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May 13, 2015

More than 80 CFOs and Controllers are gearing up for the CBIZ MHM CFO Conference to be held next week at the FedEx Institute of Technology on the University of Memphis campus.  Three CFOs – Todd Smith of MicroPort Orthopedics, Inc., Ann Langston of Church Health Center, and Mike Wood of EnSafe – are slated to close the full-day conference with a Q&A session, giving insight into the top concerns of CFOs.

This conference will be the fifth of its kind hosted by the Memphis office.  The May 19th event will focus specifically on the current top concerns of CFOs including economic development, succession planning, big data, cyber security, the affordable care act, and the latest tax and accounting standards. 

Todd Smith
Todd has served as VP of Finance of MicroPort Orthopedics, Inc. since its establishment in January 2014 following MicroPort Scientific’s acquisition of Wright Medical Technology, Inc.’s global OrthoRecon business. MicroPort Orthopedics currently represents MicroPort’s largest business segment specializing in the design, manufacture and marketing of reconstructive joint devices and related services. Prior to the MicroPort acquisition, Todd served in various leadership roles in Wright’s finance division and also served as VP and Controller for VisionAmerica, Inc.

Ann Langston
Ann is the Chief Strategic Officer at Church Health Center and has been with the Center since 1999. Prior to her time on staff, she served as a volunteer legal counsel and was Chair of the Board of Directors. Ann has over 20 years in the private practice of law, first in Atlanta, Georgia and last with Gerrish & McCreary, P.C. in Memphis.

Mike Wood
Mike is the VP of Finance and Administration of EnSafe, an environmental consulting firm. He has nearly 30 years of experience in financial management and has served in senior management at EnSafe for the past 18 years.  Prior to working at EnSafe, he supervised financial services provided to various municipalities, including the cities of Bartlett, Millington, and Germantown, TN.

If you would like to attend, please click here to be directed to our registration page.

May 6, 2015

The Memphis office is proud to announce the selection of five of our employees, Brooke Balducci, Cherry Blanton, Rhett Butler, Josh Finfrock, and Karen Gondan (pictured below L-R), to the Emerging Managing Director Academy (EMDA), Class of 2017. Each brings a unique perspective regarding their journey to this point in their career.

  Brooke Balducci   Cherry Blanton  Rhett Butler       

  • Brooke Balducci is a Senior Manager in our tax services practice. Her prior Big 4 experience coupled with insight gained during her six years with us have greatly contributed to her expertise with large complex clients that are publicly traded or owned by large private equity groups.
  • Cherry Blanton, an audit Senior Manager, currently serves attest clients in a wide variety of industries with diverse types of owners ranging from private equity firms to family groups. Prior to public accounting, Cherry held corporate accounting positions with privately held companies in the airline and marine industries.
  • Rhett Butler joined our firm eight years ago after earning his Masters and currently serves as a Senior Manager in the attest practice. Rhett focuses primarily on mergers and acquisitions, fraud, and employee benefit plans in the areas of manufacturing, retail, and distribution.
  • Josh Finfrock is the Director of our Transfer Pricing practice in Memphis. He joined our firm in 2008 and also has prior experience with a Big 4 firm. Through Josh's leadership, we have been able to capitalize on the expanding market demand for this unique service line.
  • Karen Gondan, a Managing Director in our attest practice, joined our firm about a year ago. Karen's participation in the EMDA program will not only be a way to further her understanding of MHM and CBIZ, but also will provide an opportunity for her to share her prior partner level experiences with those beginning that career path.
The Emerging Managing Director Academy's goal is to make sure that newly promoted Managing Directors make the best possible start in their new role.  This program helps them achieve a higher level of self-awareness and self-development, combined with relevant business, people development, and leadership skills. 

Congratulations to Brooke, Cherry, Rhett, Josh, and Karen! We look forward to seeing them build upon the existing qualities and capabilities that got them to this point in their respective careers.

April 21, 2015

Eustis Corrigan, Senior Managing Director of the Memphis officeparticipated in a Thomson Reuter's tax chat on Twitter. Using the hashtag (#ReutersTax), Eustis and several other "taxperts" across the U.S. answered questions in 140 characters or less.

The following questions were asked by various followers and answered by Eustis (EC):

  1. What are some common tax mistakes?
    • EC: Common mistakes include bad math and misspelled names; misclassification of dividend income as well
  2. Can you explain the tax impact on pre-tax contribution to 401(k) vs after-tax contribution?
    • EC: A pre-tax contribution is not subject to federal income tax and reduces AGI for c/y; tax is deferred until withdrawal is made
  3. What’s your advice to folks who don’t have the cash to pay their taxes?
  4. Is there any way for a grandparent to get a Federal tax break while contributing to their grandchildren's education? [Follow-up: What about 529s from grandparents? Tax impact vs. savings mechanism]
    • EC: A direct payment of tuition is not subject to gift tax; no other tax break
    • EC: The earnings of a 529 plan are tax free IF used for qual education expenses
  5. What will happen if I don’t file my taxes?
    • EC: If you don't file your taxes you will likely receive notices or a visit from your friendly IRS agent!
  6. How do I file for an extension? (And what are the penalties?)
    • EC: File form 4868; if you owe with your extension avoid penalties by paying all taxes owed by the original due date
  7. Should I pay for my taxes with a credit card?
    • EC: Pay taxes with a CC only as a last resort; it is always an economic analysis that should include interest/fees
    • EC: If you have a good relationship with a banker try that route first; interest rate and terms might be better
  8. What’s the craziest tax deduction you've ever heard of?
    • EC: Great question! Deducting the cost of a Mardi Gras ball costume and dues
    • EC: Also cost of cat food at a salvage yard; cats kept snakes and rats off property!
  9. How can we report dividend income from schedule K if the schedule is not available at the time?
    • EC: You may need to file an extension until you get the Schedule K-1
    • EC: The IRS matches K-1s so in order to avoid notices be safe and extend
  10. Should a loan modification be treated as a cancellation of debt?
    • EC: It depend if the modified terms result in a significant modification under IRC sec. 1001; consult tax advisor
  11. What’s the best way to avoid an audit?
    • EC: Sometimes an audit is unavoidable due to random selection; stay honest/keep good records/use a specialist
  12. I got a refund! Should I use it to pay down debt or invest it? Any other tips?
    • EC: Pay your CPA if you used one! Fund an emergency account first then pay down debt.

To view the full conversation click here or search for #ReutersTax on Twitter. If you have further questions regarding any of the above, please contact Eustis Corrigan at ecorrigan@cbiz.com or 901.685.5575. You can also follow Eustis on Twitter @eustiscorrigan for more tax insights.

April 9, 2015

The Memphis office of CBIZ MHM will host a full-day CFO & Controller Conference focused on the top concerns of CFOs. The event will take place May 19th at the FedEx Institute of Technology at the University of Memphis.

Though the local office of CBIZ MHM has hosted several CFO & Controller Conferences in the past, this will be the first time the event will span the entire day (8 AM-4 PM). Participants are eligible to earn a total of 7 CPE Credits.

The following topics & speakers will be featured in 50 minute sessions:

Are You Leaving Money On The Table?
Economic Development In Greater Memphis

  • Mark Herbison - Senior Vice President of Economic Development, Greater Memphis Chamber

Year 2025 Succession Planning: Is Your Firm Ready?

  • Karen C. Fenaroli, CPA - Managing Director, EFL Executive Search - A CBIZ Company

Rise Of Big Data & Its Impact On The CFO

  • Ken Rohman - Principal, Chief Digital Officer, archer>malmo

Cyber Security & Brand Protection

  • Damian Caracciolo - Managing Director, CBIZ Executive Risk
  • Chris Roach - Managing DirectorNational IT Practice Leader, CBIZ Risk & Advisory Services, LLC

Affordable Care Act: What CFOs Need To Know

  • Jim O'Connor - President, Employee Benefits, CBIZ Benefits & Insurance
  • Steve Dunavant - Managing Director, CBIZ MHM, LLC

Updates On Tax Developments & Accounting Standards

A Panel Discussion with Memphis-Based CFOs

If you would like to attend, please click here to be directed to our Eventbrite registration page.

April 7, 2015

CBIZ was proud to be a national sponsor of the second annual Bizwomen Mentoring Monday event hosted by the Memphis Business Journal at Christian Brothers University on March 30, 2015. Linda Lauer, Lead Managing Director, was one of 40 female mentors participating in the event. Bringing together top female professionals in the city with hundreds who are eager to learn from them, Mentoring Monday is truly an unforgettable experience. This year, the event spanned across 43 cities in the U.S. and included 1700 mentors and 8000 mentees.

In Memphis alone,  over 220 women gathered in the CBU Canale Arena. After a short presentation from Bizwomen.com editor, Mary Johnson, the coaching began. Quick 7-minute conversations were inspiring, informative, and sometimes just the beginnings of relationships carried outside of the event.

The 2015 class of Memphis Bizwomen Mentors combined a wide variety of female professionals from across the city in various industries, from healthcare to marketing and accounting to fashion.

To see further coverage of the event visit our @CBIZMemphis Twitter page or search #MentoringMonday on Twitter.

March 12, 2015

The Australian Taxation Office (“ATO”) recently published Practice Statement Law Administration (“PS LA”), online guidance for safe harbors regarding the simplification of transfer pricing record keeping. The PS LA explains the Australian Commissioner will not review a taxpayer’s transfer pricing records beyond confirming the taxpayer’s eligibility if certain safe harbor requirements are met.

The guidance provides safe harbors to the following:

Safe harbor conditions for Small (non-distribution) taxpayers:

  • Consolidated turnover is not greater than AUD 25 million; 
  • Has not incurred 3 or more consecutive years of losses;
  • Has no intercompany transactions with entities in “specified countries” (countries considered “high risk”);
  • Has not restructured in the year;
  • Has no intercompany transactions involving royalties, research and development, and license fees and arrangements;
  • Not classified as a distributor; and
  • No more than 15% of total turnover is comprised of “specified intercompany services” (services considered “high risk”).
  • Safe harbor conditions for Small-to-medium sized distributors:
  • Turnover for the distributor is no greater than AUD 50 million and has an operating margin of at least 3% on a 3-year basis;
  • Has no intercompany transactions with entities in “specified countries;”
  • Has not restructured in the year; and
  • Has no intercompany transactions involving royalties, research and development, and license fees and arrangements.

Safe harbor conditions for Low-risk intragroup services:

  • The markup on low-risk service revenue is at least 7.5% or the markup on low-risk service expense is no more than 7.5%; and
  • One of the following conditions is met: (1) No more than AUD 1 million of absolute intercompany services or (2) Greater than AUD 1 million of absolute intercompany services, with service expense comprising of no more than 15% of total expense and the service revenue comprising of no more than 15% of total revenue;
  • Has not incurred 3 or more consecutive years of losses;
  • Has no intercompany transactions with entities in “specified countries”;
  • Has not restructured in the year; and
  • No more than 15% of total turnover is comprised of “specified intercompany services.”

Safe harbor conditions for Low-level intragroup loans:

  • Australian group has a combined borrowed and loan amount of AUD 50 million or less;
  • The interest rate paid on the amounts borrowed is not more than the variable Reserve Bank of Australia indicator lending rate for “small business; variable; residential-secured; term loans”;
  • Has not incurred 3 or more consecutive years of losses;
  • Has no intercompany transactions with entities in “specified countries” (countries considered “high risk”); and
  • Has not restructured in the year.

However, there are certain limitations to the safe harbors. Any taxpayer paying or receiving royalties or license fees are excluded from the safe harbor. Furthermore, the distribution safe harbor applies to the whole group. Specifically, the whole group’s main activity must be classified as a distributor and the distribution segment cannot be segmented. Finally, safe harbor for interest only applies to inbound interest expenses (there is no safe harbor for outbound interest revenue).

If you have further questions regarding transfer pricing or safe harbors, feel free to contact our Transfer Pricing expert Josh Finfrock at jfinfrock@cbiz.com.

March 5, 2015

A common mistake (often most applicable with small businesses) is the issuance of a Form W-2 to a partner in a partnership. Surprisingly, tax advisors continue to see partners treating themselves as employees. Today, more small businesses are offering profits interest as a form of compensation to their employees at all levels, which terminates the employee status in the eyes of the IRS.

When an employee becomes a partner, payroll withholding becomes his or her own financial burden and filing obligation. Previously responsible for withholding and remitting the employment taxes of that employee, the employer must now report guaranteed payments on Schedule K-1 to the partner as opposed to issuing a W-2. Through his or her receipt of a profits interest, the partner is now responsible for making quarterly estimated payments to the IRS.

Both partners and employees should be aware of these changes when capital or profits interests are awarded as a form of compensation. If you are a partner and have received a W-2, you should consult with your tax advisor for the appropriate steps to correct your filing and withholding obligations for 2015.

If you have further questions regarding partnerships, please feel free to reach out to me (samurphy@cbiz.com) or one of my colleagues.

February 27, 2015

The Daily News hosted the third annual Women & Business Seminar at the Brooks Museum. This year was the second in a row in which the event sold out. We are honored to have been a sponsor since the seminar’s inception and to have Linda Lauer speak about the national CBIZ Women’s Advantage in the event’s opening remarks. This year’s keynote speaker was Keri Wright, Chairman and CEO of Universal Asset Management (UAM).

Appointed to Chief Operating Officer at UAM when she was only 25, Keri attributes her success to finding confidence and courage in herself. Her speech was particularly focused on finding these traits at a young age, something she gained while flying an airplane solo at the age of 15. Pointedly, Keri can relate everything in her career to “having to land the plane.” The phrase repeatedly served as the driver behind all of Keri’s points in her speech, whether it be literally or figuratively. Keri notes that learning to take full ownership of a tough situation with confidence and courage and seeing it through is what she strives to teach young women.

The Q&A section allowed audience members to inquire about common issues in the workplace including flexible work arrangements, work-life balance, and finding trusted business partners. Kim Grant, Owner of Kim Grant Homes, echoed Keri’s sentiments regarding age being a business hurdle she has had to overcome. Interestingly, even with both women working in extremely male-dominated industries, each claimed age to be her larger issue at hand.

Judy McLellan of Crye-Leike spoke to the importance of having a mentor, citing her mother, a former realtor, as her biggest influence. And Lauren McHugh, President of Huey’s, also noted the importance of finding a mentor at a young age, noting that connecting with someone early on in your career can be a tremendous help in your professional growth.

The entire panel spurred the over 250 women and men into discussion, and the room’s intimate setting allowed for quick dialogue. Publisher of the Daily News, Eric Barnes, took questions up until the last second with hands still raised. With the chatter only continuing at the event’s wine and cheese reception, one thing is clear - the women & business seminar series is flying, and it doesn’t look like it’s ready to land anytime soon.

February 25, 2015

If you read Part 1 of our blog post series concerning self-rental income, you know that the Net Investment Income (NII) Final Regulations removed self-rental relationships from the inclusion in Bucket 1 of the NII. While the focus of the previous blog post centered with the rental income in Bucket 1, we will now look at the impact of the self-rental relationship impact on Bucket 3 and some additional tax planning considerations.

After the Proposed Regulations were released, many tax professionals suggested converting triple net-lease arrangements to operating leases. An operating lease holds you responsible for more than just collecting money each month. A triple-net lease designates the tenant as solely responsible for all costs and services for the property.

By converting to an operating lease, the belief was that the rental income would not be included in Bucket 1 due to meeting the “derived in a trade or business in which the taxpayer materially participates” language. However, the Final Regulations relieved this concern by exempting activity falling under Reg. §1.469-2(f)(6) and Reg. §1.469-4(d)(1) as illustrated in our previous blog post. By meeting either of those two positions in the Regs, any gain or loss should also be excluded from Bucket 3.

However, there still may be some benefit in converting a triple-net lease into an operating lease even after the change from the Proposed Regs to the Final Regs.

The operating lease may strengthen your position that the rental activity is a trade or business vs. an investment. The disposition of property used in a trade or business is generally considered ordinary under §1231, therefore if the property is disposed of at a loss it might be considered ordinary under §1231 instead of a capital loss (subject to capital loss limits) on investment property. Additionally, if there is a COD event in respect to real property used in trade or business, there may be an opportunity to make an election under §108(c) to reduce the basis of depreciable real property instead of recognizing COD income. This election would not be available if the property was deemed to be an investment property.

If you have further questions regarding the NII tax or your self-rental property, feel free to reach out to me at bkoch@cbiz.com or one of my colleagues.

February 18, 2015

The Net Investment Income (NII) tax went into effect in 2013, but if you participate in a self-rental property arrangement, now may be a good time to review your tax filings and entity structuring as we head into filing season. The NII Final Regulations included a reversal from a position taken in the 2012 Proposed Regulations concerning the treatment of self-rental income.

As a reminder, the 3.8% Medicare surtax on qualifying NII includes three buckets:

  1. Gross income from interest, dividends, annuities, royalties and rents, unless derived in a trade or business in which the taxpayer materially participates
  2. Gross income from a trade or business that is a passive activity or the trade or business of trading in financial instruments or commodities
  3. Net gain from the disposition of property, other than property the income generated from which otherwise would be excluded under Bucket 1 or 2

For a detailed description of the NII tax, feel free to read our previous post on the topic.

In this example, Bob is an attorney and operates his law practice in which he materially participates inside an S-Corporation of which he owns 100% of the stock. Bob also owns the property in which the law practice operates inside of a separate single-member LLC. Under the terms of the lease, Bob’s law practice pays rent to the single-member LLC.

In most circumstances, rental income is by nature considered passive income. However under Reg. §1.469-2(f)(6), rental income derived from property rented to a trade or business in which the taxpayer martially participates “is treated as not from a passive activity.” In the example presented above, since the rental income in Bob’s single member LLC is derived from the S-Corp, which is an operating business in which Bob materially participates, the income would be considered nonpassive. Also, Bob may group the rental activity with the operating business activity under Reg. §1.469-4(d)(1) thus making the grouped activity a nonpassive activity.

Initially under the Proposed NII Regs, self-rental income appeared to be subject to the 3.8% because it fell within the “rents” description in Bucket 1, unless the rental income was proved to be “derived in the ordinary course of a trade or business.” After hearing complaints from tax professionals, Treasury reversed the position in the Final NII Regs allowing rental income from a self-rental to be excluded from Bucket 1 if it is treated as a nonpassive activity (Reg. §1.469-2(f)(6)) or if the rental activity is grouped with an active trade or business activity (Reg. §1.469-4(d)(1) ) (and the grouped activity is nonpassive to the taxpayer).

For most small business owners, it’s common to split real estate and active business operations into separate legal entities for liability issues. Therefore, it is critical that taxpayer’s develop an understanding of self-rental structuring. A rental lease’s arrangement could change the nature of a property owner’s involvement in the trade or business such as in the case of an Operating lease versus a Triple-net lease. This arrangement is one example of a tax planning opportunity available for self-rental property owners.

Also, how you deal with the disposition of the activity or property can affect if your operations are viewed as a trade or business or an investment property. Read more about these considerations in Part 2 of our blog post series.

If you have any further questions regarding the NII tax or your self-rental property, please feel free to contact Bryan Koch at bkoch@cbiz.com or 901.685.5575.


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