BP Office Olympics

Our team headed out to the Kirkwood Center and Hotel last week to compete in our version of the Olympics!  Sporting colorful t-shirts to represent the countries we were competing for, we started our day off right with food from around the world and took a little extra time to learn more about our fellow teammates.  During a “people scavenger hunt” we learned that a certain team member has perfect pitch and another beat Olympian Shawn Johnson in a half-marathon. 

 Care to learn more about the unique talent we have on our team?  Check-out this video that shows off our talent beyond spreadsheets, and includes one of our partners in a gorilla suit!

The rest of our afternoon flew by with presentations from team members on company goals intermixed with Olympic events!   Our team walked away with many takeaways thanks to recent feedback from our clients and informative speakers.  We especially enjoyed hearing from a community friend who shared with our team his belief in having passion for what we do.  We agreed with him whole heartedly when he commented that he enjoys working with our team because he can feel that passion because we truly care about helping our clients.  We couldn’t agree more!

With four offices across Eastern Iowa, it’s important that we stay up-to-date with each other.  

Learn who knows who in all of our offices, and how we are linked to Kevin Bacon.

We ended our day with a medal ceremony honoring our South African team for winning three out of four of our Olympic events, and a toast to many MORE great years for our Bergan Paulsen team!

Check out more photos by heading over to our Facebook page!

The Supreme Court Upholds the Patient Protection & Affordable Care Act

Today the Supreme Court, in a 5 to 4 vote, upheld the constitutionality of the Patient Protection & Affordable Care Act under the broad power that Congress has to impose taxes.  Some of the provisions such as allowing children to stay on their parent’s health insurance through age 26, and the small employer health insurance credit have already taken effect, and will continue to remain in effect.

Additional provisions of the Act have different effective dates.  Some of the provisions that take effect beginning in 2013 are as follows:

• Beginning in 2013 health flexible spending accounts offered through a cafeteria plan must limit annual reimbursements to $2,500.  This does not limit other benefits available under a cafeteria plan such as dependent care reimbursements.
• Currently individual wages are subject to Medicare hospital insurance tax.  The employer pays 1.45% on eligible wages and the employee pays 1.45% with no cap on the wage amount.  Beginning in 2013 there is an additional .9% for the employee portion on wages over $200,000 ($250,000 on a joint return).  An employer only withholds based on the individual’s wages and any shortfall that is calculated on a joint tax return is assessed on the taxpayer’s individual income tax return.  The provision also applies to self-employment income.
• Beginning in 2013 a 3.8% Medicare tax is imposed on the lesser of

·        An individual’s net investment income for the tax year or

·        Modified adjusted gross income in excess of $250,000 for joint filers and surviving spouses, $125,000 for a married taxpayer filing a separate return and $200,000 in any other case. 

For this purpose investment income includes interest, dividends, rents and income from passive

business activities.  Additional guidance and clarification needs be issued in this area.

• Currently the itemized deduction for medical expenses is reduced by 7.5% of adjusted gross income.  Beginning in 2013 this increases to 10%.  The Act delays the 10% adjustment for taxpayer 65 or older until 2017.

Other provisions such as the tax on failing to have health insurance (individual mandate) and rules regarding large employers providing affordable health insurance take effect in 2014.

Bergan Paulsen will continue to monitor the effect this decision has on our clients.  Please don’t hesitate to contact any of our offices with specific questions.

Cedar Falls:  319.268.1715
Cedar Rapids: 319.294.8000
Coralville:  319.248.0367
Waterloo: 319.234.6885

IRS Correspondence Letters and Notices

It is rarely a pleasant feeling to go to your mail box and see a letter waiting for you from the IRS, unless it is a refund check of course! Correspondence via letter or notice from the IRS is becoming very common as they deal with budget cuts, and technology allows for more matching and sharing of tax information.

• Following are some things you should know about IRS notices:
• First, don’t panic; many of the notices simply ask for additional information.
• The notice usually covers a very specific issue and form, such as a request for payment or a change to your account.
• It will provide specific instructions on how to respond to the notice.
• Always compare the information in the correspondence with your tax return.
• You will be given the opportunity to disagree with the notice and provide additional documentation to support it.
• A telephone number is usually included for further questions. Mondays are not a good day to call the IRS. Long waits are common at any given time when calling.
• There is usually a section in the notice to give someone else, such as a Bergan Paulsen team member, permission to respond on your behalf. Depending on the nature of the issue, it may be necessary for you to give us Power of Attorney for the purpose of responding to the notice.
• Always respond to the notice if requested. You will be contacted approximately every 30-60 days until you respond or an assessment or levy will possibly be made on your account. When an issue gets to this point, it is more difficult to resolve.
• Ensure that you keep a copy of all correspondence for your records. If you speak with an IRS representative, write down the employee number they give you when they answer the phone and listen carefully to the prompts in the system so you reach the correct area.

The above tips also apply to any State or local correspondence, as they are all looking for additional revenue and compliance as well.

Remember, the IRS will never contact you via phone or email.

The Bergan Paulsen team is available to assist you with deciphering the correspondence, gathering necessary information and responding in a timely manner.

Bonus Depreciation and Section 179 Depreciation Rules for 2012

Related Article: 2012 / 2013 Bonus Depreciation & Section 179 Summary [TABLE]
  
The 2010 Tax Relief Act signed in December 2010 provides that qualified property acquired and placed in service during calendar 2012 qualifies for 50% bonus depreciation. For qualified property acquired and placed in service in calendar 2011, the law allowed 100% bonus depreciation. Current law provides that the bonus depreciation provisions will expire on December 31, 2012.

The bonus depreciation provision generally applies to tangible property with a recovery period not exceeding 20 years, as well as purchased computer software and qualified leasehold improvement property. Another provision relating to bonus depreciation is that the asset’s original use must begin with your business – therefore, used assets purchased will not qualify for bonus depreciation.

The 2010 Tax Relief Act set the Section 179 amount at $139,000 for tax years beginning in 2012, with the asset addition phase-out threshold beginning at $560,000 (both of these are the inflation-indexed amounts). This means that once qualifying asset purchases reach $699,000, taxpayer’s are ineligible to take a Section 179 deduction. Previously, the Small Business legislation allowed the Section 179 allowance to be $500,000 for taxable years beginning in 2011, with the asset addition phase-out beginning at $2,000,000.

For tax years beginning in 2011, $250,000 of a taxpayer’s $500,000 Section 179 allowance may be applied to qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property. There is also a taxable income limit aspect that factors into the amount of Section 179 that can be taken.

The changing Section 179 limits apply based upon a taxpayer’s fiscal year. The $139,000 applies to tax years beginning in 2012, and the $500,000 applies to tax years beginning in 2011. The bonus depreciation amounts are based upon a calendar year. 50% bonus depreciation applies to calendar year 2012 and the 100% bonus applies to calendar year 2011. For example, a taxpayer with a taxable year that goes from September 1, 2011 to August 31, 2012 is eligible for $500,000 limit of Section 179. Their qualifying assets that are placed in service between September 1, 2011 and December 31, 2011 would be eligible for the 100% bonus depreciation. Those qualifying assets that are placed in service between January 1, 2012 and August 31, 2012 would be eligible for the 50% bonus depreciation.

Contact us with further questions.

Get to Know MORE about Dave Happel

We recently had the chance to catch up with Managing Partner, Dave Happel.  Learn more about how he got into the accounting industry and his first experience with Bergan Paulsen.

1.    What are some of the more important leadership lessons you’ve learned in your career?
Over the years, I’ve learned to listen and to think before I respond to many situations.  Ultimately, it has to be about the team and these lessons tend to lend themselves to finding solutions that are better for the “we” rather than the “me.”

2.    Why accounting?  What brought you to this career and what do you like most about it?
I had an excellent business education teacher in high-school who sparked my interest in business and accounting, specifically.  Actually, I wrote my senior career paper on becoming a CPA. I knew early on that it was what I wanted to do.  Having been raised on a farm, I’ve never been afraid of hard work.

As for what I like the most about the career, it has got to be the people.  I truly enjoy the relationships I have made with our team, clients and people in the community.

3.    Why BP?  What differentiates this firm for you?
My first interview was with Tom Murley 38 year ago.  He lived in Denver, Iowa and that’s where I am from.  He invited me to an interview with him on a Saturday afternoon.  I arrived at his house, dressed to impress, and ready for an interview.  I remember him paying a lot more attention to the basketball game that was on television than to me, so I was surprised when Don Bergan called me the very next week for a follow-up interview.

From that very first interview to the firm we have grown into today, it has and always will be about the people.  We have gotten bigger but never lost that intimate family feel.

4.    What do you look for when you hire?
I look for their people skills and whether or not they would be a good cultural fit.

5.    How would you summarize your leadership philosophy?
I think it’s important to be a “servant leader.”  It really comes down to building trust within your relationships, so that, at the end of the day, everyone is focused on the greater good of the team.  When the team wins, we all win!

6.    What advice would you give someone getting out of school right now?
Set stretch-goals and review them regularly.  I think it’s important to determine what is expected of you and then do your best to exceed those expectations.

What the Health Care Act Could Mean to Taxes

As many business owners and individuals know, the 2010 Affordable Care Act includes some major tax changes that will take effect next year. As the law remains in limbo due to its debate in the Supreme Court, we are advising our clients to prepare for the changes until more is known. Please review the changes as outlined below, and we will keep you up-to-date as the Supreme Court makes their decision.

	Currently	Starting in 2013
Medicare Tax	Medicare tax on salary and/or self-employment (SE) income is 2.9%. If you're an employee, 1.45% is withheld from your paychecks, and the other 1.45% is paid by your employer. If you're self-employed, you pay the whole 2.9% yourself.	An extra 0.9% Medicare tax will be charged on: (1) salary and/or SE income above $200,000 for an unmarried individual, (2) combined salary and/or SE income above $250,000 for a married joint-filing couple, and (3) salary and/or SE income above $125,000 for those who use married filing separate status. For self-employed individuals, the additional 0.9% Medicare tax hit will come in the form of a higher SE bill.
Medicare Tax on Investment Income	The maximum federal income tax rate on long-term capital gains and dividends is 15%.	1.     The maximum rate on long-term gains is scheduled to go up to 20% and the maximum rate on dividends is scheduled to increase to 39.6% as the current tax cuts expire. 2.     All or part of the net investment income, including long-term capital gains and dividends, can get an additional 3.8% "Medicare contribution tax." Therefore, the maximum federal rate on long-term gains for 2013 and beyond will actually be 23.8%, and the maximum rate on dividends will be a 43.4%. An example: A married joint-filing couple with AGI of $265,000 and $60,000 of net investment income would pay the 3.8% tax on $15,000 (the amount of excess AGI). If the same couple has AGI of $350,000, they would pay the 3.8% tax on $60,000 (the entire amount of their net investment income).
$2,500 Cap on Health- Care FSA Contributions	There's no tax-law limit on contributions to your employer's healthcare flexible spending account (FSA) plan (although many plans impose their own limits). Amounts you contribute to the FSA plan are subtracted from your taxable salary. Then, you can use the funds to reimburse yourself tax-free to cover qualified medical expenses.	The maximum annual FSA contribution for each employee will be capped at only $2,500.
Higher Threshold for Itemized Medical Expense Deductions	You can claim an itemized deduction for medical expenses paid for you, your spouse, and your dependents, to the extent the expenses exceed 7.5% of AGI.	The hurdle is raised to 10% of AGI.  However, if either you or your spouse is age 65 or older at year end, the 10%-of-AGI threshold will not take effect until 2017.

U.S. Department of Justice Issues Report on Competition and Agriculture

It is safe to say the landscape of agribusiness has changed significantly over the past few years and will continue in the years to come with advancements in technology and the openings into world markets.

With these changes, new challenges with safety, promotion of foreign trade, environmental welfare and competitive practices have come about.  The Department of Justice Antitrust Division has addressed the issue of competition in agriculture and along with the United States Department of Agriculture, recently issued a report on workshops conducted in 2010, that gathered comments from over 18,000 respondents in the process.

The underlying message is that they came away with a better understanding of the agricultural markets and a renewed commitment to enforce antitrust laws in the agricultural sector.

Click here for a summary from the National Council of Farmer Cooperatives and the full report issued by the U.S. Department of Justice in May of 2012.

For additional information, please contact anyone of our agribusiness specialists.