Bell and Company CPAs and Business Advisors Trucking Blog

Arkansas Business Article on the House Bill 1209

noreply@blogger.com (Bell and Company) — Thu, 4 Feb 2021 09:42:00 -0600

https://www.arkansasbusiness.com/article/134554/bill-would-allow-s-corps-partnerships-to-avoid-salt-cap-on-tax-deductions?utm_campaign=email-share&utm_medium=email

House Bill to Clarify Minimum Wage and Overtime Calculations - HB1227

noreply@blogger.com (Bell and Company) — Fri, 29 Jan 2021 14:30:00 -0600

Some great information we wanted to pass along regarding an issue trucking companies are facing. If you click on the HB1227 you can open the bill to read over.

Sen. English is co-sponsoring a bill in the 93^rd Arkansas Legislative Session that ATA has drafted. HB1227, which was introduced today, aims to clarify minimum wage and overtime calculation questions for commercial truck drivers. This simple clarification could potentially save trucking companies from time-consuming and costly employment litigation.

Bipartisan Emergency COVID Relief Act of 2020 - Paycheck Protection Program

noreply@blogger.com (Bell and Company) — Fri, 18 Dec 2020 09:35:00 -0600

By Richard L. Bell, CPA

PPP Summary Topic (see linked Bipartisan Emergency COVID Relief Act of 2020 - Framework Summary)

The Bill would allow for a second round of PPP loans to certain small businesses, with fewer than 300 employees, who had a 30% revenue loss in any quarter of 2020.

Contrary to the recent IRS Notice and Rulings that would disallow the deductibility of PPP paid expenses with PPP loan proceeds that are forgiven, thus making the loan forgiveness totally taxable.

This Bill would allow full tax deductibility of business expenses paid with PPP funds, and would allow for the forgiveness of the PPP loan proceeds as well.

If you have any questions on this subject please contact me Richard.bell@bellandcompany.net.

Driver Per Diem to Pay or Not to Pay that is the Question

noreply@blogger.com (Bell and Company) — Wed, 18 May 2016 10:54:00 -0500

Arkansas Business Article

There are a lot of questions on the best way to manage per diem pay for truck drivers these days. Per diem, in this case, is a non-taxable reimbursement for meals and incidentals as it pertains to the trucking industry. Other types of per diem also include a lodging rate, which is based on the locale of the travel.

By allocating a portion of a driver's pay, you eliminate the payroll taxes on that portion and also the federal and state income taxes on that portion for the driver. You also reduce the amount of worker’s compensation premium that you pay. But be careful in this, because most work comp policies have a limit on how much per diem you can exclude from pay for work comp premium calculation purposes. Although 20 percent of the per diem paid is not deductible for the company, the savings on payroll taxes and work comp premium will exceed the tax on the 20 percent.
By Day or Mile?

Paying per diem by the day is a more accurate method of payment. It eliminates the need for testing the per diem on a periodic basis which is required to be performed if you pay by the mile.

If you are paying by the mile and you are not testing your per diem you need to start. Should you be subjected to an audit that is one of the first things the auditors will want to review. If you are paying by the mile there could be a chance, depending on the rate, that you could exceed the daily allowance, which is currently $63 per day. On any departure or arrival day you can pay up to 75 percent of the daily allowance. So in an ideal situation, when the driver leaves on Monday at 8 a.m. and returns Friday at 8 p.m., you can pay the driver two days at 75 percent of the daily rate and three days at 100 percent of the daily rate.

The payment of the per diem pertains to the amount of time the driver is away from his or her “tax home.” Also, by paying by the mile, you could lose out on the maximum savings you can receive by paying the per diem. For example, if you pay per diem at .08 cents per mile, your driver may go 600 miles in a 24-hour period (obviously an almost perfect scenario), that amounts to only $48. Technically the driver should get $63, so you have missed out on the maximum savings of paying the per diem. By paying by the day, you calculate the per diem at the end of the trip and that means no need to test it periodically.

Fiscal Year 2016 Travel Per Diem Rates Now Available

noreply@blogger.com (Bell and Company) — Tue, 29 Sep 2015 14:32:00 -0500

Documenting business travel expenses causes administrative headaches for employers and employees alike. Typically, employees are required to collect receipts as they travel, noting the time, place and business purpose of each expenditure. They then must submit monthly expense reports that are subject to approval of their supervisors. Sometimes, administrative delays occur if documentation is incomplete or a supervisor questions the business purpose (or reasonableness) of an item. Employers must hold on to all of this documentation for several years in case the IRS questions business travel deductions. Isn't there any easier way to reimburse workers for their travel costs?

Alternative Substantiation Methods
Fortunately, the IRS offers simpler alternatives that may be worthwhile for some companies. Instead of reimbursing employees for their actual expenses for lodging, meals and incidentals while traveling, employers may pay them a per diem amount, based on IRS-approved rates that vary from locality to locality.
If your company uses per diem rates, employees don't have to meet the usual recordkeeping rules required by law. Receipts of expenses generally aren't required under the per diem method. Instead, the employer simply pays the specified allowance to employees, although they still must substantiate the time, place and business purpose of the travel. Per diem reimbursements generally aren't subject to income or payroll tax withholding or reported on the employee's Form W-2.

Important note: Per diem rates can't be paid to individuals who own 10% or more of the business.
Under the "high-low method," the IRS establishes an annual flat rate for certain areas with higher costs of living. All the locations within the continental United States that aren't listed as "high-cost" automatically fall into the low-cost category. The high-low method may be used in lieu of the specific per diem rates for business destinations. Examples of high-cost areas include San Francisco, Boston and Washington, D.C. (See the chart below for a complete list by state.)
Under some circumstances — for example, if an employer provides lodging or pays the hotel directly — employees may receive a per diem reimbursement only for their meals and incidental expenses. The IRS also provides a $5 incidental-expenses-only rate for employees who don't pay or incur meal expenses for a calendar day (or partial day) of travel.

Recent Updates for 2016
The IRS recently updated the per diem rates for business travel for fiscal year 2016, which starts on October 1, 2015. Under the high-low method, the per diem rate for all high-cost areas within the continental United States is $275 for post-September 30, 2015, travel (consisting of $207 for lodging and $68 for meals and incidental expenses). For all other areas within the continental United States, the per diem rate is $185 for post-September 30, 2015, travel (consisting of $128 for lodging and $57 for meals and incidental expenses). Compared to the prior simplified per diems, the high-cost area per diem has increased $16, and the low-cost area per diem has increased $13.
The following costs aren't included in incidental expenses:

Transportation costs between places of lodging or business and places where meals are taken, and
Mailing costs of filing travel vouchers and paying employer-sponsored charge card billings.

Accordingly, taxpayers using per diem rates may separately deduct, or be reimbursed for, transportation and mailing expenses.
The IRS also modified the list of high-cost areas for post-September 30 travel. The following localities have been added to the high-cost list:

Mammoth Lakes, Calif.,
Grand Lake, Colo.,
Silverthorne/Breckenridge, Colo.,
Traverse City/Leland, Mich.,
Hershey, Pa., and
Wallops Island, Va.

On the other hand, these areas have been removed from the previous list of high-cost localities:

Sedona, Ariz.,
Santa Cruz, Calif.,
New Orleans, La.,
Baltimore City, Md.,
Cambridge/St. Michaels, Md.,
Glendive/Sidney, Mont.,
Conway, N.H.,
Glens Falls, N.Y.,
Tarrytown/White Plains/New Rochelle, N.Y.,
Kill Devil, N.C., and
Williston, N.C.

Note: Certain tourist-attraction areas count as high-cost areas on only a seasonal basis. Starting on October 1, the following tourist-attraction areas have changed the portion of the year in which they are high-cost localities:

Napa, Calif.,
Telluride, Colo.,
Miami, Fla.,
Martha's Vineyard, Mass.,
Nantucket, Mass.,
Jamestown/Middletown/Newport, R.I.,
Charleston, S.C., and
Jackson/Pinedale, Wyo.

Rules and Restrictions
Companies that use the high-low method for an employee must continue to use it for all reimbursement of business travel expenses within the continental United States during the calendar year. The company may use any permissible method to reimburse that employee for any travel outside the continental United States, however.
For travel in the last three months of a calendar year, employers must continue to use the same method (per diem method or high-low method) for an employee as they used during the first nine months of the calendar year. Also, employers may use either:
1. The rates and high-cost localities in effect for the first nine months of the calendar year or
2. The updated rates and high-cost localities in effect for the last three months of the calendar year, as long as they use the same rates and localities consistently for all employees reimbursed under the high-low method.

Company Deductions
In terms of deducting amounts reimbursed to employees on the company's tax return, employers must treat meals and incidental expenses as a food and beverage expense that's subject to the 50% deduction limit on meal expenses. For certain types of employees — such as air transport workers, interstate truckers and bus drivers — the percentage is 80% for food and beverage expenses related to a period of duty subject to the hours-of-service limits of the U.S. Department of Transportation.
Example: A company reimburses its marketing manager for attending a July trade show in Chicago based on the $275 high-cost per diem. It may deduct $241 ($207 for lodging plus $34 for half of the meals and incidental expense allowance).

Contact a Tax Pro
IRS auditors often target business travel expenses. So, detailed recordkeeping is imperative. Per diem substantiation methods may simplify your recordkeeping requirements and minimize IRS scrutiny. Contact your tax adviser to determine if it makes sense for your company to use per diem rates to reimburse employees' business travel expenses.

The High-Cost Area List for 2016

State	Key City
California	Mammoth Lakes (December 1-February 29)
	Monterey (July 1-August 31)
	Napa (October 1-October 31; May 1-September 30)
	San Francisco
	San Mateo/Foster City/Belmont
	Santa Barbara
	Santa Monica
	Sunnyvale/Palo Alto/San Jose
Colorado	Aspen (December 1-March 31; June 1-August 31)
	Denver/Aurora
	Grand Lake (December 1-March 31)
	Silverthorne/Breckenridge (December 1-March 31)
	Steamboat Springs (December 1-March 31)
	Telluride (December 1-March 31; June 1-August 31)
	Vail (December 1-March 31; July 1-August 31)
District of Columbia	Washington, D.C.
Florida	Boca Raton/Delray Beach/Jupiter (January 1-April 30)
	Fort Lauderdale (January 1-March 31)
	Fort Walton Beach/DeFuniak Springs (June 1-July 31)
	Key West
	Miami (December 1-March 31)
	Naples (January 1-April 30)
Illinois	Chicago (October 1-November 30; March 1-September 30)
Maine	Bar Harbor (July 1-August 31)
Maryland	Ocean City (June 1-August 31)
Massachusetts	Boston/Cambridge
	Falmouth (July 1-August 31)
	Martha's Vineyard (June 1-September 30)
	Nantucket (October 1-December 31; June 1-September 30)
Michigan	Traverse City/Leland (July 1-August 31)
New York	Lake Placid (July 1-August 31)
	New York City
	Saratoga Springs/Schenectady (July 1-August 31)
Pennsylvania	Hershey (June 1-August 31)
	Philadelphia (October 1-November 30; March 1-June 30; September 1-September 30)
Rhode Island	Jamestown/Middletown/Newport (June 1-August 31)
South Carolina	Charleston (October1-November 30; March 1-September 30)
Texas	Midland
Utah	Park City (December 1-March 31)
Virginia	Virginia Beach (June 1-August 31)
	Wallops Island (July 1-August 31)
Washington	Seattle
Wyoming	Jackson/Pinedale (June 1-September 30)

— Source: IRS

noreply@blogger.com (Bell and Company) — Mon, 29 Sep 2014 08:49:00 -0500

Excellent Article on Per Diem in our newsletter this week.

http://bza.me/?AIUZ7T

A Closer Look at Home Office Deductions Working form home

noreply@blogger.com (Bell and Company) — Tue, 3 Sep 2013 12:30:00 -0500

Home office deductions can save taxpayers a bundle, if they meet the tax law qualifications. However, claiming expenses for a home office has long been a red flag for an IRS audit since many people don't qualify. But don't be afraid to take a home office deduction if you're entitled to it. You just need to pay close attention to the rules to ensure that you're eligible -- and that your recordkeeping is complete.

Beware: IRS Hot Button

The IRS often scrutinizes home office deductions claimed on tax returns. In one recent U.S. Tax Court case, many of the taxpayer's claimed expenses were disallowed once she became an employee. The case illustrates a number of issues that you should consider before deducting home office expenses.
Facts of the Case
Jean Marie Fontayne and her husband worked for Vitesse Semiconductor Sales Corporation. The husband was an employee, but Jean was a part-time independent contractor who worked from her home from January to July 2008.
After Jean's supervisor retired, his replacement hired Jean as a full-time employee in July 2008. As an employee, she was required to work from Vitesse's office at least two days a week and could work from home up to three days a week.
The taxpayers moved into their home in January 2008. Jean designated a room with a closet and a bathroom as her office space. Later that year, the taxpayers enlarged the home office. A contractor removed an office wall and replaced it 14 inches further into the living room.
In the home office area, the taxpayers replaced the carpet, re-tiled the bath, and added under-the-floor heating, a central vacuum, and a fireproof safe in the closet.
The Fontaynes reported a tentative profit from the business of $24,728 and expenses of $24,728 ($22,883 plus $1,845 for a casualty loss and depreciation) for business use of their home. That amount included direct expenses of $16,501 for repairs and maintenance, as well as an allocable portion of indirect expenses, such as utilities and homeowners insurance.
The taxpayers claimed that the office occupied 17.87 percent of their home (554 square feet in the home office divided by 3,100 feet in the total house). Their home office measurement included the hallway, entryway, room, bathroom and closet. In addition, the taxpayers calculated square footage from the outside of the house.
The IRS allowed deductions of just $1,113 for business use of home expenses. This included $391 of real estate taxes removed from Schedule A and re-characterized as home office expenses.
Tax Court Findings: The court agreed that the taxpayers qualified for home office deductions, for part of the year. The rest of the time, the court noted the taxpayer was an employee who wasn't required to work from home, although it might have made her more productive.
The taxpayers presented a letter from Vitesse stating Jean's part-time home office was beneficial for the company but wasn't required. Instead, she had to work at the company's location at least two days a week. The court ruled Jean didn't meet the "convenience of employer" requirement and disallowed home office deductions for the second half of the year.
The court also ruled the bathroom wasn't used exclusively and regularly for business. Neither was the closet, because Jean wasn't required to store inventory or other items for work. In addition, most of the claimed repairs were capital improvements, which couldn't be deducted.
Ultimately, the Court allowed a home office deduction for the first half of the year, when Jean was a contractor. The judge also scaled back on many of the taxpayers' computed direct and indirect expenses. (Fontayne, T.C. Summ. Op. 2013-54)

For Self-Employed Individuals
For self-employed individuals, a home office qualifies for deductions if it is used:

Exclusively and regularly as your principal place of business;
Exclusively and regularly as a place where you meet or deal with patients, clients, or customers in the normal course of your trade or business; or
In the case of a separate structure, in connection with your trade or business.

There are also special rules for portions of a home used as a child care facility or for storage of inventory or product samples.
If you are self employed, have no other business location and perform the work at home, you should qualify. You can also qualify if you perform administrative or management activities in a home office and have no other fixed location where you can conduct such activities.
For example, suppose you're self-employed and take orders while visiting clients. Your only location for processing orders and following up on inquiries is your home office, so it likely qualifies for a tax deduction.
Regularly meeting customers or clients at a home office also qualifies it. The key word is regularly. Seeing customers twice a month is unlikely to meet the threshold.
The exclusive use requirement is also strictly interpreted. A spare bedroom converted into a home office will probably qualify, unless your relatives use the room when they come to visit.
For Employees
The rules for employees are stricter. An employee's home office qualifies if it is:

For the employer's convenience and
Required as a condition of employment.

To be a condition of your employment means it is necessary for you to properly perform your work. For example, suppose you're an engineer who inspects construction sites during the day and performs administrative tasks at night. If your employer's office is locked after hours, your home office would probably qualify for home office deductions if you use it to write up daily reports. In these types of cases, get a letter from your employer to substantiate the facts.
Crunching the Numbers
When computing your deduction, there are two types of expenses that are deductible -- indirect and direct. Indirect expenses are those that pertain to the whole house, such as utilities and homeowners insurance. Those are apportioned based on the percentage of the space used for business.
Some expenses -- such as housekeeping and gardening expenses or repairs to another room in the house -- don't qualify as an indirect expense and would not be deductible at all.
Direct expenses don't have to be apportioned. For example, if you have a separate electric line and meter for your home office, the full amount of the electric bill for that meter would be deductible.
New Simplified Option
Starting in 2013, you can deduct a simplified safe harbor amount of $5 per square foot up to a maximum of $1,500 (300 square feet). That's not overly generous, but it means you can itemize your full mortgage interest and real estate taxes on Schedule A of your personal tax return.
In some parts of the country, the effective savings of the new simplified option may be as much as if you claimed actual home office expenses. But if you live near a major metropolitan area, the simplified option might amount to a fraction of the actual expenses.
Keep in mind, the simplified option only makes the recordkeeping burden easier. It does not change the criteria for who can claim home office deductions. There's no simplified method for qualifying in the first place.
Pick One Method for the Year
Below is a chart from the IRS comparing the two options for claiming home office expenses. Once you choose a method for the tax year, you cannot change to the other method for the same year. If you use the simplified method for one year and use the regular method for any subsequent year, you must calculate the depreciation deduction for the subsequent year using the appropriate optional depreciation table. This is true regardless of whether you used an optional depreciation table for the first year the property was used in business.
If you have questions about whether you qualify to claim home office deductions on your tax return, consult with your tax adviser.

New Simplified Option	Regular Method
Deduction for home office use of a portion of a residence allowed only if that portion is exclusively used on a regular basis for business purposes	The same rules apply
Allowable square footage of business home use (not to exceed 300 square feet)	Percentage of home used for business
Standard $5 per square foot used to determine home business deduction	Actual expenses determined and records maintained
Home-related itemized deductions claimed in full on Schedule A	Home-related itemized deductions apportioned between Schedule A and business Schedule C or F
No depreciation deduction	Depreciation deduction for portion of home used for business
No recapture of depreciation upon sale of home	Recapture of depreciation on gain upon sale of home
Deduction cannot exceed gross income from business use of the home, less business expenses	The same rules apply
Amount in excess of gross income limitation may not be carried over	Amount in excess of gross income limitation may be carried over
Loss carryover from use of regular method in prior year may not be claimed	Loss carryover from use of regular method in prior year may be claimed if gross income test is met in current year

Six Steps to Maximize Transportation Profits

noreply@blogger.com (Bell and Company) — Tue, 30 Apr 2013 13:52:00 -0500

Carriers know they should be more efficient and work smarter not harder. But sometimes they confuse increasing revenues with maximizing profits. Want to maximize profits instead of just increase revenues? Any carrier, of any size, can using these six steps.

Step one: Get smart.

Utilize technology to give your business an edge. The right equipment will provide cash and movement reports so you can stay on top of your business, as well as real-time updates on maintenance issues and driver performance. Technology is the one area where you do not want to save a buck. Months from now, you’ll hardly remember if you spent a little more than necessary, but you’ll kick yourself many times if you didn’t spend enough – especially if your competitors have capabilities you don’t.

Step two: Get tough.

Institute a fuel program, and then monitor it. Are you relying on your local or regional fuel salesperson to give you the best deal? How do you know what the best deals are? Cost plus? Retail minus? Better of? Bob Joiner of StrategEZ Fuel Network Solutions says carriers should contact fuel vendors regularly and negotiate the best prices possible. Deals shouldn’t stay in place year after year. Then carriers should track transactions to measure the results and make sure drivers are fueling at stops that are in the network. Many smaller carriers can’t afford a full-time fuel manager and assign this responsibility to another staff member, often the safety director. Safety directors have too important a job to ask them to take on this extra duty.

Step three: Get lean.

Make sure you aren’t wasting miles or keeping equipment you don’t need. Review your rates and your lanes in detail so you know where your trucks are going and so your customer service reps know what you need to turn a profit. When your customer asks you to do more, ask yourself if that request would force you outside your standard routes. Maybe you should consider passing on the business.

Jimmy Starr, owner of Arkansas-based Woodfield Trucking, reduced his company’s fleets by 20 units about a year ago and now has 102 units. It was just too expensive to pay for trucks he wasn’t using and too hard to find qualified drivers to keep them moving. If the right business comes along, he’ll grow the fleet again, but he’s comfortable where he is.

Another place to look when trimming your company is excess staff. We’ve found that a carrier needs one non-driving employee, including owners, for every seven drivers. If your company is way over the mark, review your processes and make sure you are not paying people just to shuffle paper around. In reviewing the operations of a particular company, we found that very few loads were being booked during the morning hours, and then right before the end of the day, several loads miraculously would be entered into the system. We concluded the company had too many dispatchers. The company removed two and never missed a beat.

Step four: Get green – and by green, I mean more fuel-efficient.

Gabe Stephens at CC Jones Trucking said his owner-operators spend up to $1,500 more a month on fuel using their older trucks than his company spends with newer trucks. One owner-operator got rid of his gas guzzler and is paying for his new rig with the difference in fuel costs alone.

To really save money, move the speedometer back to 62 miles per hour. A carrier driving 12 million miles a year that improves its fuel mileage from five to six miles per gallon would save, at $4 a gallon, $1.6 million a year. Stephens said, “I told somebody the other day, ‘When’s the last time you were on the interstate driving 65 to 70 miles an hour, and you had a truck pass you?’ he said. “If you think about it, it just doesn’t hardly happen anymore.”

Worried that you’ll lose drivers by doing that? Share some of those fuel savings with them. Bulkley Trucking out of Sulphur Springs, Texas, gives drivers incentives to improve their mileage. The company’s driver of the year averaged 9.1 miles per gallon and was awarded a Ford F-150 pickup truck in response. Thanks in part to its fuel efficiencies, the company’s profits and fleet size are increasing.

Step five: Get better maintenance processes.

Don’t skimp on maintenance – at all. Little things can cause big problems and review your utilization per shop personnel. This sometimes is a black hole where money goes in but nothing comes out. Accountability is the only way to stop the flow. Implement a repair order system, and if you already have one, make sure it is working as intended. Get shop reports weekly on equipment that needs to be repaired or is up for preventive maintenance, and have a person in management approve all repair and maintenance before it is performed. Check your production on your shifts, especially if you are running two of them. It could be that you need only one.

Step six: Get a second opinion.

CPAs who really know the trucking industry can do more than balance your books and file your tax returns. They can help you save on all kinds of expenses. They also can provide projections whether you want to expand your business, cut back, or trade equipment. If leasing or purchasing is a question, let your CPA help you figure out the best approach based on your current tax and cash flow situation. Work with your CPA to make sure you are presenting your financial statements to your creditors in the best possible light.

http://www.arkansasbusiness.com/article/92212/six-steps-to-maximize-transport-profits-jeff-lovelady-commentary

Guide to Government Incentives for Green Commerical Trucks

noreply@blogger.com (Bell and Company) — Tue, 30 Apr 2013 13:49:00 -0500

There are numerous benefits for utilizing fuel-efficient commercial trucks. In addition to being better for the environment, fuel-efficient trucks boosts your company image and positively impacts your bottom line.

While these vehicles are more expensive than their less-efficient counterparts, the U.S. government has set up incentive programs to provide loans, offset costs and offer tax credits and exceptions to help companies outfit their transportation operations with green fleets.

At the federal, regional and state level, there are five types of incentives for those that purchase new commercial vehicles or upgrade in fuel-saving trucking equipment:

1. Grants

2. Rebates and vouchers

3. Low cost loans

4. Tax credits

5. Tax exceptions

However, it’s important to consider who qualifies for these programs. Many incentive programs commonly stipulate vehicle type, fuel type, state/region of operation, vehicle weight limit, fleet size and overall company revenue. In addition, the application for each type of incentive is nuanced, and each program has its own requirements.

To help, Software Advice, a website that reviews transportation software (here), has put together a comprehensive guide that breaks down the federal, regional and state incentive programs and provides contact information for each program. In addition, the guide provides a quick, four-step process to help guide your application process.

For more detailed information on these programs, check out the guide here: http://blog.softwareadvice.com/articles/scm/government-incentives-fuel-efficient-commercial-trucks-0413/.

Bell & Company Celebrates 30 Years

noreply@blogger.com (Bell and Company) — Thu, 10 Jan 2013 16:55:00 -0600

Bell and Company recently celebrated 30 years of business and put together a video of our clients and what they had to say about our company please enjoy the following link to the video.

http://sterlingimageworks.com/p871245256/h51e09806#h51e09806

Bell and Company wins a National Public Service Award

noreply@blogger.com (Bell and Company) — Tue, 6 Nov 2012 12:15:00 -0600

10.22.12

Bell and Company, PA was selected by the American Institute of Certified Public Accountants as the recepient of the 2011 Public Service award where we traveled to Ameila Island Florida to receive.

Here is the press release from the award.

Amelia Island, Fla. (Oct. 22, 2012) – The American Institute of CPAs is pleased to announce that Johnny K. Hudson, CPA is the 2011 recipient of the Institute’s Public Service Award for Individuals. Bell and Company, North Little Rock, Ark. and the Reznick Group, Bethesda, Md. have received the 2011 Public Service Award for Firms. The annual awards honor members and firms of the AICPA who have made significant contributions to their communities. The recipients received their awards at the fall meeting of the Institute’s governing Council in Amelia Island, Fla.

Kathy G. Eddy, chair of the awards committee presented the awards.

“The many strong candidates for these awards make it difficult to select individuals and firms. So many make significant contributions to their communities,” said Kathy Eddy, chair of the AICPA’s awards committee, “It is our belief that all of compassionate and tireless volunteers should be recognized. But this year’s winners, Johnny K. Hudson, Bell & Company and the Reznick Group clearly stand out.”Bell and Company’s partners and employees have served in pivotal roles in community organizations throughout North Little Rock, Ark. and Haiti. Following the 2010 earthquake in Haiti, the firm raised much needed funds for school supplies for children residing a remote village. The firm gathered, sorted and packed the supplies into 400 individual containers per child. In the same village, Bell & Company supported a medical clinic by providing Internet service and funding a full-time nurse. The firms sent two employees to the location to personally distribute the school supplies and help set up the clinic.

In Arkansas, Bell& amp; Company supports the Arkansas State Mental Hospital through volunteerism and donations, staff members serve meals for the homeless at the Salvation Army the first Wed. of each month and is actively involved in the Susan G. Komen Race for the Cure and Hearts and Hooves, a therapeutic horse riding and teaching facility for those with disabilities.

Indpendent Contractors Model

noreply@blogger.com (Bell and Company) — Fri, 20 Jul 2012 10:01:00 -0500

Richard Bell recently spoke at the TEANA conference in New Orleans here is a link to the White Paper he handed out "The Five Evil Sisters: An Attach on Indpendent Contractors".

Following is what TEANA said about he topic.

"Transportation accountant Richard Bell pointed out threats facing the independent contractor model many TEANA members utilize. Bell contends business owners do a better job of allocating and managing resources than government, as local, state and federal authorities seek revenue during times when tax coffers are thinning. Bell encourages TEANA members aggregate against government controlling independent contractor law and for members to work towards changing state workers compensation laws to make them statutory. Bell advises all members to understand the definition of "employee" in each state they provide services, for workers compensation purposes."

If you would like more information on this topice or would like the exhibits in the white paper listed above please contact deanna.lovelady@bellandcompany.net or call Richard Bell 501.753.9700.

Traps for Small Businesses

noreply@blogger.com (Bell and Company) — Mon, 19 Mar 2012 16:30:00 -0500

Click here for great article explaining 1099 request.

Daily Poll Summary

noreply@blogger.com (Bell and Company) — Thu, 2 Feb 2012 09:39:00 -0600

In tax planning for 2012 and 13, below polls would indicate higher tax rates in 2013 on capital gains and dividends from 15% to 20%, and individual rates with the Bush tax rate expiration at the end of this tax year. The assumption is that the Bush era tax cuts would probably not be renewed by a split democrat /republican house, senate, and incumbent presidency. One side note, the reversion to the Clinton era tax rates would increase all individual income tax rates from the lowest rate of 10% to 15% and highest rate of 35% to 39.6%. Definitely, planning opportunities this year! We look forward to working with you on these changes.

For more information please contact Richard Bell (501) 753-9700 or e-mail richard.bell@bellandcompany.net.

Daily Poll Summary, 1/27

Today's Post: A Look at Obama's Poll Numbers: http://www.nationalpolls.com/articles/20120127001-look-at-obama-numbers.html

2012 Matchup Polls

Michigan, EPIC MRA, 1/21 - 1/25: Obama 48, Romney 40
Michigan, EPIC MRA, 1/21 - 1/25: Obama 51, Gingrich 38
http://www.nationalpolls.com/2012/general-election/michigan.html

North Carolina, Civitas, 1/9 - 1/11: Obama 39, Romney 48
http://www.nationalpolls.com/2012/general-election/north-carolina.html

Pennsylvania, Franklin Marshall, 1/17 - 1/22: Obama 41, Romney 30
Pennsylvania, Franklin Marshall, 1/17 - 1/22: Obama 43, Santorum 30
http://www.nationalpolls.com/2012/general-election/pennsylvania.html

National, Rasmussen, 1/23 - 1/25: Obama 45, Romney 42
National, Rasmussen, 1/23 - 1/25: Obama 48, Gingrich 41
National, NBC WSJ, 1/22 - 1/24: Obama 47, Republican 42
National, NBC WSJ, 1/22 - 1/24: Obama 53, Santorum 38
National, NBC WSJ, 1/22 - 1/24: Obama 49, Romney 43
National, NBC WSJ, 1/22 - 1/24: Obama 55, Gingrich 37
http://www.nationalpolls.com/2012/general-election/national.html

Obama Approval Ratings

Florida, Quinnipiac, 1/19 - 1/23: Approve 46, Disapprove 52
Florida, Quinnipiac, 1/19 - 1/23: Approve 0, Disapprove 0
http://www.nationalpolls.com/obama/florida.html

Minnesota, PPP, 1/21 - 1/22: Approve 49, Disapprove 45
http://www.nationalpolls.com/obama/minnesota.html

Texas, Blum and Weprin Assoc, 1/21 - 1/24: Approve 41, Disapprove 50
http://www.nationalpolls.com/obama/texas.html

GOP Primary

Florida, TPM PollTracker Prediction, 1/27 - 1/27: Romney 39, Gingrich 30, Paul 11, Santorum 12
Florida, Nate Silver FiveThirtyEight Prediction, 1/27 - 1/27: Romney 41, Gingrich 34, Paul 10, Santorum 12
Florida, Quinnipiac, 1/24 - 1/26: Romney 38, Gingrich 29, Paul 14, Santorum 12
Florida, Sunshine State News, 1/24 - 1/26: Romney 40, Gingrich 31, Paul 9, Santorum 12
http://www.nationalpolls.com/florida.html

Michigan, EPIC MRA, 1/21 - 1/25: Romney 31, Gingrich 26, Paul 14, Santorum 10
http://www.nationalpolls.com/michigan.html

National, Gallup Tracking, 1/22 - 1/26: Romney 24, Gingrich 32, Paul 14, Santorum 13
National, NBC WSJ, 1/22 - 1/24: Romney 28, Gingrich 37, Paul 12, Santorum 18
http://www.nationalpolls.com/national.html

Cost Segregation

noreply@blogger.com (Bell and Company) — Mon, 30 Jan 2012 09:54:00 -0600

Cost Segregation:

If you are in the process of buying or selling a company, you may want to review the recent tax case Peco Foods v. Commissioner, TC Memo 2012-18. This case dealt with a proposed reallocation of asset values by the purchaser from a broad classification and large dollar value allocation of asset types (e.g. 26 categories of class types) contained in the sales agreement, which was then followed by subsequent cost studies by the purchaser after closing. The subsequent cost segregation study allocated the 26 class groups into over 300 sub-asset groups; thus creating smaller, more specific groupings with shortened tax lives for depreciation purposes. The Tax Court ruled that the cost segregation study would be disregarded and the previously negotiated groupings contained in the sales agreement would be binding. This resulted in less annual depreciation deductions by the purchaser on the front end. What lesson is to be learned from this case? LOOK AT THE COST SEGREGATION STUDY PRIOR TO CLOSING, which should be followed by the negotiated acceptance by the buyer and seller to treat the study as acceptable by both sides and made part of the sales agreement . I would suggest, for example, that the 300 sub-asset groups be attached to Form 8594, which is an IRS form that reports the acquisition and sale by the respective parties in the year of sale. If you have questions, please contact Richard Bell, CPA 501.753.9700 or e-mail richard.bell@bellandcompany.net a link to a copy of the case is below.

Peco Foods V Commissioner Case

IRS New Proposed Regs on Capitalization

noreply@blogger.com (Bell and Company) — Thu, 26 Jan 2012 14:39:00 -0600

The IRS has issued new proposed regs on capitalization vs. expensing of materials and supplies. I usually think about pens or pencils, paper, etc, as supplies and never considered a computer meeting the definition of materials and supplies, but computers are used as an example to explain one section of the proposed regs. The de minimis rule exception for capitalization can now apply to computer equipment. IIf you file a timely election on your tax return for 2012 and thereafter, and if you have a written policy in place for expensing such computer items under a certain dollar amount, for example- $500 per unit, then you may deduct the total purchase of computers for the year that meet your policy guideline of $500 or less per unit times the number of units purchased. This is subject to the upper limit of .1% times the gross sales of the business, or 2% of the total amount of depreciation and amortization claimed. For additional information, give Kelly Phillips, Pancho Espejo, or myself a call.

501.753.9700 Richard Bell, CPA

1099s

noreply@blogger.com (Bell and Company) — Thu, 19 Jan 2012 10:00:00 -0600

The deadline for providing 1099’s to recipients is on January 31, we wanted to make you aware of some new questions that you have to answer on your tax returns. The IRS wants to make sure that you are following the rules on providing 1099’s to those who meet the reporting threshold. If you pay a non incorporated service provider at least $600 during the calendar year in the course of your business or farm activity, you are required to report those payments to them on a Form 1099. Attorneys are a special category of vendors, in that you are required to send them a 1099 for all payments.

The IRS is asking if you have made payments to a service provider that would require a Form 1099 to be filed. If you answer this question yes, they ask if you have filed the Form 1099 or are going to do so. If you have questions on 1099’s please give Jeff Lovelady a call 501.753.9700 or e-mail jeff.lovelady@bellandcompany.net.

Handheld Mobile Phone Ban for Drivers

noreply@blogger.com (Bell and Company) — Thu, 5 Jan 2012 07:59:00 -0600

Effective January 3, 2012, the Federal Motor Carier Saftety Regulations will prohibit commerical drivers from using hand-held mobile phones while operating a truck.

Original Transportation Law Alert sent on December 15, 2011

Effective January 3, 2012, the Federal Motor Carrier Safety Regulations will prohibit commercial drivers from using hand-held mobile phones while operating a commercial truck or bus. Violations of the rule can result in fines of up to $2,750 to drivers and $11,000 to motor carriers. Habitually offending drivers of this new rule can be disqualified from operating a CMV. This ban can also create additional hurdles for accident liability claims.

As trucking company owners and drivers what are your thoughts on this new rule?

Volunteer Day

noreply@blogger.com (Bell and Company) — Wed, 21 Dec 2011 13:14:00 -0600

So a couple of us went to volunteer for the Salvation Army Angel Tree Distribution and we just so happened got on the news attached is the link if you would like to view News Story.

Recently published Letter from Jeff Lovelady in Transport Topics

noreply@blogger.com (Bell and Company) — Thu, 8 Dec 2011 14:27:00 -0600

Updated: 11/28/2011 8:00:00 AM Letters: Taxes, Speed Limiting These Letters to the Editor appear in the Nov. 28 print edition of Transport Topics. Click here to subscribe today. Taxes Your Oct. 31 “Analysis” from The Associated Press, which was headlined “Small Business Tax Deduction to Shrink, Showing Importance of Year-End Planning” (p. 7), stated: “The maximum that can be deducted under the two deductions combined is $2 million.” If that refers to the section 179 deduction and the bonus depreciation deduction, the information is not accurate. There is no limit on bonus depreciation. The limit only applies to section 179, and the amount that can be deducted is $500,000 — and then it is limited dollar-for-dollar for every dollar the purchases for the year exceed $2 million. For example, if a company buys $2.2 million worth of trucks— assuming no trade-in — the company can take a $2.2 million bonus depreciation deduction, assuming the transaction meets all the requirements. If the company elects not to take bonus depreciation, then it can take a section 179 for $300,000 ($2.2 million minus $2 million limit equals $200,000, and $500,000 minus $200,000 equals $300,000) and then take the MACRS (modified accelerated cost-recovery system) three-year deprecation amount on the remaining $1.9 million. Also, keep in mind that if a company can enter into a binding contract, it can take 100% bonus depreciation on the equipment in 2012, as long as it either (1) has paid for the equipment if it is a cashbasis taxpayer or (2) has secured financing and recorded the liability if it is an accrual-basis taxpayer. So, if it is an accrual-basis taxpayer: Book the asset and the liability prior to Dec. 31, 2011, put the asset into service in 2012 and take 100% bonus depreciation on the asset in 2012. This is not available if it has followed the proper procedures in securing a contract to build or has paid for the equipment in 2011. This is only available to transportation assets and other qualified long-lived property. As always, consult your own advisers should you have questions. Jeff Lovelady CPA Bell & Company, Pa. North Little Rock, Ark.

Personal Use of Company Auto

noreply@blogger.com (Bell and Company) — Fri, 2 Dec 2011 10:28:00 -0600

Did you know if you use a company vehicle for personal use, that benefit is taxable compensation to you? The IRS requires that personal use of a company automobile be calculated for each person receiving the benefit. The calculation is based on the personal mileage compared to business mileage, a personal gas factor of 5.5 cents per personal mile, and the IRS guidelines for the annual lease value of employer-provided vehicles. Recent IRS audit information shows that personal use of company auto generally is found to be in the 20% to 30% range. Business mileage does not include commuting miles, so these need to be included in the personal use percent. Adequate records, such as mileage logs, must be kept to support business use. Any personal use is added to the employee’s W2 by issuing the employee a salary check. The employee will have Social Security and Medicare taxes withheld from the gross amount of personal use. Federal and state taxes are not required, but the employer may choose to withhold federal and state taxes. The employer is responsible for matching the Social Security and Medicare taxes and remitting any federal or state withholding on the personal use. If the employer does not withhold the income taxes, you will need to notify the employees so they can adjust any personal tax estimates for the consequences of the personal use. For more information on this topic contact Bethany Pusifull. Bethany.pursifull@bellandocmpany.net or call her 501.753.9700.

noreply@blogger.com (Bell and Company) — Mon, 14 Nov 2011 10:51:00 -0600

November 11, 2011 Richard Bell recently attended the NASTC conference in Nashivlle, TN. While attended conference he was on the Dave Nemo show which airs on Road Dog XM Radio Station.

2290

noreply@blogger.com (Bell and Company) — Wed, 19 Oct 2011 14:57:00 -0500

Updated as of September 28, 2011 Congress has passed and the President has signed an extension of the Heavy Highway Vehicle Use tax through September 30, 2012. By November 30, 2011, taxpayers will be required to file Form 2290 for vehicles first used in July, August, September and October 2011. Although the Form 2290 is expected to be available in late October, the IRS will not provide a stamped (receipted) Schedule 1 until November 1, 2011. In the meantime, you can still pay your 2010 excise tax, get your 2011 tags and register your new or used vehicle.

2011 Trip to Arlington

noreply@blogger.com (Bell and Company) — Thu, 6 Oct 2011 09:17:00 -0500

We recently traveled to Arlington Texas to attend the Arkansas Society of CPA's Annual Banquet and received the 2011 Firm Public Service Award. It was an honor to be selected by the Arkanasas State Society as the State's Winner.

IRS Fresh Start for Employers

noreply@blogger.com (Bell and Company) — Thu, 6 Oct 2011 09:10:00 -0500

The IRS announced an opportunity for a fresh start for employers on the much debated classification of contract laborers as employees. Procedures outlined in IRS Announcement 2011-64 offer business owners a window of opportunity to voluntarily reclassify contract laborers as employees within certain guidelines. This voluntary reclassification, called the Voluntary Classification Settlement Program (VCSP), allows eligible employers to reclassify contract laborers as employees on a forward looking basis with only minimal federal, social security, and Medicare tax exposure for past liability periods (note, however, that state withholding and workman’s compensation authorities are not bound to this program). The IRS, in previous publications, has announced an expected increase in the number of audits in this area due to non-compliance and wants to give employers a chance to change any misclassifications they may be aware of. To be eligible, the employer must have treated the workers or group of workers consistently as independent contractors and issued 1099-Misc forms for services performed during the last three years. An employer under IRS or DOL audit is not eligible even if it otherwise would have met the conditions set forth. If an employer has been previously audited and has continued to comply with the conditions of that audit, the employer will be eligible for the program. The application is made on form 8952. On this form, the federal tax and social security withholdings are calculated by taking the 1099-MISC income for the entire group of laborers who are being reclassified as employees, multiplying that number by a pre-determined factor (10.68% for 2010 and 10.28% for 2011 for laborers under the social security wage base threshold amount), the product of which is multiplied by 10%. There are no penalties or interest assessed on the result of this calculation, but the employer agrees to treat the workers as employees on a prospective basis and a six year statute of limitations instead of three. Please contact Kelly Phillips or Nell Sterling at (501) 753-9700 if you have questions regarding the calculation and how it may benefit you. Bell & Company can help you apply for the program through the IRS. WARNING: Carefully think through the reclassification process for 2011 and into the future. For instance, consider the impact upon the 50 person employee rule (base measurement used by the health care reform to be effective in 2014), matching payroll taxes, etc. Also, be aware - this fresh start opportunity has not been adopted by the State of Arkansas for unemployment and state withholding purposes. One should carefully consider the implication of these additional taxes when evaluating the reclassification process.