Volume 1 – 2016

 In Newsletters

In Volume 1 of our 2016 newsletter, we highlight:

  • Announcements

  • 70 Years of Service

  • GASB Statement No. 77, Abatement Disclosures

  • myRA Plan – New Option to Save for Retirement

  • PATH Act of 2015

  • PATH Act Educational Benefits


Announcements

Angela E. Dorn, CPA has been promoted to Partner in the Chesterfield, Missouri office.  Having joined Hochschild, Bloom & Company LLP in 2005 as a Supervisor of accounting and auditing, she was promoted to manager in 2007, and director in January 2010.  Angela has vast experience in the areas of governmental and nonprofit accounting, with expertise in performing audits, reviews, and compilations as well as preparing IRS Form 990s for nonprofit organizations.  Prior to moving to the Greater St. Louis area, she enjoyed a number of accounting employment opportunities throughout the United States and Europe, thanks in large part to relocations in line with her husband’s military career.

Angela graduated from New Mexico State University in 1982 with a Bachelor of Accountancy.  She oversees the Firm’s nonprofit marketing niche and is responsible for the Firm’s in-house professional education seminars.  She is a licensed Certified Public Accountant in the States of Nevada, Florida, and Missouri.  She serves as Secretary on the Finance Committee of Immaculate Conception Parish Dardenne Prairie, is a member of the not-for-profit committee of the Missouri Society of Certified Public Accountants, and recently joined the Women’s Foundation of Greater Saint Louis as Treasurer.

James L. Pursley, CPA has been promoted to Partner in the Chesterfield, Missouri office.  Jim joined Hochschild, Bloom & Company LLP in August 2004 and worked at various staff levels during his time with the Firm until his recent promotion.  Prior to joining the Firm, Jim worked at another local St. Louis CPA firm.  Since joining the Firm, he has overseen numerous compilation, review, audit, taxation, and consulting engagements for various clients of the Firm.  His areas of concentration include tax planning and consulting for individuals and closely-held businesses.  He is a team leader of many of the Firm’s audit practice areas including:  technology companies, healthcare providers, employee benefit plans, governmental, and nonprofit organizations.

Jim graduated from Missouri State University in Springfield, Missouri in 1999 with a Bachelor of Science degree in Accounting.  He is a licensed Certified Public Accountant in the State of Missouri.  He serves on the Audit Committee of the Missouri Society of Certified Public Accountants and is an active member of the Medical Group Management Association of Greater St. Louis.  He has had many articles published on current auditing practices.

 

70 Years of Service

2016 marks the 70th Anniversary for Hochschild, Bloom & Company LLP.  This landmark was made possible by our founding partner Peter Hochschild, who is no longer with us, and our outstanding clients that we service every day.

A few interesting facts from 1946.  Harry Truman was President of the U.S.; there was no vice president.  Winston Churchill gave his “Iron Curtain” speech.  The CIA (Central Intelligence Agency) was formed.  The St. Louis Cardinals were the World Series Champions.  The life expectancy was 62.9 years.

Thanks to everyone who has added to the success of our Firm.  We look forward to many more years of valuable service and to meeting our clients’ needs.

 

GASB Statement No. 77, Tax Abatement Disclosures
By:  Victoria Dailey, CPA

The Governmental Accounting Standards Board (GASB) has issued Statement No. 77 (GASB 77), Tax Abatement Disclosures.  Tax abatements are when one or more governments agree to forgo tax revenues and an individual or entity agrees to take a specific action that contributes to economic development or otherwise benefits the governments or citizens of those governments.

Governments should disclose in the notes to the financial statements the following information related to tax abatements:

  • Brief descriptive information, such as the tax being abated, the authority under which tax abatements are provided, eligibility criteria, the mechanism by which taxes are abated, provisions for recapturing abated taxes, and the types of commitments made by tax abatement recipients
  • The gross dollar amount of taxes abated during the period
  • Commitments made by a government, other than to abate taxes, as part of a tax abatement agreement

Governments should organize those disclosures by major tax abatement program and may disclose information for individual tax abatement agreements within those programs.  GASB 77 goes into effect for reporting periods beginning after December 15, 2015.

GASB concluded that disclosure of information about the nature and magnitude of tax abatements will make these transactions more transparent to financial statement users.  As a result, users will be better equipped to understand:  1) how tax abatements affect a government’s future ability to raise resources and meet its financial obligations and 2) the impact those abatements have on a government’s financial position and economic condition.

There are many specific details regarding GASB 77 and this article only summarizes a few.  It is important for governments to be aware of this new statement, so they can begin obtaining the necessary information to satisfy this disclosure requirement on a timely basis.

 

myRA Plan – New Option to Save for Retirement
By:  Ashley Straatmann, CPA

The United States Department of the Treasury has implemented a new retirement savings plan for individuals called myRA.  The program provides a simple and affordable option to save for retirement.  It is specifically designed to help those who lack other options for saving, such as a retirement savings plan through their employer.

A myRA account is a Roth IRA account with no start-up costs or fees.  The myRA plan is essentially a starter account for retirement savings.  Contributions are invested in a new U.S. Treasury security bond, which earns interest at the same variable rate as investments in the government securities fund for federal employees.  (The return for these investments was 2.31% in 2014).  The investment is backed by the U.S. Treasury, therefore, the account has no risk of losing money.  Contributions can be made to these accounts through direct deposit from paychecks or bank accounts, or by directly depositing some or all of a federal tax refund to the account.

Once an individual either accumulates a balance of $15,000 in their myRA account or holds the account open for 30 years, the account is transferred or rolled over into a private-sector Roth IRA, where the account can continue to grow through contributions and earnings from investments.  The account can be transferred or rolled over sooner if desired.  The same annual contribution limits that apply to Roth IRA accounts apply to myRA accounts; contributions are limited to $5,500 annually (or $6,500 for those age 50 and over).  There is no minimum contribution requirement.  Visit www.myra.gov to sign up or to obtain additional information.

 

PATH Act of 2015

The Protecting Americans from Tax Hikes Act of 2015 (Act), which was signed into law on December 18, 2015, extended many tax provisions and made some permanent.  The following is a list of some of the items contained in the new Act.

Permanent provisions:

  • State and local sales tax itemized deduction
  • Child tax credit for children under age 17
  • $250 teacher classroom expense deduction
  • Tax-free distribution from an IRA account by age 70½ and older individuals to a qualified charity
  • Research and development tax credit
  • Code Section 179 expensing up to $500,000 of first year equipment purchases with a $2,000,000 overall investment limit

Extender provisions:

  • Bonus depreciation partial write-off for new equipment through 2019
  • Residential energy property credit extended through 2016
  • Tax on high dollar health care plans known as “Cadillac Plans” will not be effective until tax years beginning after December 31, 2019

These are only a few of the many tax provisions in the new Act.

 

PATH Act Educational Benefits
By:  Jim Pursley, CPA

The Act, also introduced various improvements to 529 plans, effective retroactively to tax years beginning after December 31, 2014.

Previously, 529 rules treated a computer as a “qualified higher education expense” only if the beneficiary’s college required it as a condition of enrollment or attendance.  But now, under the new law, a computer or peripheral equipment (e.g., printers), computer software, and internet access or related services are considered qualified higher education expenses as long as the beneficiary is the primary user of the computer, equipment,     software, or services while enrolled in school.

When given a refund from an eligible educational institution of amounts paid out of a beneficiary’s 529 plan account for tuition and other qualified expenses, account owners can now re-contribute that money into the same or another 529 account for the same beneficiary.  Re-contributed refunds will not have federal income taxes or penalties associated with them, provided you re-contribute a refund within 60 days of receiving it, and the re-contributed amount does not exceed the amount of the refund.

The Act also extended the above-the-line deduction for qualified tuition and related expenses through 2016.  The maximum deduction for these expenses is $4,000, but the deduction is phased out based upon certain adjusting gross income (AGI) limits.

The American Opportunity Tax Credit has been made permanent.  This credit applies to the first four years of a student’s post-secondary education.  This credit also phases out ratable for taxpayers over certain AGI limits.

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