NOVEMBER, 2017 FALL/WINTER

Share

NOVEMBER, 2017 FALL/WINTER TAX NEWSLETTER

For clients of: HENRY C KULIK, JR CPA LLC

November, 2017

As the end of year 2017 approaches, it’s time to think of planning moves that will help lower your tax bill for this year, and possibly the next. In many cases this will involve the usual year end planning ideas we have asked everyone to consider in the past:

  • Deferring income to the 2018 tax year, where we expect taxes to be lower (at some point)
  • Accelerating deductions into this year to reduce 2017 taxable income.

The tax code and tax rates are now some at of the highest in history. They have increased, in some form, almost every year over the last 7 years. Many new “phase-outs” and high sur-tax rates were tied directly to the ACA (affordable care act). When that wasn’t enough, every year the words came forth… “it’s time for the “rich” to pay their fair share.” What was not mentioned that “rich” included couples earning about $140,000 and singles about $70,000! These weren’t the $ millionaires and $ billionaires that were the supposed target shown on television.

Cautionary tale

Our reports show that IRS audits are pointing to form 1065 Partnerships, and form W-2 wages vs/ 1099-MISC where agents are finding companies misclassifying employees as subcontractors. A finding can result in severe interest and penalties, plus the employer gets to pay the income tax that should have been withheld along with FICA and Medicare. Then the State wants their piece of the pie. 3+ years of this, nicely wrapped under the tree. Fewer agents, but higher audit tax findings along with collection revenues from past due taxes are helping the treasury.$$$$$

New tax plans

It appears that all of the tax plans being talked about would take effect 1/1/18. (The bill even shows 2018 start date) Depending on the specific rules passed, most everyone will pay less in tax. Corporate taxes, including pass-throughs such as S-Corporations, and Schedule Cs could see the largest breaks in an effort to help businesses create new jobs through growth. The confusing part is what will the great sausage machine in D.C. finally turn out in the wrapper? Below I have illustrated just a few of the differences in the 3 plans: a) the original Trump plan (found at www.whitehouse.gov), b) the House of representatives plan (www.house.org)  and  c) the Senate plan (www.senate/gov)

*Married Filed Jointly* examples

Tax range on TaxRate Capital Gains Exemptions Itemized
Trump plan: $0 to $50,000 0% 0% no changes 100%
$50,000-$100K 10% 0% no changes 100%
$100K-$300K 20% 15% income based 50% (est)
$300K-and up 25% 20% phase-outs 75% (est)

Notes:  NO AMT; Charity and mortgage interest remains; No Estate Tax
Business tax changes to promote bringing offshore cash and jobs back to USA

House plan $0 to $90,000 12% 0% None Limits;$24K std
$90K-$260K 25% 15% None Limits;$24K std
$2600K-$1M 35% 20% None Limits;$24K std
$1M and up 39.6% 28% None Limits;$24K std

Notes: NO AMT; $10K limit on Home taxes; no adoption credits, no itemized for medical; mortgage interest won’t affect most people; debt cannot exceed $500K.Child Credit $1,600 Capital gain exclusion on personal residence limited/reduced;5/8 years instead of 2/5 removes moving expenses, form 2106, student loan interest. Any/all employer benefits taxable on W2.

Senate plan $0 to $19,050 10% 0% None Limits;$24K std
$19,051-$77,400 12% 0% None Limits;$24K std
$77,401-$120K 22.5% 15% None Limits;$24K std
$120K – $290K 25% 15% None Limits;$24K std
$290K – $390K 32.5% 24% None Limits;$24K std
$390K – $1M 35% 24% None Limits;$24K std
$1M and up 38.5% 28% None Limits;$24K std

Notes: NO AMT; Child Credit $1,650;$500 non-child dependent. Same itemized deduction as the House plan; NO Misc itemized. NO moving expense, NO casualty losses (same as House); business $2M Sect 179,) New business pass-thru deduction of 17.4% of business income (Phase-out $150K AGI)

NO business losses allowed; carryover instead. NO Professional tax rates (1120

Of course, all of this is just proposals and what, if anything, actually gets passed could be very different.  Much like other recent years if they fail to pass something very soon it could delay the start of the 2018 filing season and refunds being issued while the IRS updates their software, forms and instructions. So stay tuned and I promised to keep you posted!

Economic Outlook

There are a few predictions about the economy that could impact your taxable income. The stock market has been booming and is on track to close out 2017 with record highs. This could mean higher interest and dividend income on your investments plus a greater potential for capital gains on any stock sales. Check those year-end investment statements so you aren’t surprised when April rolls around.

The predicted 2.2% total economic growth for 2017 is making 2018 look really good at this point, with expected growth of at least 2.6%. Even if our friends in Washington fail to pass any kind of tax reform the 2.2% growth from 2017 is expected to continue.

Tax planning – Individuals

The Obamacare surtax of 3.8% is still in effect for 2017 on higher-income earners. If you estimate your modified adjusted gross income to be $250,000 MFJ, $125,000 MFS or $200,000 single or HOH or more you might want to look at deferring some of your income at the end of the year to reduce the impact of the NII tax.

A similar strategy could be used by those same earners with respect to year end wages or bonuses which could/would be subject to the 0.9% additional Medicare tax.

Consider increasing your deductible expenses by prepaying them or paying them with a credit card before year end. If you think you’ll owe state income taxes when you file in 2018 consider paying them ahead before the end of the year. This strategy could be most beneficial if the deduction(s) go away for 2018 as some of the tax reform models are suggesting. Do watch out for AMT though. If you are subject to AMT this strategy won’t help you.

If you have a pending insurance or damage claim, try to get it settled in 2017 to maximize your casualty loss deduction.

Avoid penalties by being sure to take your Required Minimum Distribution (RMD) from your IRA or 401K. If you turn 70 ½ in 2017 you need to take your first RMD by April 1, 2018. However, you’ll still need to take your RMD for 2018 before the end of 2018 so unless you will be in a much lower tax bracket in 2018 it could be most beneficial not to defer the RMD.

Tax Planning- businesses

If your business has done well in 2017 and you need new equipment or to invest in infrastructure it would be a good idea to get that in place before the end of 2017 to maximize your business deductions and minimize taxable income.  The expensing limit for 2017 is $510,000 and applies to most purchases that are depreciable (computers, off the shelf software, A/C and heat units, etc.) in addition qualified leasehold improvement, restaurant or retail improvement property are also eligible. Better still this deduction is NOT pro-rated which means that you can wait till December to make your purchase and still take the full deduction.

You can also take advantage of the 50% bonus depreciation on purchased assets (also not pro-rated) and the bonus drops to 40% in 2018.

If Congress manages to get tax reform through without too many changes Corporations may want to consider deferring some year-end income until 2018 if they will likely in a lower tax bracket.

If you aren’t sure about what your best strategy is you can always contact the office and I would be happy to discuss your particular situation. Now is also the best time for a face-to-face review of everything before the end of the year is here!

Happy Thanksgiving

Merry Christmas

May everyone have a blessed warm Holiday season!

Henry C. Kulik, Jr., CPA LLC

TAX OVERHAUL MAY TAKE EFFECT 01/01/18 WOW!

Share

Tax Overhaul Is Planned for 2018, Leaving Just a Few Weeks to Prepare
Most provisions in the House and Senate GOP tax bills would take effect in 2018, meaning people could have little time to do crucial year-end tax planning

Most provisions in the Republican tax bills would take effect in 2018, assuming a bill passes.

By Laura Saunders

Nov. 10, 2017 7:00 a.m. Fewer tax breaks for homeowners. No deduction for state income taxes. A higher bar for charitable write-offs. No “personal” exemption. No alternative minimum tax.

Republican leaders in the House and Senate have proposed different bills to overhaul the tax code, but both sweep away or limit many tax breaks for individuals in a bid to boost economic growth and simplify the system.
Both bills also expand credits for children. They increase the “standard deduction” greatly, so that perhaps 30 million filers wouldn’t need to break out deductions separately. Many business owners would get a tax break and owe less than wage earners with similar income. The estate-tax exemption would double, to $10 million a person.
There are so many differences between the two bills that exact outcomes are hard to predict, assuming a bill passes. What is clear is that people could have little time to do crucial year-end tax planning. Most provisions would take effect in 2018.
Here are tax moves to consider, based on current proposals.
Home Buyers and Sellers
The Senate bill preserves current law allowing deductions on a total of $1 million of mortgage debt on up to two homes.
The House bill would allow home buyers taking out mortgages after Nov. 2 to deduct interest only on $500,000 of debt, and only on one home. It appears to prohibit mortgage-interest deductions for all second homes. Both bills end interest deductions for home-equity loans.
If the House version prevails, the Nov. 2 cutoff might be extended in a nod to the Senate. But there are no guarantees, so buyers should beware.
Both bills also restrict the popular exemption of $500,000 of profit on the sale of a first home ($250,000 for singles). The new rules would require sellers to live in a house for five of the prior eight years, rather than two out of five years, to get the benefit.
The House bill reduces the exemption for sellers whose income exceeds $500,000 ($250,000 for singles). Affected home sellers should complete sales before year-end.
Pass-Through Income

Both bills cut taxes on some income earned by so-called pass-through firms such as partnerships and S corporations, but the rates and categories of business owners who would benefit differ.
Stay tuned as the final provision becomes clear. Business owners who would benefit from a lower rate may want to defer income into 2018, says Chris Hesse, a certified public accountant with CliftonLarsonAllen.
State Taxes
The House bill repeals the deduction for state and local income and sales taxes and caps the deduction for property taxes at $10,000. The Senate bill repeals deductions for property taxes, in addition to repealing the others. Exceptions apply for property-sales taxes paid by owners of pass-through firms.
Individuals who won’t owe alternative minimum tax this year may want to prepay 2018 state and local taxes that could be disallowed next year. This move requires careful analysis, as high state and local tax deductions could trigger the AMT in 2017 and eliminate much of the benefit.
Charitable Donations
If the standard deduction greatly increases as proposed, only 10% of filers will need to list write-offs separately compared with 30% now. Taxpayers donating a small percentage of income may want to accelerate donations into 2017 to get a deduction.
These givers should also consider so-called donor-advised funds. Such accounts enable donors to “bunch” several years of smaller gifts into one large amount. A donor can designate charitable recipients later, and meanwhile the assets can be invested and grow tax-free.
Plug-In Cars
Get your Tesla, Chevy Bolt, or similar plug-in vehicles before year-end. The House bill repeals a credit of up to $7,500.

Medical-Expense Deductions
The House bill repeals the deduction for medical expenses, which is highly important for people paying large bills for home health aides and nursing-home care. The Senate bill retains it.
Tax professionals caution against prepaying 2018 medical expenses in 2017. The law allows the IRS to disallow such write-offs entirely, and courts have ruled against the taxpayer on this issue.
There is an exception for some people entering retirement homes. Under current law, part of the entrance fee to such facilities could be deductible for 2017 even if the person doesn’t enter until 2018, says Andy Mattson, a CPA with Moss Adams. This is a complex area, and taxpayers should seek professional help.
Employee Stock Options
Workers who have Incentive Stock Options (ISOs) may benefit if they wait to exercise them until 2018, says Scott Kaplowitch, a CPA with Edelstein & Co. ISOs can trigger the alternative minimum tax, which both bills would repeal.
Alimony
Sign divorce or separation agreements that include alimony before the end of 2017. In the House bill, alimony ceases to be deductible by the payer in 2018.
Carlyn McCaffrey, an attorney with McDermott, Will & Emery, says that for a top-bracket spouse required to provide $250,000 of tax-free income to a bottom-bracket spouse, the tax savings from signing an agreement in 2017 compared with 2018 would be about $43,000.
Write to Laura Saunders at laura.saunders@wsj.com

 

 

Tax Software email responses, issues

Share

Hello-We are having a few difficulties with our portal notification system. While everything remains secure, if you get an email telling you that the email address is incorrect, please ignore. The information is being transferred correctly!

We are NOT getting notified when clients upload documents or send in organizers. We only get email notifications from the system when clients use “FILE EXCHANGE.” Kindly  do all uploads to this area of the portal. Other data and organizers will come over, but we are NOT notified. Please email the office if you send something using the methods so we know its on the way!

Our software vendor is working on this issue.

I apologize for any confusion!

Thank You- Henry

Post Election Tax Info Update

Share

Ok- THE ELECTION IS OVER and Donald J Trump is the president-elect. I have summarized his tax plans below. Naturally, not everything is likely to make it all the way to law without any changes, but the bulk of it will likely pass, according to sources. It is very similar to speaker-of-the-house Paul Ryan’s tax plan. This is the most recent information I have, and not all details have been released as it is still November!

INDIVIDUALS

  1. Tax rates reduces to only three: 12%, 25%, and 33%
  2. 12% rate for income up to $75,000 couples; $37,500 singles
  3. 33% rate for $225,001 for couples, $112,501 for singles
  4. Eliminates the Head-of Household filing status (Married or Single only)
  5. Eliminates all surtaxes that were passed with Obamacare (1%;4%)
  6. Eliminates all Obamacare health insurance compliance penalties
  7. Eliminates AMT for both individual and corporate (Alternative Minimum Tax)
  8. Maximum capital gains tax rate at 20%. Lesser rates still available based on income, supposed to remain similar to the Bush tax cuts that stiull are in effect today.
  9. Standard deductions would increase to $15,000 singe; $30,000 couples
  10. Itemized deductions would be capped at $100,000 AGI singles; $200,000 AGI couples
  11. Expanded Child care/parent care deduction(s): Includes stay-at-home Mothers (does not with current law) up to four children under age 13, and elderly dependents, max deduction is $5,000 above the line (reduces AGI) Higher income taxpayers will not get this deduction (currently, no income limitation applies for the tax credit)

BUSINESS

  1. New 15% business tax rate, including not only for “C” Corporations, but also LLCs, S Corps, and Schedule Cs. Now one has any detail on this- or how it would work since pass-thrus and Schedule C currently gets taxed at a person’s individual rate.
  2. Only Manufacturing business could fully expense any asset purchases, but would lose the interest deduction if financed.
  3. Most business tax credits would be gone, except for the R&D credit.
  4. Untaxed income brought in from a foreign country would get a special 10% rate, encouraging large business owners/CEOs to bring the money back to the US- and manufacture here, at home
  5. Import tax (if the company used to manufacture here in the U.S.) but now ships the same product into this country, creating loss of jobs. Tax would be of 35% (i.e. like a tariff)

OTHER ITEMS

  1. Removing all “executive orders” from President Obama, along with chopping back the infamous Dodd-Frank laws. This should easily encourage business lending for companies to grow. Elimination of all Obamacare penalties would also help this. Pulling back on coal, gas, and hundreds of recent EPA and other agency tough regulations will allow business to operate as they did under Reagan, or at least similarly. (5%-6% economic growth in some of those years)
  2. Military upgrades and infrastructure work should create higher-pay full time positions in all parts of the economy. And quickly. That as opposed to most new jobs today are part-time now and seasonal. And annual growth around 1%.
  3. JANUARY 2017- (law change) ALL W2s, and 1099s must be issued to both IRS and employees before January 31. Penalties apply if late.
  4. The IRS will be very busy writing new regulations to interpret all the tax code changes. I would not expect to see any of these changes take effect until tax year 2017 at the very earliest. (Just my opinion), but one never knows. Trying to implement these changes quickly now would render the IRS into total CHAOS!

RECENT OFFICE NEWS

  1. Bookkeeping DivisionMany clients have been asking us for some time to do their bookkeeping. Some, for years! So, this year we partnered with an experienced individual that specializes in Bookkeeping, especially QuickBooks. The service can be performed either remotely, done at our office, or at your location. Prices are competitive. Contact Maureen Ehwa, operations director for details if interested! Maureen.ehwa@henrykulikcpa.com All work will be billed and contracted through our office!
  2. Tax season: For the upcoming tax season, we will be the strongest in years with more qualified staff and resources than ever before! I feel really good about what is happening here…

Merry Christmas and Happy New Year to everyone! Have a safe, enjoyable holiday season!

Tax Season 2017

Share

Dear Client:

There is still time to call the office and make a tax planning appointment in 2016, or via mail. Not everybody needs this, but if sales are up, up, up, then you can guess which way your taxes would be heading!

Tax season-2017. As usual my “book” is pretty full for those clients who want to sit with me. We do have slots in January and around deadline. If you don’t owe, many clients last year came in shortly after tax season (we file Henry’s easy-extension for you!) and were delighted to not hear all phones ringing and being pressed for time. Extensions are a good thing, not bad. Come in and relax while we do the work. You can book those anytime also.

Corporations (including LLC/S Corps) can be a great help getting information to us in early January.

Depending on who wins the election, tax rules could change significantly.

Donald Trump was lower taxes, and business success-stimulating less regulations with deep tax-cuts.

Hillary Clinton is just the opposite who wants to increase payroll and other taxes which could slow or stall the growth of business and instead increase government spending on benefits, education and other programs.

The other two no-party candidates have announced little or nothing, so I don’t know. They are not even mentioned in any of my tax resources.

I will only speak generally, since political tax plans released during campaigns are never what appears later to be approved and passed by Congress when the time comes.

NEWS ITEM!  Numerous People (32+) in India and other countries (including 20 from the US)  making calls from call-centers to US citizens pretending to be IRS and other government officials and have arrested and charged. Thousands of individuals in the US have been victimized of hundreds of millions of dollars. (us dept. of justice)

NEW 2017 CHANGES ALREADY PASSED

2017 pay-in for 401(k) remains the same at $18,000. Add $6,000 if 50 and over.

2017 SIMPLE IRA remains the same too. $12,500 max plus now $3,000 if 50 and over

ROTH and regular IRA stay the same too at $5,500 plus $1,000 50 and over. Traditional IRA Phase outs will be at higher income levels- $99,000-$119,000 couples. ROTH phase-outs will be $186,000-$190,000 for couples.

Social Security /Payroll taxes will increase quite a bit. $8,700 increase up to $127,200 will be charged the FICA tax (12.4%). However, for people receiving Social Security, look forward to a whopping 0.3% benefit increase. Wow!

As the end of the year approaches, it is a good time to think of planning moves that will help lower your tax bill for this year and possibly the next. Factors that compound the planning challenge this year include turbulence in the stock market, overall economic uncertainty, and Congress’s all too familiar failure to act on a number of important tax breaks that will expire at the end of 2016.

PERSONAL/INDIVIDUAL PLANNING

Some of these expiring tax breaks will likely be extended, but perhaps not all, and as in the past, Congress may not decide the fate of these tax breaks until the very end of 2016 (or later). For individuals, these breaks include:

  1. the exclusion for discharge of indebtedness on a principal residence,
  2. the treatment of mortgage insurance premiums as deductible qualified residence interest,
  3. the 7.5% of adjusted gross income floor beneath medical expense deductions for taxpayers age 65 or older, and the deduction for qualified tuition and related expenses. There is also a host of expiring energy provisions, including:
  4. the nonbusiness energy property credit,
  5. the residential energy property credit,
  6. the qualified fuel cell motor vehicle credit,
  7. the alternative fuel vehicle refueling property credit,
  8. the credit for 2-wheeled plug-in electric vehicles,
  9. the new energy efficient homes credit, and
  10. the hybrid solar lighting system property credit.

Incomes that exceed $200,000 AGI (modified), $125,000 MFS once again have unique concerns to address from additional Obamacare surtaxes. They must be wary of the 4% surtax on certain unearned, rental and passive income and the additional 1% Medicare (hospital insurance, or HI) tax on earned income. Note-S Corporation taxable income is not subject to these taxes.

We have compiled a checklist of additional actions based on current tax rules that may help you save tax dollars if you act before year-end. Not all actions will apply in your particular situation, but you (or a family member) will likely benefit from many of them. We can narrow down the specific actions that you can take once we meet with you to tailor a particular plan. In the meantime, please review the following list and contact us at your earliest convenience so that we can advise you on which tax-saving moves to make:

Details for Year-End Tax Planning Moves for Individuals

  • Realize losses on stock while substantially preserving your investment position. There are several ways this can be done. For example, you can sell the original holding, then buy back the same securities at least 31 days later. It may be advisable for us to meet to discuss year-end trades you should consider making.
  • Postpone income until 2017 and accelerate deductions into 2016 to lower your 2016 tax bill. This strategy may enable you to claim larger deductions, credits, and other tax breaks for 2016 that are phased out over varying levels of adjusted gross income (AGI). These include child tax credits, higher education tax credits, and deductions for student loan interest. Postponing income also is desirable for those taxpayers who anticipate being in a lower tax bracket next year due to changed financial circumstances. Note, however, that in some cases, it may pay to actually accelerate income into 2016. For example, this may be the case where a person’s marginal tax rate is much lower this year than it will be next year or where lower income in 2017 will result in a higher tax credit for an individual who plans to purchase health insurance on a health exchange and is eligible for a premium assistance credit.
  • If you believe a Roth IRA is better than a traditional IRA, consider converting traditional-IRA money invested in beaten-down stocks (or mutual funds) into a Roth IRA if eligible to do so. Keep in mind, however, that such a conversion will increase your AGI for 2016.
  • If you converted assets in a traditional IRA to a Roth IRA earlier in the year and the assets in the Roth IRA account declined in value, you could wind up paying a higher tax than is necessary if you leave things as is. You can back out of the transaction by re-characterizing the conversion—that is, by transferring the converted amount (plus earnings, or minus losses) from the Roth IRA back to a traditional IRA via a trustee-to-trustee transfer. You can later reconvert to a Roth IRA.
  • It may be advantageous to try to arrange with your employer to defer, until early 2017, a bonus that may be coming your way.
  • Consider using a credit card to pay deductible expenses before the end of the year. Doing so will increase your 2016 deductions even if you don’t pay your credit card bill until after the end of the year.
  • If you expect to owe state and local income taxes when you file your return next year, consider asking your employer to increase withholding of state and local taxes (or pay estimated tax payments of state and local taxes) before year-end to pull the deduction of those taxes into 2016 if you won’t be subject to alternative minimum tax (AMT) in 2016.
  • Take an eligible rollover distribution from a qualified retirement plan before the end of 2016 if you are facing a penalty for underpayment of estimated tax and having your employer increase your withholding is unavailable or won’t sufficiently address the problem. Income tax will be withheld from the distribution and will be applied toward the taxes owed for 2016. You can then timely roll over the gross amount of the distribution, i.e., the net amount you received plus the amount of withheld tax, to a traditional IRA. No part of the distribution will be includible in income for 2016, but the withheld tax will be applied pro rata over the full 2016 tax year to reduce previous underpayments of estimated tax.
  • Estimate the effect of any year-end planning moves on the AMT for 2016, keeping in mind that many tax breaks allowed for purposes of calculating regular taxes are disallowed for AMT purposes. These include the deduction for state property taxes on your residence, state income taxes, miscellaneous itemized deductions, and personal exemption deductions. Other deductions, such as for medical expenses of a taxpayer who is at least age 65 or whose spouse is at least 65 as of the close of the tax year, are calculated in a more restrictive way for AMT purposes than for regular tax purposes. If you are subject to the AMT for 2016, or suspect you might be, these types of deductions should not be accelerated.
  • You may be able to save taxes this year and next by applying a bunching strategy to “miscellaneous” itemized deductions, medical expenses and other itemized deductions.
  • For 2016, the “floor” beneath medical expense deductions for those age 65 or older is 7.5% of adjusted gross income (AGI). Unless Congress changes the rules, this floor will rise to 10% of AGI next year. Taxpayers age 65 or older who can claim itemized deductions this year, but won’t be able to next year because of the higher floor, should consider accelerating discretionary or elective medical procedures or expenses (e.g., dental implants or expensive eyewear).
  • You may want to pay contested taxes to be able to deduct them this year while continuing to contest them next year.
  • You may want to settle an insurance or damage claim in order to maximize your casualty loss deduction this year.
  • Take required minimum distributions (RMDs) from your IRA or 401(k) plan (or other employer-sponsored retirement plan). RMDs from IRAs must begin by April 1 of the year following the year you reach age 70-½. That start date also applies to company plans, but non-5% company owners who continue working may defer RMDs until April 1 following the year they retire. Failure to take a required withdrawal can result in a penalty of 50% of the amount of the RMD not withdrawn. Although RMDs must begin no later than April 1 following the year in which the IRA owner attains age 70 ½, the first distribution calendar year is the year in which the IRA owner attains age 70½. Thus, if you turn age 70-½ in 2016, you can delay the first required distribution to 2017, but if you do, you will have to take a double distribution in 2017—the amount required for 2016 plus the amount required for 2017. Think twice before delaying 2016 distributions to 2017, as bunching income into 2017 might push you into a higher tax bracket or have a detrimental impact on various income tax deductions that are reduced at higher income levels. However, it could be beneficial to take both distributions in 2017 if you will be in a substantially lower bracket that year.
  • Increase the amount you set aside for next year in your employer’s health flexible spending account (FSA) if you set aside too little for this year. (maximum $2,500)
  • If you become eligible in December of 2016 to make health savings account (HSA) contributions, you can make a full year’s worth of deductible HSA contributions for 2016.
  • If you are thinking of installing energy saving improvements to your home, such as certain high-efficiency insulation materials, do so before the close of 2016. You may qualify for a “nonbusiness energy property credit” that won’t be available after this year, unless Congress reinstates it.
  • Make gifts sheltered by the annual gift tax exclusion before the end of the year and thereby save gift and estate taxes. The exclusion applies to gifts of up to $14,000 made in 2016 and 2017 to each of an unlimited number of individuals. You can’t carry over unused exclusions from one year to the next. The transfers also may save family income taxes where income-earning property is given to family members in lower income tax brackets who are not subject to the kiddie tax.

Details for Year-End Tax-Planning Moves for Businesses & Business Owners

Businesses should consider making expenditures that qualify for the business property expensing option. For tax years beginning in 2016, the expensing limit is $500,000 and the investment ceiling limit is $2,010,000. Expensing is generally available for most depreciable property (other than buildings), off-the-shelf computer software, and qualified real property—qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property. The generous dollar ceilings that apply this year mean that many small and medium sized businesses that make timely purchases will be able to currently deduct most if not all their outlays for machinery and equipment. What’s more, the expensing deduction is not prorated for the time that the asset is in service during the year. This opens up significant year-end planning opportunities.

Businesses also should consider making expenditures that qualify for 50% bonus first year depreciation if bought and placed in service this year. The bonus depreciation deduction is permitted without any proration based on the length of time that an asset is in service during the tax year. As a result, the 50% first-year bonus write-off is available even if qualifying assets are in service for only a few days in 2016.

  • Businesses may be able to take advantage of the “de minimis safe harbor election” (also known as the book-tax conformity election) to expense the costs of lower-cost assets and materials and supplies, assuming the costs don’t have to be capitalized under the Code Sec. 263A uniform capitalization (UNICAP) rules. To qualify for the election, the cost of a unit of property can’t exceed $5,000 if the taxpayer has an applicable financial statement (AFS; e.g., a certified audited financial statement along with an independent CPA’s report). If there’s no AFS, the cost of a unit of property can’t exceed $2,500. Where the UNICAP rules aren’t an issue, purchase such qualifying items before the end of 2016.
  • A corporation should consider accelerating income from 2017 to 2016 if it will be in a higher bracket next year. Conversely, it should consider deferring income until 2017 if it will be in a higher bracket this year.
  • A corporation should consider deferring income until next year if doing so will preserve the corporation’s qualification for the small corporation AMT exemption for 2016. Note that there is never a reason to accelerate income for purposes of the small corporation AMT exemption because if a corporation doesn’t qualify for the exemption for any given tax year, it will not qualify for the exemption for any later tax year.
  • A corporation (other than a “large” corporation) that anticipates a small net operating loss (NOL) for 2016 (and substantial net income in 2017) may find it worthwhile to accelerate just enough of its 2017 income (or to defer just enough of its 2016 deductions) to create a small amount of net income for 2016. This will permit the corporation to base its 2017 estimated tax installments on the relatively small amount of income shown on its 2016 return, rather than having to pay estimated taxes based on 100% of its much larger 2017 taxable income.
  • If your business qualifies for the domestic production activities deduction (DPAD) for its 2016 tax year, consider whether the 50%-of-W-2 wages limitation on that deduction applies. If it does, consider ways to increase 2016 W-2 income, e.g., by bonuses to owner-shareholders whose compensation is allocable to domestic production gross receipts. Note that the limitation applies to amounts paid with respect to employment in calendar year 2016, even if the business has a fiscal year.
  • To reduce 2016 taxable income, consider deferring a debt-cancellation event until 2017.
  • To reduce 2016 taxable income, consider disposing of a passive activity in 2016 if doing so will allow you to deduct suspended passive activity losses.
  • If you own an interest in a partnership or S corporation, consider whether you need to increase your basis in the entity so you can deduct a loss from it for this year.

These are just some of the year-end steps that can be taken to save taxes. Again, by contacting us, we can tailor a particular plan that will work best for you.

Have a great after-election party and safe Holidays!

Happy Thanksgiving

MORE “IRS” SCAMS ! Beware!

Share

IRS Warns of Latest Scam Variation Involving Bogus “Federal Student Tax”

WASHINGTON — The Internal Revenue Service today issued a warning to taxpayers about bogus phone calls from IRS impersonators demanding payment for a non-existent tax, the “Federal Student Tax.”

Even though the tax deadline has come and gone, scammers continue to use varied strategies to trick people, in this case students. In this newest twist, they try to convince people to wire money immediately to the scammer. If the victim does not fall quickly enough for this fake “federal student tax”, the scammer threatens to report the student to the police.

“These scams and schemes continue to evolve nationwide, and now they’re trying to trick students,” said IRS Commissioner John Koskinen. “Taxpayers should remain vigilant and not fall prey to these aggressive calls demanding immediate payment of a tax supposedly owed.”

Scam artists frequently masquerade as being from the IRS, a tax company and sometimes even a state revenue department. Many scammers use threats to intimidate and bully people into paying a tax bill. They may even threaten to arrest, deport or revoke the driver’s license of their victim if they don’t get the money.

Some examples of the varied tactics seen this year are:
•Demanding immediate tax payment for taxes owed on an iTunes gift card.
•Soliciting W-2 information from payroll and human resources professionals–IR-2016-34
•“Verifying” tax return information over the phone–IR-2016-40
•Pretending to be from the tax preparation industry–IR-2016-28

The IRS urges taxpayers to stay vigilant against these calls and to know the telltale signs of a scam demanding payment.

The IRS Will Never:
•Call to demand immediate payment over the phone, nor will the agency call about taxes owed without first having mailed you a bill.
•Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
•Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
•Require you to use a specific payment method for your taxes, such as a prepaid debit card.
•Ask for credit or debit card numbers over the phone.

If you get a phone call from someone claiming to be from the IRS and asking for money and you don’t owe taxes, here’s what you should do:
•Do not give out any information. Hang up immediately.
•Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page or call 800-366-4484.
•Report it to the Federal Trade Commission by visiting FTC.gov and clicking on “File a Consumer Complaint.” Please add “IRS Telephone Scam” in the notes.
•If you think you might owe taxes, call the IRS directly at 1-800-829-1040.

s179 Changes

Share

Dear Client,

In what is easily the most positive tax legislative action taken for small business in the past several years, Congress recently made permanent the $500,000 Section 179 expensing limit, thus enabling a small business to elect to expense up to $500,000 of investment in new equipment and other qualifying property instead of having to depreciate the cost over a number of years.

In recent years, the $500,000 limit and some other favorable aspects of the election have been extended for a year or two at a time, but sometimes these provisions weren’t extended until December, leaving many taxpayers uncertain for most of a tax year as to whether the higher expensing limit and other favorable provisions would be extended. What’s worse, the $500,000 limit and other favorable provisions expired again at the end of 2014. Most dramatically, on Jan. 1, 2015, the limit reverted to its old level of $25,000 and the other favorable provisions also lapsed, once again plunging taxpayers into uncertainty.

I am happy to report that the uncertainty is over. The recently enacted “Protecting Americans from Tax Hikes Act of 2015” (i.e., the 2015 PATH Act) makes the higher expensing limit and other favorable provisions permanent.

To provide a bit more detail, the new law, retroactive so as to not leave out tax years beginning in calendar year 2015:

  • . . . makes permanent the expensing of up to $500,000 annually of the cost of qualifying property; as was true for earlier years for which the $500,000 limit was in place, the amount of expensing allowed is subject to gradual reduction (down to zero) once the total qualifying property placed in service during the year exceeds $2 million;
  • . . . makes permanent the eligibility for expensing of most computer software;
  • . . . makes permanent the eligibility for expensing of qualified real property (certain leasehold building improvements, retail building improvements and restaurant property); and
  • . . . makes permanent the ability to revoke an election, or change its specifics, without IRS consent.

And, for tax years beginning after calendar year 2015 (post-2016 years), the new law:

  • . . . indexes both the $500,000 and $2 million limits for inflation;
  • . . . ends the exclusion from expensing of air conditioning and heating units; and
  • . . . removes the $250,000 cap on qualified real property expensing; the capped expensing nevertheless also had to be applied against the $500,000 limit.

I hope this information is helpful. If you would like more details about these changes or any other aspect of the new law, please do not hesitate to call.

Very truly yours,

Henry C Kulik, Jr. CPA

November/December, 2015 Newsletter

Share

November/December, 2015 Newsletter

Dear Client:

Yes, we are into the Holiday Season already! So a very Merry Christmas, Happy Chanukah, and Happy New Year to everyone!

Before I get into the details and tax savings available, there some office updates I am delighted to share with everyone:

  1. If you have not booked an appointment for 2015 tax analysis review, there is still time to book that now. An alternative is to mail in the basic information, or inform us ahead of time if you expect any unexpected things (i.e. winning the lottery, collecting on BINGO, or just having a really good year for more income). Just CALL the office and we will take care of the rest.
  2. We have added another convenient payment option on our website. (henrykulik.com) You may now pay invoices via e-check (electronic debit—not immediate ACH) or via debit or credit card. We now accept Discover, MC/Visa, American Express and even Diner’s Club.
  3. Corporate and LLC/S-Corp clients: If at all possible, please get us as much information as possible in early January! QuickBooks files, source documents (loans and bank statements, etc.) so we can get an early start. That avoids your corporate work being pushed into the February/March individual tax return rush!! Use our convenient online web-portal that only active clients of this firm have access to. (Virtually anything can be uploaded to us using this method- electronic files (QuickBooks, Peachtree) and zipped and unzipped documents. Even if everything is similar to the prior year, please let us know that too!
  4. Electronic individual tax organizer will be released to the web portal (along with an email announcement) the week before the last week of the year.

As the end of the year approaches, it is a good time to think of planning moves that will help lower your tax bill for this year and possibly the next. Factors that compound the challenge include turbulence in the stock market, overall economic uncertainty, and Congress’s failure to act on a number of important tax breaks that expired at the end of 2014. (My other research materials claim that all or most of these tax breaks will be reinstated again!- but no guarantees) Some of these tax breaks ultimately may be retroactively reinstated and extended, as they were last year, but Congress may not decide the fate of these tax breaks until the very end of 2015 (or later).

These breaks include, for individuals:

  1. the option to deduct state and local sales and use taxes instead of state and local income taxes;
  2. the above-the-line-deduction for qualified higher education expenses;
  3. tax-free IRA distributions for charitable purposes by those age 70-1/2 or older;
  4. and the exclusion for up-to-$2 million of mortgage debt forgiveness on a principal residence.

 

For businesses, tax breaks that expired at the end of last year and may be retroactively reinstated and extended include:

  1. 50% bonus first-year depreciation for most new machinery, equipment and software
  2. the $500,000 annual expensing limitation (Section 179)
  3. the research tax credit
  4. the 15-year write-off for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements.

Higher-income earners have unique concerns to address when mapping out year-end plans. They must be wary of the 3.8% surtax on certain unearned income and the additional 0.9% Medicare (hospital insurance, or HI) tax. The latter tax applies to individuals for whom the sum of their wages received with respect to employment and their self-employment income is in excess of an unindexed threshold amount ($250,000 for joint filers, $125,000 for married couples filing separately, and $200,000 in any other case).

*****************************************************************

Henry’s Year-End Tax Planning Moves for Individuals

  • Realize losses on stock while substantially preserving your investment position. There are several ways this can be done. For example, you can sell the original holding, then buy back the same securities at least 31 days later.
  • Postpone income until 2016 and accelerate deductions into 2015 to lower your 2015 tax bill. This strategy may enable you to claim larger deductions, credits, and other tax breaks for 2015 that are phased out over varying levels of adjusted gross income (AGI). These include child tax credits, higher education tax credits, and deductions for student loan interest. Postponing income also is desirable for those taxpayers who anticipate being in a lower tax bracket next year due to changed financial circumstances. Note, however, that in some cases, it may pay to actually accelerate income into 2015. For example, this may be the case where a person’s marginal tax rate is much lower this year than it will be next year or where lower income in 2016 will result in a higher tax credit for an individual who plans to purchase health insurance on a health exchange and is eligible for a premium assistance credit.
  • If you believe a Roth IRA is better than a traditional IRA, consider converting traditional-IRA money invested in beaten-down stocks (or mutual funds) into a Roth IRA if eligible to do so. Keep in mind, however, that such a conversion will increase your AGI for 2015.
  • If you converted assets in a traditional IRA to a Roth IRA earlier in the year and the assets in the Roth IRA account declined in value, you could wind up paying a higher tax than is necessary if you leave things as is. You can back out of the transaction by recharacterizing the conversion—that is, by transferring the converted amount (plus earnings, or minus losses) from the Roth IRA back to a traditional IRA via a trustee-to-trustee transfer. You can later reconvert to a Roth IRA.
  • It may be advantageous to try to arrange with your employer to defer, until 2016, a bonus that may be coming your way.
  • Consider using a credit card to pay deductible expenses before the end of the year. Doing so will increase your 2015 deductions even if you don’t pay your credit card bill until after the end of the year.
  • If you expect to owe state and local income taxes when you file your return next year, consider asking your employer to increase withholding of state and local taxes (or pay estimated tax payments of state and local taxes) before year-end to pull the deduction of those taxes into 2015 if you won’t be subject to the alternative minimum tax (AMT) in 2015.
  • *We can also prepare extra vouchers for you if you really expect to owe and do not want a balance due April 15!
  • Take an eligible rollover distribution from a qualified retirement plan before the end of 2015 if you are facing a penalty for underpayment of estimated tax and having your employer increase your withholding is unavailable or won’t sufficiently address the problem. Income tax will be withheld from the distribution and will be applied toward the taxes owed for 2015. You can then timely roll over the gross amount of the distribution, i.e., the net amount you received plus the amount of withheld tax, to a traditional IRA. No part of the distribution will be includible in income for 2015, but the withheld tax will be applied pro rata over the full 2015 tax year to reduce previous underpayments of estimated tax.
  • Estimate the effect of any year-end planning moves on the AMT for 2015, keeping in mind that many tax breaks allowed for purposes of calculating regular taxes are disallowed for AMT purposes. These include the deduction for state property taxes on your residence, state income taxes, miscellaneous itemized deductions, and personal exemption deductions. Other deductions, such as for medical expenses of a taxpayer who is at least age 65 or whose spouse is at least 65 as of the close of the tax year, are calculated in a more restrictive way for AMT purposes than for regular tax purposes. If you are subject to the AMT for 2015, or suspect you might be, these types of deductions should not be accelerated.
  • You may be able to save taxes this year and next by applying a bunching strategy to “miscellaneous” itemized deductions, medical expenses and other itemized deductions.
  • You may want to pay contested taxes to be able to deduct them this year while continuing to contest them next year.
  • You may want to settle an insurance or damage claim in order to maximize your casualty loss deduction this year.
  • Take required minimum distributions (RMDs) from your IRA or 401(k) plan (or other employer-sponsored retirement plan). RMDs from IRAs must begin by April 1 of the year following the year you reach age 70-1/2. That start date also applies to company plans, but non-5% company owners who continue working may defer RMDs until April 1 following the year they retire. Failure to take a required withdrawal can result in a penalty of 50% of the amount of the RMD not withdrawn. If you turned age 70-1/2 in 2015, you can delay the first required distribution to 2016, but if you do, you will have to take a double distribution in 2016—the amount required for 2015 plus the amount required for 2016. Think twice before delaying 2015 distributions to 2016, as bunching income into 2016 might push you into a higher tax bracket or have a detrimental impact on various income tax deductions that are reduced at higher income levels. However, it could be beneficial to take both distributions in 2016 if you will be in a substantially lower bracket that year.
  • Increase the amount you set aside for next year in your employer’s health flexible spending account (FSA) if you set aside too little for this year.
  • If you can make yourself eligible to make health savings account (HSA) contributions by Dec. 1, 2015, you can make a full year’s worth of deductible HSA contributions for 2015.
  • Make gifts sheltered by the annual gift tax exclusion before the end of the year and thereby save gift and estate taxes. The exclusion applies to gifts of up to $14,000 made in 2015 to each of an unlimited number of individuals. You can’t carry over unused exclusions from one year to the next. The transfers also may save family income taxes where income-earning property is given to family members in lower income tax brackets who are not subject to the kiddie tax.

Henry’s Year-End Tax-Planning Moves for Businesses & Business Owners

  • Businesses should buy machinery and equipment before year end and, under the generally applicable “half-year convention,” thereby secure a half-year’s worth of depreciation deductions in 2015.
  • Although the business property expensing option is greatly reduced in 2015 (unless retroactively changed by legislation), making expenditures that qualify for this option can still get you thousands of dollars of current deductions that you wouldn’t otherwise get. For tax years beginning in 2015, the expensing limit is $25,000, and the investment-based reduction in the dollar limitation starts to take effect when property placed in service in the tax year exceeds $200,000.
  • *The depreciation issues above are the same as last year. Then, at the last minute everything worked out!
  • A corporation should consider accelerating income from 2016 to 2015 if it will be in a higher bracket next year. Conversely, it should consider deferring income until 2016 if it will be in a higher bracket this year.
  • (For C Corporations only)—A corporation should consider deferring income until next year if doing so will preserve the corporation’s qualification for the small corporation AMT exemption for 2015. Note that there is never a reason to accelerate income for purposes of the small corporation AMT exemption because if a corporation doesn’t qualify for the exemption for any given tax year, it will not qualify for the exemption for any later tax year.
  • A corporation (other than a “large” corporation) that anticipates a small net operating loss (NOL) for 2015 (and substantial net income in 2016) may find it worthwhile to accelerate just enough of its 2016 income (or to defer just enough of its 2015 deductions) to create a small amount of net income for 2015. This will permit the corporation to base its 2016 estimated tax installments on the relatively small amount of income shown on its 2015 return, rather than having to pay estimated taxes based on 100% of its much larger 2016 taxable income.
  • If your business qualifies for the domestic production activities deduction (DPAD) for its 2015 tax year, consider whether the 50%-of-W-2 wages limitation on that deduction applies. If it does, consider ways to increase 2015 W-2 income, e.g., by bonuses to owner-shareholders whose compensation is allocable to domestic production gross receipts. Note that the limitation applies to amounts paid with respect to employment in calendar year 2015, even if the business has a fiscal year.
  • To reduce 2015 taxable income, if you are a debtor, consider deferring a debt-cancellation event until 2016.
  • To reduce 2015 taxable income, consider disposing of a passive activity in 2015 if doing so will allow you to deduct suspended passive activity losses.
  • If you own an interest in a partnership or S corporation, consider whether you need to increase your basis in the entity so you can deduct a loss from it for this year.

These are just some of the year-end steps that can be taken to save taxes. Again, by contacting us, we can tailor a particular plan that will work best for you. We also will need to stay in close touch in the event that Congress revives expired tax breaks to assure that you don’t miss out on any resuscitated tax-saving opportunities!

Other Miscellaneous Tax Items

  1. Firms that reimburse workers directly for health insurance or Medicare bought separately are in for a surprise The IRS will fine you $100 per day, per employee you reimburse. Wow! That can add up quickly…
  2. NO increase in social security wage base. It will remain at $118,500 subject to FICA tax. After that, only the Medicare tax is charged.
  3. IRS will stop seizing Social Security disability payments for unpaid taxes. Other Social Security income can be grabbed up to 15% of the amount paid.
  4. If you self-insure your employees, the “special tax” increases to $2.17 x the number of employees, dependents, and spouses (all lives)
  5. Right here in MA, a court ruled the IRS had to use a CPA’s calculations for basis on 200 old stocks and securities sold. You can’t beat a good CPA!!
  6. States are considering a tax on electronic cigarettes to raise revenue. Watch those E-Cigs!
  7. IRS is going after (auditing) entertainers, including songwriters, musicians, and producers. *AUDIT ALERT* IRS is also closely looking at TIP income re: hotels, restaurants, hair salons, etc. Be sure to report every $ earned by wages, tips, or cash- just like you do now.
  8. IRS did fewer personal (individual) audits during 2014. In 2010 the rate was 1.11%; now its .86% But the “red flags” still can trigger a review/exam, even if a correspondence exam. But the IRS has 22% less revenue agents than 5 years ago.
  9. ACA/HEALTH INS: The penalty has again increased if you refuse insurance. In 2016 the amounts are $695 per adult and $348 per child. Family ceiling is $2,085. The other fine is 2% to 2.5% of gross family income; whichever is larger of the 2 methods is due.
  10. RMD- If you turn 70-1.2 this year you can delay your 2015 payment until April 1, 2016.
  11. President Obama’s MY-IRA plan is expanded- now nationwide. They work similar to a Roth, but the principal is Government insured, like a bank. There are income limits and other restrictions. Check out www.myira.gov
  12. If you owe more than $50,000 in federal taxes, your passport could be seized! Taxpayers who are compliant with a payment plan are OK..for now.

 

Very truly yours,

Henry C Kulik, Jr. CPA LLC

 

Employees and Managers Losing out on $10.7 Billion in Unclaimed Expenses

Share

Employees and Managers Losing out on $10.7 Billion in Unclaimed Expenses

December 3, 2015
North American employees and managers are missing out on more than $10.7 billion of unclaimed expenses every year, according to new estimates.

Enterprise resource planning software provider Unit4 surveyed senior and middle-management professionals in the U.S. and Canada and found that 17 percent of them regularly don’t expense all they could, while the percentage is even higher in Canada, at 23 percent.

Unit4 estimates that U.S. employees lose out on an average of $390 per year, while Canadian employees miss out on $284 per year, both in U.S. dollars.

 

Unit4 surveyed senior and middle management professionals who are employed full and part-time, and who submit expense claims in the U.S., Canada, as well as the United Kingdom, Spain, France, Netherlands, Germany, Belgium and Sweden. The findings are based on responses from almost 2,000 employees with at least 200 responses from each country.

Survey respondents gave a number of reasons for failing to claim expenses, including low value, forgetting to ask for receipts, losing receipts or simply forgetting to submit the expense claim. One out of three employees said they refrain from submitting expense claims because the process is too frustrating and time consuming. The same amount have to wait for more than one month for their expenses to be paid after making a claim, though overall most expenses are paid within a month.

Corporate expense claim processes do not support employee engagement initiatives to the extent that companies are leaving employees short of money. Two out of five (37 percent) U.S. professionals who regularly claim expenses say this is the case, with those in France (24 percent), Spain (23 percent), the U.K. (23 percent) and Canada (20 percent) reporting they find themselves short of money.

Many North American professionals feel they are being financially taken advantage of by their employers. When asked if they feel their employer is gaining a financial advantage over them through the expense claim process, 42 percent of U.S. respondents said yes. In Spain (29 percent) and Sweden (26 percent), the UK (25 percent), France (23 percent), Canada (21 percent) and Belgium (20 percent) agreed, compared to only 10 percent in Germany and the Netherlands.

IRS audit rates at more than decade-long low

Share

f you took liberties on your 2014 federal tax return, you picked a good year to do it.

The odds of a U.S. taxpayer facing an IRS audit fell to the lowest level in more than a decade during the 2015 federal fiscal year, according to preliminary data the nation’s tax agency released Tuesday.

The audit coverage rate, the percentage of federal tax returns the IRS examined either in person or by mail correspondence, dropped to 0.84%, the IRS said. The rate was the lowest since 2004, and the decline marked the third consecutive year with audit coverage below 1%.

IRS personnel audited just over 1.2 million individuals during the fiscal year, the preliminary data shows. That marked a 1.1% decline from 2014, and a nearly 22.3% drop from fiscal year 2010.

As a result, audit collections so far this year dropped to $7.32 billion, the lowest level since 2002. Audit-generated revenue averaged $14.7 billion annually between 2005 and 2010, but the average dropped to $10.5 billion per year since 2010, the IRS said.

The declines came amid cuts in IRS budget funding and employee headcount, as well as a rise in the number of individual federal returns filed for three of the last four years.

Staffing reductions contributed to the worst level of IRS taxpayer services in years, as phone calls dropped by the tax agency’s switchboard soared past 8 million, and rates of calls answered fell sharply.

Repeating his previous calls for increased funding, IRS Commissioner John Koskinen said fewer audits and reductions in IRS service could lead to increased tax cheating and other problems.

“If people think they’re not going to get caught if they cheat, or they’re just fed up because they can’t get the help they need from us to file their taxes, the system will be put at risk, and voluntary compliance is likely to suffer,” Koskinen said during a speech at the American Institute of Certified Public Accountants’ national conference in Washington, D.C.