up #3 on March 5th, and Shareholder Maria Arriola proudly struts out her 26th year on the ELLS team as of April 9th.
Shareholders Greg Lewis and Sherry Radmore attended this years Shamrock Supply’s St Patrick’s day party. It turned out to be an auspicious occasion when John O’Connor made the day particularly memorable as he turned over the reins of President to his son, Mike O’Connor. Our best wishes to Mike!
ELLS Co-Hosts “Key Trends for Closely Held Businesses” at Center Club in Costa Mesa
In photo above, Shareholder Maria Arriola poses with Steve Kwong from Merrill Lynch and Robert Panetti from Blackrock, Inc., an asset management firm.
Shareholder Ed Lieber was invited to Community Bank in Anaheim to give a presentation on the ways businesses can benefit from participation in an Enterprise Zone. Joining Ed, in the photo above, are Alex Arjonilla, VP Business Center Manager, Dave Malone, President, CEO of Community Bank, Debbie Santoro, VP Senior Relationship Manager, ELLS Shareholder Ron Stumpf and Jesus Leon, VP Relationship Manager. Lenders to an EZ business may be eligible to receive a net interest deduction on certain types of loans made to these businesses. For more information, a call to Ed Lieber will get you an answer.
In February 2010, the Santa Ana Enterprise Zone (EZ) expanded its boundaries to include many new businesses. If you were not located in the EZ, but have a Santa Ana street address, it’s very possible you may now be eligible for the substantial tax saving incentives of the EZ. If you would like to know if you now qualify for EZ incentives, call our receptionist at 714-569-1000 and she will put you through to one of our ELLS advisers who can help you.
Among the most popular EZ benefits is the hiring credit. Businesses of any type can earn $37,440 or more in state tax credits for each qualified employee hired. An employee does not have to live within EZ boundaries to qualify their employer for this credit. In addition, some companies can earn sales tax credits on purchases up to $20 million per year of qualified machinery and parts and can take advantage of up-front expensing of certain depreciable property.
Another advantage is that companies located in the EZ can earn preference points on state contracts. Unused tax credits can be applied to future tax years, stretching out the benefit of the initial investment. If you are not currently taking advantage of the EZ tax credits, this may be a great opportunity for you.