Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform...
Transcript of Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform...
![Page 1: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/1.jpg)
November 30, 2016
![Page 2: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/2.jpg)
Mike Robbins, CPA
![Page 3: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/3.jpg)
2016 tax matters
• Overall a very quiet tax year (common for election years)
• Tax return due date changes for 2016 filings:– Form 1065 (LLCs and Partnerships) – due 3-15-17
– Form 1120 (C-corporations) – due 4-15-17
– Form 1120S (S-corporations) – due 3-15-17
– Form 1040 (Individuals) – due 4-15-17
– FinCEN (FBAR) – moved up from 6/30 to 4/15
![Page 4: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/4.jpg)
2016 tax matters
• ACA Forms 1095-B & 1095-C – due to participants extended to March 2, 2017
• Section 179 expense - $500,000, reduced when acquired property > $2,010,000
• 50% bonus depreciation on qualifying asset additions
• Charitable contributions from IRAs for taxpayers age 70 ½
• Section 385 regulations for companies with international operations
![Page 5: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/5.jpg)
Tax planning ideas & issues
• Social Security planning• Review life insurance policies• Consider Roth IRA conversions• Business transition planning/valuation discounts• Retirement Plan check-up• State tax – apportionment & nexus• Cost Segregation Studies• R&D tax credit• IC-DISC• Year-end inventory management
![Page 6: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/6.jpg)
Future tax matters
• President Trump and Republican House & Senate
• Lame-duck session probably pretty lame
– Limited to keeping the government funded
– No significant tax legislation
• Expect changes to tax laws for businesses & individuals
• GOP tax reform blueprint shares similarities with Trump tax proposals
![Page 7: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/7.jpg)
Future tax matters
• Comprehensive tax reform historically occurs in first year of new administration – 2017
• Tax reform to be focused on growing the economy and building infrastructure
• Lower tax rates proposed– Corporate rate reduced to 15% from 35%
– Individual top rate reduced to 33% from 39.6%
– Three brackets 12%, 25%, 33%
![Page 8: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/8.jpg)
Future tax matters
• Proposed repeal of ACA, Estate Tax, Corporate and Individual AMT
• Cap itemized deductions
• Increase Section 179 expense to $1 million
• Manufacturing – current deduction for all new investments in the business
• Individual deduction for child & dependent care expenses
• Pass-thru business tax rate of 15%
• Deemed repatriation of offshore corporate profits at a reduced rate
• Address tax extenders expiring at end of 2016 (energy and other miscellaneous items)
![Page 9: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/9.jpg)
Future tax matters
• Tax planning – difficult to predict what will happen
• If tax rates are reduced, defer income into 2017, accelerate deductions into 2016
• Will be watching closely and will report any meaningful reforms.
![Page 10: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/10.jpg)
Sam Hodges, CPA, CGMA
![Page 11: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/11.jpg)
• Power of Attorney Changes
• Nexus
• Apportionment
![Page 12: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/12.jpg)
Michigan Changes
![Page 13: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/13.jpg)
Treasury administrative matters
• Power of Attorney– Fradco and SMK Decisions– New Form 151
• 205.8 Letters and notices sent to taxpayer's official representative.– If a taxpayer files with the department a written request that copies of
letters and notices regarding a dispute with that taxpayer be sent to the taxpayer's official representative, the department shall send the official representative, at the address designated by the taxpayer in the written request, a copy of each letter or notice sent to that taxpayer. A taxpayer shall not designate more than 1 official representative under this section for a single dispute.
![Page 14: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/14.jpg)
![Page 15: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/15.jpg)
![Page 16: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/16.jpg)
![Page 17: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/17.jpg)
The ever-changing landscape
![Page 18: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/18.jpg)
In a nutshell, nexus is the minimum connection a business haswith a state through its activities that gives the state the right totax the entity.
• Governed at the federal level - U.S. Constitution– Due Process Clause – requires some minimum connection to exist and contains
a minimum contacts test addressing fairness of a state’s taxation of interstate commerce.
– Commerce Clause - requires the nexus or connection be substantial. The tests it establishes focus on excessive (undue) burdens on interstate commerce that states might impose.
U.S. Congress has the constitutional authority to regulate interstate commerce (Commerce Clause).
![Page 19: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/19.jpg)
Different nexus rules for different tax types.
• Sales and use
• Business activity taxes (to name a few):
– Income taxes (or franchise taxes based on net income)
– Franchise taxes
• Based on net income (e.g. IL replacement tax)
– Other:
• Gross receipts or Gross Margin taxes
• Business & occupancy
![Page 20: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/20.jpg)
Different nexus rules for different tax types.
• Sales and use [Minimal Connection]
• Business activity taxes (to name a few):
– Income taxes [Substantial Connection*]
– Franchise taxes [Substantial Connection*]
• Based on net income (e.g. IL replacement tax)
– Other: [Minimal Connection]
• Gross receipts or Gross Margin taxes
• Business & occupancy
![Page 21: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/21.jpg)
Federal PL 86-272 is a very narrow protection from net income-based taxes for sellers of tangible personal property, where solicitation of orders and activities ancillary to solicitation are the only activities in a state and where orders are sent out-of-state for approval.
• Ancillary activities are activities that serve no independent function apart from their connection to soliciting orders.
• Special provisions for use of in-state independent contractors
![Page 22: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/22.jpg)
![Page 23: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/23.jpg)
Apportionment — overview
• Primary mechanism for assigning taxable income to various states
• Taxpayer must have a right to apportion by establishing nexus in another state
• Historically 3-factor formulas, trending to single-factor sales formula
– About 50/50 now, but many states still using 3-factor are weighting sales factor more heavily
![Page 24: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/24.jpg)
Apportionment — sales of TPP
• Generally sourced to shipping destination
– Need to consider “ultimate destination”
• MI new 30 day rule
– Need to dig beneath the “sales by state” making sure sales to ship-to and not bill-to address
![Page 25: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/25.jpg)
Apportionment — sales of services
• Traditionally sourced based on income-producing activity (Cost-of-Performance Sourcing)
• States moving to sourcing based on where the benefit of the service is received (Market-Based Sourcing)
• “Nowhere sales” opportunities, but more fundamental issue of just getting it right
– Need to gather info for both sourcing methods
![Page 26: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/26.jpg)
State\Method Property Payroll Sales 3-Factor
AR 0.000000
CA 20,000 5,000 50,000 0.018262
IL 25,000 0.003299
IN 2,000 0.000264
KS 650,000 0.085775
MI 1,500,000 200,000 1,000,000 0.752029
NY 5,000 0.000660
OH 24,000 200,000 0.061327
PA 1,000 0.000132
SC 5,000 0.000660
SD 22,000 0.002903
TN 15,000 0.001979
TX 51,000 0.006730
Foreign 500,000 0.065980
Total 1,520,000 229,000 2,526,000 1.000000
![Page 27: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/27.jpg)
Cost of Cost of
Performance Perf >50% Signed Billed HQ Work Delivery Ordered
State\Method COP % COP >50% Contract Address Location Performed Location Location Other
AR 5,000
CA 55,153 100,000 629,000 50,000 300,000 252,600
IL 25,000 252,600
IN
KS 50,000 600,000 400,000 400,000 252,600
MI 2,206,114 2,526,000 1,725,000 1,000,000 597,000 2,526,000 750,000 821,000 252,600
NY 45,000 1,300,000
OH 264,734 20,000 250,000 75,000 252,600
PA 75,000
SC 252,600
SD 20,000 25,000 252,600
TN 252,600
TX 1,000 27,000 90,000 252,600
Foreign 750,000 734,000 866,000 900,000 252,600
Total 2,526,000 2,526,000 2,526,000 2,526,000 2,526,000 2,526,000 2,526,000 2,526,000 2,526,000
B E N E F I T S R E C E I V E D
![Page 28: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/28.jpg)
Cost of Cost of
Performance Perf >50% Signed Billed HQ Work Delivery Ordered
State\Method COP % COP >50% Contract Address Location Performed Location Location Other
AR 5,000
CA 55,153 100,000 629,000 50,000 300,000 252,600
IL 25,000 252,600
IN
KS 50,000 600,000 400,000 400,000 252,600
MI 2,206,114 2,526,000 1,725,000 1,000,000 597,000 2,526,000 750,000 821,000 252,600
NY 45,000 1,300,000
OH 264,734 20,000 250,000 75,000 252,600
PA 75,000
SC 252,600
SD 20,000 25,000 252,600
TN 252,600
TX 1,000 27,000 90,000 252,600
Foreign 750,000 734,000 866,000 900,000 252,600
Total 2,526,000 2,526,000 2,526,000 2,526,000 2,526,000 2,526,000 2,526,000 2,526,000 2,526,000
B E N E F I T S R E C E I V E D
![Page 29: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/29.jpg)
Grant Keppel, CPA Andy Rose, CPA
![Page 30: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/30.jpg)
Purchase & renovations impact
CSS Pivotal along with Timing
• Coordinate prior to Demo begins to see building
• Allocated Purchased building cost to shorter tax lives
• Ability to allocated new renovations to shorter tax lives
• Set up building and structural assets in line with TPP
• If Complete Demo in current year – excellent planning point to get “cake and eat it too”
![Page 31: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/31.jpg)
Replace roof
• Timing is everything• Before move in but after purchase• Ability to write off existing roof vs newly replaced
roof• Becomes part of the study for both TPR and CSS
![Page 32: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/32.jpg)
Change of design of parking
• Change orders become part of the process• Happens all the time• Would add this to our scope and for this
particular asset cost – tax treatment of 15 year• And bonus eligible – 50% currently
![Page 33: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/33.jpg)
How much client involvement
• Minimal time disruption• Many times provide walk through of building 1-2
hours• Information request of items like blueprints or cost
data• After handoff of information we take all the rest
from there
![Page 34: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/34.jpg)
What is my risk for doing a CSS
• Very little• Greater risk for doing nothing at all• Compliance with TPP regulations a must• Done Right with Engineering and Tax team
![Page 35: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/35.jpg)
What if I get audited?
• We provide a comprehensive study for back up
• Our team stands behind work product now and into future
• We have the experience with IRS in event of audit and provide time in our original fee to compliment
• Very low percentage of IRS audits on a national level
![Page 36: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/36.jpg)
CSS examples
• For a renovation of a Seafood Manufacturer which spent under $1mm in improvements
– Over 70% allocation to 5 year assets vs 39 year
![Page 37: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/37.jpg)
CSS with TPR impact
• For a Manufacturer with existing assets already being depreciated – both CSS and TPR came into play– CSS identified an opportunity of approximately $19m
of building assets
– Resulted in additional tax deduction in 2015 of over $5m (2007 in svc date)
– TPR identified $30m in assets that qualified for Repair Treatment
– Resulted in a NBV and current deduction of over $11m
![Page 38: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/38.jpg)
New depreciation developments
• Bonus Depreciation 50%
• New Qualified Improvement Property
• Up to 500,000 for Section 179(d) eligible property
![Page 39: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/39.jpg)
![Page 40: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/40.jpg)
Jessica Dore, CISA
![Page 41: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/41.jpg)
Fraud, cyber crime & the bottom line
$400 billion lost annually to fraud and misappropriation
by US organizations
6% of annual revenue lost to fraud and abuse by the
average organization
$4 million to resolve the average data breach, not including liability issues
![Page 42: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/42.jpg)
Data breach history
Source: ID Theft Resource Center
Category 2015 2014 2013
Banking/Financial 71 (9.1%)
5,063,04443 (5.5%)
1,198,492 23 (3.7%)
786,789
Business 312 (39.9%)
16,191,017258 (33%)
68,237,914 211 (34.4%)
77,262,781
Educational 58 (7.4%)
759,60057 (7.3%)
1,247,81255 (9.0%)
3,239,748
Government/Military 63 (8.1%)
34,222,763 92 (11.7%)
6,649,319 56 (9.1%)
1,881,803
Medical/Healthcare 277 (35.5%)
112,832,082333 (42.5%)
8,277,991269 (43.8%)
8,811,051
![Page 43: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/43.jpg)
Stats
Source: 2015 Verizon Data Breach Report
![Page 44: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/44.jpg)
Stats
Source: 2016 Verizon Data Breach Report
85% of
successful exploit traffic leverage the top 10 vulnerabilities.
![Page 45: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/45.jpg)
The main root causes of a data breach
Source: Poneman 2016 Cost of Data Breach Study
The most common types of malicious or criminal attacks include malware infections, criminal insiders, phishing/social engineering and SQL injection.
Negligent insiders are individuals who cause a data breach because of their carelessness
![Page 46: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/46.jpg)
Source: progressbangladesh.com
Cyber crime is here to stay
• Cyber warrior ‘mercenaries’ for hire worldwide
• Cyber crime is a multi-billion dollar underground economy
• Cyber crime is an industry of suppliers, distributors and manufacturers
• Information is the commodity
![Page 47: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/47.jpg)
60% of businesses FAIL within 6 months of
being hacked
• Loss of cash from bank accounts
• Cost of breach repair and recovery
• Cost of notification
• Cost of compliance
• Cost of lost customers
• Cost of reputation loss
Source: www.greenskyproductions.co.uk
![Page 48: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/48.jpg)
Small businesses a big target
• Don’t believe they will be attacked
• Cybersecurity not a priority
• Weak cybersecurity/ outdated tools
• Poor employee training
• Poor or no data breach response plan
• Lead to bigger fish
Source: ameriscope.com
![Page 49: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/49.jpg)
Data breach costs are rising
Source: Poneman 2016 Cost of Data Breach Study
The difference a year makes
• The average total cost of a data breach increased from $3.79 to $4 million (+5.3%)
– Up 29% since 2013
• The average cost paid for each lost or stolen record containing sensitive and confidential information increased from $154 to $158 (+2.6%)
– Up 15% since 2013
![Page 50: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/50.jpg)
How do cyber criminals get in?
Ransomware Ransomware Phishing
Ransomware DDOS
Malware/ Spyware
Keylogging Skimming
Smishing
Social Engineering
Ransomware
Vishing
![Page 51: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/51.jpg)
Phishing definition
Example: Sending an e-mail to a user falsely claiming to be an established, legitimate enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft.
![Page 52: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/52.jpg)
Phishing scams
• Email from you
• Email from your internal staff
• Email from your customer
• Message from friend overseas and in trouble
• “Your tax refund is already taken care of”
• Email from CEO to CFO requesting wire transfer
![Page 53: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/53.jpg)
Vishing
• Phishing with a VoIP twist
![Page 54: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/54.jpg)
Smishing
• A combination of short message service (SMS or text messaging) and phishing.
• Occurs when scammers pose as trusted companies.
• Send bogus text messages to notify you of account problems.
• They need to verify personal information and provide Web sites or telephone numbers for you to do so.
![Page 55: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/55.jpg)
Ransomware
• Your data taken “hostage”
• Ransom email
• Today $300
• Tomorrow more
• If you don’t pay, they destroy your data
![Page 56: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/56.jpg)
Malware/spyware
• Short for "malicious software," malware refers to software programs designed to damage or do other unwanted actions on a computer system. Common examples of malware include viruses, worms, trojanhorses, and spyware.
![Page 57: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/57.jpg)
Malware
Source: 2015 Verizon Data Breach Report
![Page 58: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/58.jpg)
Keylogging
• The use of a computer program to record every keystroke made by a computer user, especially in order to gain fraudulent access to passwords and other confidential information.
![Page 59: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/59.jpg)
Skimming
• A type of fraud which occurs when a ATM or other card reading device is compromised by a skimming device, which can be disguised to look like a part of the machine. The card reader saves the users' card number and pin code, which is then replicated into a counterfeit copy for theft.
![Page 60: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/60.jpg)
2015 most common passwords1. 123456 (Unchanged)
2. password (Unchanged)
3. 12345678 (Up 1)
4. qwerty (Up 1)
5. 12345 (Down 2)
6. 123456789 (Unchanged)
7. football (Up 3)
8. 1234 (Down 1)
9. 1234567 (Up 2)
10. baseball (Down 2)
![Page 61: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/61.jpg)
What do they do with the information?
• Cyber Criminals sell personal identifying information or use it to:
– Open false bank accounts
– File false IRS returns
– Open false credit cards
– Steal from bank accounts
– Hack into other accounts/businesses
![Page 62: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/62.jpg)
Employees are the weakest link
• Negligent insiders are the top cause of data breaches
• Clicking on links in emails
• Sending work email to personal accounts
• Using company data on insecure lines
• Not following corporate policies
• Not securing mobile devices
![Page 63: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/63.jpg)
Vulnerability: weak IT Security
• Poor access controls
• Poor patch management
• Improper device configuration
• Lack of security audits
• Weak enforcement of remote login policies
![Page 64: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/64.jpg)
Controls combat incidents
Source: 2015 Verizon Data Breach Report
![Page 65: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/65.jpg)
Where should you focus?
• Data
• Perimeter
• Access
• Governance
• Vendor
• Mobile
• Human
Source: www.lifehack.org
![Page 66: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/66.jpg)
Data management
• Data – What is it and where is it?
• Risks – What is it worth?
• Access Paths – How can you get to the data and what are the control points?
• Access – Who can get to your data?
www.intelymind.com
![Page 67: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/67.jpg)
Perimeter management
• Do you have a
firewall?
• Do you have a
DMZ?
Source: www.linklogger.com
![Page 68: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/68.jpg)
IDS/IPS — alerts
infosecprimer.wordpress.com
• Do you have an
Intrusion Detection
System?
• Do you have an
Intrusion Prevention
System?
• Are alerts turned on?
• Are they monitored?
![Page 69: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/69.jpg)
Monitor
• Conduct:
– External Vulnerability and Penetration Test
– Internal Vulnerability and Penetration Test
– Social Engineering Test
dstudio.ubc.ca
![Page 70: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/70.jpg)
Access management
Source: blog.lookout.com
• Access Control
• Restrict Administrative Access
• Perform Access Reviews
• Leverage Least Privilege
![Page 71: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/71.jpg)
Software patching
• How often do you patch?
• Best Practice = 30 Days
Source: www.gfi.com
![Page 72: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/72.jpg)
Backups
–Daily Backups
–Rotated Offsite
– Testing
www.itservicesalbuquerquenm.com
![Page 73: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/73.jpg)
Vendor management
• Selection Due Diligence
• Contract Reviews
• Annual Due Diligence
www.questproductsinc.com
![Page 74: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/74.jpg)
Mobile
Source: mobileappbuilders.co
• Mobile Device Strategy
• Acceptable Use Agreements
• Authentication & Encryption
• Secure Transmission
• Device Management
• Employee Training
![Page 75: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/75.jpg)
Training
• Train users on:
– Information Security Program
– Incident Response Plans
– Business Continuity Plans
– Security Threats
afgenvac.org
![Page 76: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/76.jpg)
Close the loopholes
Create & Enforce security policies
Educate employees
Update security software
Backup & encrypt data
Secure wireless devices
Patch systems
Have an IT Security Assessment Performed
![Page 77: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/77.jpg)
Source: blog.zopim.com
In the end…
![Page 79: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/79.jpg)
Greg Light, CFA, ASA
![Page 80: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/80.jpg)
Overview
• Drivers of business value
• The importance of planning ahead
• The impact of economic cycles on business values (do you sell now or wait it out)
• The 80/20 rule
• Proposed Regulation 2704
![Page 81: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/81.jpg)
Factors that drive business value
• Many different valuation methods:– Income Approach
– Market Approach
– Asset Approach
• No matter which one is used, it always comes down to 2 factors:– Cash flow
– Risk
![Page 82: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/82.jpg)
Importance of planning ahead
• Planning ahead gives the business owner control. Allows you to take the time to:– Maximize cash flow
– Minimize risk
– Control the transition
• Business owners that plan ahead generally feel much more satisfied with the results of a transition if they plan ahead and have control over the timing , terms, transaction partner, etc.
![Page 83: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/83.jpg)
Impact of economic cycles on business value
• Economic cycles can impact business value more than many business owners expect. We call it the “double-whammy”.– Economic conditions are poor, so company profits are depressed.– Many other factors depress the market for businesses such as limited
availability of financing, less buyers in the marketplace, limited cash available for purchases, etc.
– The result is that you have lower cashflow and higher risk. Either one of these factors on their own would reduce business value. The two combined cane really drive down business values.
• The danger for business owners is that many decide that they are making good money now and they don’t want to sell. However, there is significant risk of the market turning south and having to wait a full economic cycle before values return to current levels.
![Page 84: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/84.jpg)
The 80/20 rule as it relates to valuation
• In reality, probably more like 70/30. 30% of the work gets us 70% of the way to a final answer.
– This can be both a blessing and a curse.
– Valuation often gets boiled to “what’s the EBITDA multiple” when in reality its more complicated than that.
– The purpose of the valuation has a big impact on how precise it needs to be.
![Page 85: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/85.jpg)
Proposed Valuation Regulation
• Proposed Regulation 2704 has the potential to eliminate certain valuation discounts.
• However, the proposed regulations are….– Unclear
– Subject to hearings
– Uncertain
– Not applicable to all situations
– Likely to be re-written in some form
• That being said, we are advising clients to proceed before year end with any gifting transactions that they KNOW they are going to undertake in the near future.
![Page 86: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/86.jpg)
Mike McCarthy, CPA, CFP®, MST
![Page 87: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/87.jpg)
Individual
Current Rates Trump/GOP Rates Joint Filers: Blueprint Single Filers: Blueprint
10% 15 % 0%/12% up to $75,300 up to $37,650
25 % & 28 % 25% up to $231,450 up to $190,150
33%,35%, & 39.6%
33% above $231,450 above $190,150
![Page 88: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/88.jpg)
Alternative Minimum Tax (AMT)
During the campaign, Trump proposed to eliminate the alternative minimum tax (AMT)
![Page 89: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/89.jpg)
Net Investment Income (NII) Tax
During the campaign, Trump proposed to repeal the Affordable Care Act (ACA). Repeal of the ACA would include repeal of the 3.8 percent net investment income (NII) tax.
![Page 90: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/90.jpg)
Corporate Income Tax
During the campaign, Trump proposed to lower the business tax rate to 15 percent and eliminate the corporate alternative minimum tax.
![Page 91: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/91.jpg)
Flat rate on pass-throughs
Generally, Trump’s campaign materials indicate that the owners of pass-through entities could elect to be taxed at a flat rate of 15 percent on their pass-through income retained within the business, rather than be taxed under regular individual income tax rates (the top individual rate would be 33 percent under Trump’s plan).
![Page 92: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/92.jpg)
![Page 93: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/93.jpg)
Sec. 179 expensing
Specifically directed toward small business, Trump during the campaign indicated that he would increase the annual cap on Section 179 expensing from $500,000 to $1 million.
![Page 94: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/94.jpg)
Manufacturing expensing
In lieu of deducting interest expenses, Trump proposed during the campaign that manufacturing firms would be able to immediately deduct all new investments in the business.
![Page 95: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/95.jpg)
Childcare tax benefits
• “Spending rebates” to lower-income families for childcare expenses through the EITC. “the rebate would be equal to a certain percentage of remaining eligible childcare expenses, subject to a cap of half of the payroll taxes paid by the taxpayer,” according to campaign materials.
• “Above-the-line” deductions for child and elder care expenses, for qualified taxpayers with income up to a certain thresholds.
![Page 96: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/96.jpg)
Childcare credit for businesses
During the campaign, Trump proposed to increase the annual cap for the business tax credit for on-site childcare. Additionally, the recapture period would be reduced.
![Page 97: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/97.jpg)
Estate and gift tax
During the campaign, Trump proposed to repeal the federal estate and gift tax. The unified federal estate and gift tax kicks in at $5.490 million for 2017 (essentially double at $10.980 million for married individuals).
![Page 98: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/98.jpg)
Estate and gift tax, cont….
During the campaign, Trump also added to estate and gift tax repeal a proposal that would disallow “stepped up basis” to shelter otherwise taxable gains of more than $10 million under the income tax. Currently, any asset that passes through an estate receives a tax basis equal to date of death value, a significant tax advantage when the asset is eventually sold by heirs. Trumps plan would appear to provide exemptions for small businesses and family farms.
![Page 99: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/99.jpg)
Joe Olekszyk, CFP®
![Page 100: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/100.jpg)
A good plan can be simple
To be effective, it should address:• Income
• Growth
• Reserves
• Opportunity
• Legacy
>>Taxation considerations affect every part
![Page 101: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/101.jpg)
Purpose of a personal financial plan
Virtually everyone who undertakes the process wants to:
• know they won’t outlive their money (investments)
• be protected from risk (insurance)
• Be sure their wishes are carried out after their death (estate planning)
![Page 102: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/102.jpg)
Income
Intending to retire someday? What sources of income will you have?
• Employer Pension
• Bond Portfolio
• Social Security Benefit
• Annuity Payments
• Royalty Income
• Passive Income from a Private Business
![Page 103: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/103.jpg)
Income
Very general rule of thumb:• Have income-generating assets which cover at least
50% of your estimated post-tax retirement living expenses.
Very general guideline:• Your post-tax retirement living expenses will likely be
75% to 80% of your current amount.
![Page 104: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/104.jpg)
Growth
Virtually everyone knows that they should ‘invest for the future’, but why?
• Keep pace with, and hopefully exceed the ever-rising cost of living (inflation).
• It is not to make up for a lack of contributions to personal retirement accounts.
![Page 105: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/105.jpg)
Growth
What types of investments should be considered ‘growth’?
• Stocks, Stock Indexes, Stock Mutual Funds
• Real Estate-related investments
• Commodity-related investments
![Page 106: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/106.jpg)
Reserves
Can you recall any of the money lessons your parents taught you?
• “Have something set aside for a rainy day”
• In other words, keep some cash handy.– roof needs to be replaced
– major auto repairs
– temporarily without a job
![Page 107: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/107.jpg)
Reserves
What might the reserves be?• Cash, Money Market Funds, CD’s
• The two most important criteria:– Must be easy to access
– Must be able to access without penalty
![Page 108: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/108.jpg)
Opportunity
Should you speculate for a ‘big win’?• It depends on your financial wherewithal and
temperament.
• If your Income, Reserves, and Growth investments are funded, then maybe.
• Even then, limit it to 5% (10% maximum) of your liquid net worth.
![Page 109: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/109.jpg)
Opportunity
What might be considered an ‘opportunity’ investment?
• Private Placements
• Hedge Funds
• Oil and Gas Partnerships
• One-Drug Biotech Stocks
• Rental Real Estate
![Page 110: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/110.jpg)
Legacy
Do you have intentions to leave money to your children, favorite charity, or university?
• Charitable Remainder Trust (CRT)
• Joint & Survivor Life Insurance Policy
• Individual Stocks
![Page 111: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/111.jpg)
Any Questions from the Audience?
While a financial plan can be simple, there are a lot of details involved.
Don’t hesitate to ask the wealth advisor in your office to review the client’s personal financial situation – you never know how we might be a great help to them!
![Page 112: Mike Robbins, CPA - Rehmann · •50% bonus depreciation on qualifying asset ... •GOP tax reform blueprint shares similarities with ... –Need to consider ultimate destination](https://reader031.fdocuments.us/reader031/viewer/2022022603/5b5b8ea67f8b9a302a8e3383/html5/thumbnails/112.jpg)