Category Archives: Business Reports

Business Report: Darwinism And Business Taxes

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James W. Cole is a tax partner with SaxBST, an accounting, tax and financial services firm.

BY JAMES W. COLE, CPA

According to Wikipedia, Darwinism is the
theory of biological evolution stating that all
species arise and develop through the natural
selection of small inherited variations that
increase the organism’s ability to compete,
survive and reproduce. In nature this plays
out over long periods, often with small incremental
changes.

In today’s business and tax world, these
changes happen rapidly and “natural selection”
is driven by innovation, global competition,
the political process and, ideally, by
well-informed conscious choice rather than
transmutation.

Most businesses today are no longer bound
by small geographical constraints. You can
invent the better mousetrap in your garage
today and be selling it across the country and
possibly the world next month thanks to the
internet and global shipping. And it is even
easier for many IT based businesses that can
avoid shipping altogether. This provides both
opportunity for success, as well as competitive
risk to be beaten by someone, somewhere who
can build it faster and/or cheaper.

So how does all of this “evolution” play out
in the business tax world?

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Business Report: Is 2016 Open For Business?

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Michael Billok is a member of Bond,
Schoeneck & King’s Albany office.

BY MICHAEL BILLOK

Like time, the regulatory landscape never stops
moving. To that end, a key question on employers’
minds is this: What new laws and regulations are
going into effect in 2016, and how will they affect
my business?

New Overtime Exemption Rules

In July of 2015, the U.S. Department of Labor
(USDOL) proposed sweeping changes to
the overtime rules, such that millions of fewer
employees would be exempt from overtime. Currently
under federal law, in order to be exempt
from overtime under the executive, professional
or administrative employee exemptions, an employee
must earn at least $455 per week. (State
law requires minimum amounts of $675 per week
for executive and administrative employees).

Under the proposed new rule, those employees
would need to earn at least $970 per week in
order to still be exempt from the requirement
to pay them overtime for any time worked over
40 hours in a week. According to the USDOL’s
rulemaking schedule, the final rule should be
issued by July 2016. Once this rule goes into
effect, millions of employees that were earning
between $23,660 and $50,440 annually and were
previously exempt, will suddenly be subject to
overtime requirements.

New Injury and Illness Reporting Rules

In November of 2013, the U.S. Occupational
Safety and Health Administration (OSHA) proposed
rules that would drastically change how
employers track and report their injuries and
illnesses. This new rule is set to go into effect soon
as well, as OSHA has stated it intends to publish
the final rule in March of 2016. Currently employers
post annually, but do not submit, the OSHA
Form 300A that contains reportable injuries and
illnesses incurred over the past year.

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Business Report: Put Your Financial 'Puzzle' Together

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BY ROB SNELL

Jan. 29 is National Puzzle Day, with puzzle celebrations
and events taking place at museums, libraries
and other venues across the country.
Why this date was chosen–or why National
Puzzle Day even exists–is something of a mystery.
But as an investor, you can find value in the concept
of a puzzle, specifically, in putting together the pieces
of your financial puzzle.

What are these pieces? Here are the essential ones:

Growth

At different times in your life, you will have
various goals – purchasing a first or second home,
sending your children to college, enjoying a comfortable
retirement, and so on. While these goals
are diverse, they all have one thing in common: To
achieve them, you’ll need some growth potential in
your investment portfolio. The nature and the extent
of the growth-oriented vehicles, such as stocks and
stock-based instruments, in your holdings will depend
on your specific goals, risk tolerance and time
horizon – but growth opportunities you must have.

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Business Report: Coordinate Retirement Planning Efforts

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BY DAVID L. CUMMING

The typical American family reflected in
iconic television shows of the 1950s and 1960s,
in which the husband went off to work each
morning and the wife happily played out the
role of homemaker, is firmly in the minority.

By 2012, the Bureau of Labor Statistics reported
that six in 10 families with children have
two working parents. What’s more, the majority
of Americans feel they need dual incomes in
order to reach their financial goals.

For a major goal like retirement, working
couples need to be especially vigilant to coordinate
their planning efforts in a way that
supports their combined accumulation objectives.
As you and your spouse execute your joint
retirement strategy, keep some of the following
tips in mind.

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Business Report: Advance Retirement, Asset Protection

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BY KEVIN M. HEDLEY, MS, CPA, PFS

Business owners are generally more concerned
with day to day business matters and
may not realize some of the opportunities that
may arise from solving problems.

You may be concerned about the loss of key
employees, vendors or major clients, legal expenses,
or a myriad other concerns. All of these
can result in a catastrophic loss if they occur
and are the types of items that can keep you up
at night. When dealing with all of this it isn’t
often that a single solution can be found to solve
multiple problems facing business owners, but
there is such a solution available in the tax law.

One potential solution is known as a Captive
Insurance Company (CIC). The key difference
with the insurance to be discussed here and
insurance you obtain from your local insurance
carrier is you own the insurance company. The
Internal Revenue Code Section 831(b) effectively
allows a business to claim a deduction of up to
$1.2 million in a calendar year and have that premium
go to an insurance company that is owned
by the business owner. The added benefit of the
self owned insurance company is you do not pay
any tax on the receipt of the insurance premium.
Yes, you read that correctly, you deduct the premium
from one company you own and exclude
the income in another company you own.

So how can a CIC help your business?

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Business Report: Capital Gains: To Gift Or Not To Gift

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Brittany Razzano is an associate with the
Herzog Law Firm in Saratoga Springs.

BY BRITTANY RAZZANO, ESQ.

What is a capital gain? Generally, a capital
gain results from a sale of an asset, such as a
stock, at a higher price than the owner originally
paid. What the owner paid for the asset
is known as the cost basis. If the sale price
is higher than the cost basis, the difference
between the two is a capital gain.

A long-term capital gain is a gain resulting
from a holding period of more than one year.
For most taxpayers, a long-term capital gain
is taxed at 15 percent (20 percent for the top
tax bracket). A short-term capital gain is a
gain resulting from a holding period of 12
months or less. A short-term capital gain is
taxed as ordinary income, which varies depending
on the taxpayer’s income tax bracket.

Beyond the basics of capital gains tax rules,
we must consider the effects of gifting and
inheriting capital assets. When considering
these events, we must also think about the
possible gift tax and estate tax ramifications.
The current federal annual gift tax exclusion
amount is $14,000 per person.

This means that a donor can give each
person $14,000 per year without having to
pay or report any gift taxes. If the donor is
married, they can give away $28,000 per year
per person. It is important to note that while
for tax purposes, a gift of $14,000 or less is
disregarded, such a gift may be considered a
transfer that could trigger a penalty period
for a Medicaid look-back period, if the donor
has to go into a nursing home within five years
of making the gift.

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