CPA News & Articles News from Saltmarsh's Pensacola, Fort Walton Beach, and Tampa offices

U.S. Banks Must Report Interest on Deposits by Nonresident Aliens

Release Date: Friday, May 11, 2012

The Internal Revenue Service (IRS) has released final regulations requiring reporting of interest paid on deposits maintained at U.S. offices of certain financial institutions by nonresident alien individuals beginning on January 1, 2013. The regulations require reporting only for interest paid to a resident of a country with which the U.S. has an exchange of information agreement in effect. In addition, the rules seek to reassure stakeholders that strict confidentiality will be maintained not only by the U.S. but also by the foreign jurisdiction receiving the information.

Background of the rules

The focus by the IRS on reporting of interest on deposits of nonresident aliens is not new, as the proposed regulations date back to 2001 and subsequently 2002. The 2002 proposed regulations would have required reporting of interest paid to such individuals who were residents of certain designated countries including Canada and fifteen others. In January 2011, new proposed regulations were released and the final regulations adopt the 2011 proposals with certain revisions. One such revision is the requirement to report only where the interest is paid to residents of a country with which the U.S. has an information exchange agreement in effect.

Basic approach of the rules

The new regulations clarify that, for purposes of determining country of residence, the reporting institution can rely on the permanent address provided on a valid IRS Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for U.S. Tax Withholding) unless the institution knows or has reason to know that the W-8BEN is incorrect or unreliable for purposes of establishing the country of residence.

Objective of the rules

The U.S. does not impose its income, gift or estate taxes on most non-business bank deposit interest or accounts of foreign persons, so this measure is likely not aimed primarily at enforcing U.S. federal taxes.
However, the IRS is in process of finalizing regulations under the U.S. Foreign Account Tax Compliance Act (FATCA) which, inter alia, will require foreign financial institutions and others to provide U.S. taxpayer information.
The success of this approach may hinge in part on the ability of the U.S. to exchange financial account information with other countries’ governments, so providing a U.S. mechanism for obtaining such information for other countries may assist enforcement efforts under FATCA and similar legislation.

Observation: We generally anticipate enhanced bilateral and/or multilateral information exchanges among nations to improve local tax enforcement, in light of continuing increases in international investment.

For more information, please contact a Saltmarsh Bank Advisor at (800)477-7458.

© 2012 EisnerAmper LLP
This publication is intended to provide general information to our friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.

• IRS Revenue Procedure 2012-24

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IRS Announces Third Opportunity for Voluntary Disclosure of Offshore Accounts

Release Date: Friday, May 11, 2012

Background
Following two initiatives in 2009 and 2011, the Internal Revenue Service (IRS) has announced a third offshore voluntary disclosure program (OVDP) for foreign financial accounts – this one with an indefinite deadline to apply. In this connection, the IRS noted that, collectively, the two previous programs have generated more than $4.4 billion in tax revenue. This new program is similarly designed to help motivate U.S. taxpayers with undisclosed accounts to comply with required U.S. tax reporting.

Observations:
• The new OVDP comes at a time when the U.S. has stepped up its focus on international tax compliance and its negotiations with several foreign banks to obtain the release of account information of U.S. customers.
• In addition, new reporting applicable to such foreign financial accounts and other foreign financial assets commences with 2011 income tax returns. The statute of limitations for omission of gross income which is derived from a reportable offshore asset is extended to six years if such income is in excess of $5,000.
• Moreover, under the Foreign Account Tax Compliance Act provisions, foreign financial and nonfinancial institutions will be required to disclose U.S. persons’ accounts beginning in 2014.

The terms of this OVDP could change in the future with the possibility of increased penalties for all or defined classes of taxpayers, or could be ended completely at any moment. Thus, this OVDP seems an opportunity for taxpayers with undisclosed foreign financial accounts to come into U.S. tax compliance without fear of criminal prosecution and with a clear understanding of what penalties will be imposed.

Penalty Structure
The overall penalty structure for this new program generally remains unchanged from the predecessor 2011 program, with one principal exception: The basic penalty has increased from 25% to 27.5% of the highest aggregate balance in unreported accounts during the eight full tax years prior to disclosure.

Framework of the 2012 OVDP
As noted above, and similarly to the first two programs, the new OVDP applies to the last eight full tax years before the year of participation – e.g., 2004-2011 during the current year 2012.

Certain key provisions of the 2011 program – which is described in our previous alerts in effect under the 2012 program, including the following:
• Taxpayers whose offshore accounts or assets did not surpass $75,000 in any calendar year will continue to qualify for a lower penalty of 12.5% during the disclosure period.
• Taxpayers meeting all of the following four conditions qualify for a reduced penalty of 5% if the taxpayer:
-- Did not open or cause the account to be opened (and permitting such an account opening if the financial institution required that a new account be opened, rather than allowing a change in ownership of an existing account, upon the death of the previous owner);
-- Has exercised minimal, infrequent contact with the account;
-- Has not withdrawn more than $1,000 from the account in any year of the eight years of the program, except for a withdrawal closing the account and transferring the funds to an account in the U.S.; and
-- Can establish that all applicable U.S. taxes have been paid on funds deposited in the account.

Observation: For purposes of the last requirement above, if funds were deposited before 1991 but no information is available to establish that the funds were appropriately taxed, it is presumed that they have been so taxed – this date also applied to the previous program and apparently has not been moved forward to a later date.

Taxpayers who reside abroad and who were unaware of their U.S. citizenship also may qualify for the 5% penalty without having to meet the four qualifications above.

Observation: The IRS recently issued Fact Sheet FS 2011-13 – described in our previous alert provide guidance to, inter alia, dual citizens who reside outside the U.S. It is not clear how the Fact Sheet and its guidance reconcile with the new OVDP’s penalty structure – e.g., under the Fact Sheet the IRS will consider reasonable cause to minimize or eliminate penalties for certain taxpayers.

Coordination with Other Required Disclosures
• The IRS continues to provide in the new OVDP an alternative mark-to-market computation for Passive Foreign Investment Companies held by participating taxpayers, as described in our previous alert.
• For those who have reported and paid tax on income from foreign financial accounts, but did not file Foreign Bank Account Reports (FBARs), this is another opportunity to file delinquent FBARs without penalty assessment, provided that a statement explaining the cause for the filing delay is contained within the filing. Similarly, those with signature authority – but no ownership interest – in foreign financial accounts should file delinquent FBARs under the same procedures.
• No penalties will apply for the failure to file certain other information returns with respect to foreign income – including but not limited to Form 5471 and Form 3520 – if there are no underreported tax liabilities and the information returns are filed with an amended tax return accompanied by a statement explaining the reason for the delinquency.

Observation: In general, the statute of limitations does not run on information returns such as Form 5471 or Form 3520 if they are not filed.

Limitations on Relief
• A taxpayer whose noncompliance has already been learned by the IRS will not be able to participate in the new OVDP, nor will participation be permitted where the foreign financial account includes property derived from illegal activities.
Observation: Taxpayers who have previously come forward since the closing of the last 2011 program will be treated under the provisions of the new program.
• It should be noted that the National Taxpayer Advocacy Office recently invoked an administrative tool to force changes in IRS audit procedures with respect to the first 2009 program. At issue is whether the IRS must revoke a March 1, 2011, memo directing examiners to stop accepting less than the 20% offshore penalty under that program (as apparently permitted in the IRS’s own FAQ 35 under the program) and instead instruct examiners to assume a violation was not willful unless they can prove otherwise.

Observation: This challenge may ultimately impact terms of the new OVDP.
• Taxpayers participating in the new OVDP must file with the IRS all original and amended tax returns for the 8-year period covered and pay – in addition to the penalty amounts referred to further above based on highest foreign account balances – the balances of any income taxes owed for the covered period, interest on the balances, a 20% accuracy related penalty, and late payment or filing penalties, if applicable.

For more information, please contact a Saltmarsh Tax Professional at (800) 477-7458.
© 2012 EisnerAmper LLP

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Construction Services Newsletter March 2012

Release Date: Tuesday, March 20, 2012

This edition of "Dimensions" covers topics such as contract cost language, transition planning for your company, and performing successful background checks.

• Download the March 2012 Dimensions Newsletter
• Learn More about Saltmarsh's Construction Services

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Suzanne Cox Appears on Tampa FOX 13

Release Date: Monday, February 13, 2012

Suzanne Cox, CPA, was recently featured in a story about stolen tax returns on Tampa's Fox 13. During her interview, she talks about how she has been a victim due to identity theft, and gives pointers on how to recognize fradulent activity.

• Watch Suzanne's Interview on Fox 13

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Bill Massey Quoted in American Banker

Release Date: Thursday, January 26, 2012

Bill Massey, CPA, Shareholder, has been quoted in the latest edition of American Banker and on AmericanBanker.com in an article focusing on rebuilding Florida's community banks.

To read Bill's quote and the article in its entirety, please click on the link below. The article is on the second page of the document.

• File Download

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Larrieu, Smith Named Rising Stars

Release Date: Thursday, January 26, 2012

Congratulations to Robin Larrieu and Justin Smith for being named to the Pensacola Independent News Rising Stars 2012 list! The Rising Stars program has been honoring leaders under the age of 35 in Pensacola since 2008. To be chosen as a Rising star, one must be seen as an upcoming leader in his or her profession within our community.

Robin Larrieu is the Network Engineer in the Information Technology Services Department of Saltmarsh, Cleaveland & Gund. Coming from a large ISP she joined the firm in June 2006 and began her career in 2003. Her experience includes computer networking and technology consulting. Robin is a Microsoft Certified Desktop Support Technician.

Justin Smith is a Senior in the Tax & Accounting Services Department of Saltmarsh, Cleaveland & Gund. He has been practicing public accounting since 2006. Justin’s area of expertise includes corporate and individual tax specializing in construction contractors, homeowner’s associations and non-profit organizations.

Saltmarsh is proud of Robin and Justin! Congratulations from the entire Saltmarsh team!

• Read more on our blog ...

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Payroll Tax Cut Temporarily Extended into 2012

Release Date: Friday, December 23, 2011

Nearly 160 million workers will benefit from the extension of the reduced payroll tax rate that has been in effect for 2011. The Temporary Payroll Tax Cut Continuation Act of 2011 temporarily extends the two percentage point payroll tax cut for employees, continuing the reduction of their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid through Feb. 29, 2012. This reduced Social Security withholding will have no effect on employees’ future Social Security benefits.

Employers should implement the new payroll tax rate as soon as possible in 2012 but not later than Jan. 31, 2012. For any Social Security tax over-withheld during January, employers should make an offsetting adjustment in workers’ pay as soon as possible but not later than March 31, 2012.

Employers and payroll companies will handle the withholding changes, so workers should not need to take any additional action.

Under the terms negotiated by Congress, the law also includes a new “recapture” provision, which applies only to those employees who receive more than $18,350 in wages during the two-month period (the Social Security wage base for 2012 is $110,100, and $18,350 represents two months of the full-year amount). This provision imposes an additional income tax on these higher-income employees in an amount equal to 2 percent of the amount of wages they receive during the two-month period in excess of $18,350 (and not greater than $110,100).

This additional recapture tax is an add-on to income tax liability that the employee would otherwise pay for 2012 and is not subject to reduction by credits or deductions. The recapture tax would be payable in 2013 when the employee files his or her income tax return for the 2012 tax year. With the possibility of a full-year extension of the payroll tax cut being discussed for 2012, the IRS will closely monitor the situation in case future legislation changes the recapture provision.

The IRS will issue additional guidance as needed to implement the provisions of this new two-month extension, including revised employment tax forms and instructions and information for employees who may be subject to the new “recapture” provision. For most employers, the quarterly employment tax return for the quarter ending March 31, 2012 is due April 30, 2012.

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IRS Announces 2012 Standard Mileage Rates

Release Date: Tuesday, December 13, 2011

The Internal Revenue Service today issued the 2012 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 55.5 cents per mile for business miles driven
• 23 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical, or charitable expense are in Rev. Proc. 2010-51.

Notice 2012-01 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

At Saltmarsh, our tax consultants work full time to keep up with the constant changes in our tax laws. We develop strategies that will allow you to take full advantage of the law, and we use our best judgment and experience to advise you as to what actions you can take to reduce your tax burden.

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United Way Day of Caring 2011

Release Date: Monday, December 12, 2011

Saltmarsh employees participated in the United Way's Day of Caring by helping Oakcrest Elementary School with the up-keep of their vegetable and butterfly gardens. In addition, new fruit trees were installed along with an irrigation system.

In addition to helping at the school, Saltmarsh employees also collected school supplies for the children of Oakcrest.

Thanks to all of our employees who helped to make a difference in the lives of these children, whether it was through giving school supplies or through giving your time!

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Lee Bell Quoted in Article on Community Banking

Release Date: Wednesday, November 30, 2011

Lee Bell, Tampa based Shareholder, was recently quoted in an article written by Margie Manning of the Tampa Bay Business Journal regarding Tampa area community banks. Below is an excerpt of that article.

Article titled "Performance improving, with a caveat" by Margie Manning.

"Tampa Bay area community banks gained strength on their balance sheets and income statements in the third quarter. As a group they bolstered capital and made a profit compared with a net loss in prior quarter."

"However, the turnaround is attributed more to failure of a dozen of the biggest statewide money-losers than to performance improvements."

"I don’t know that we’re seeing that banks are starting to make money that weren’t making money, but some of the banks that were losing money have continued to lose but at a slower pace or they are gone," said Lee Bell, shareholder in charge of the central Florida practice for accounting firm Saltmarsh, Cleaveland & Gund.

The health of the banking industry is critical for small to mid-size businesses that rely on community banks for credit and other services. Stronger banks are in a better position to make loans to be used by businesses to expand and hire, increase purchases from other businesses and in turn boost the economy.

The Tampa office of Saltmarsh, Cleaveland & Gund is located in the One Tampa City Center at 201 N. Franklin St., Suite 2720, Downtown Tampa. Call (813) 287.1111 for more information community banking.

• Read More About Tamp's CPA Firm

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New Legislative Alert - Deducting Bonuses

Release Date: Monday, November 21, 2011

Background:

Internal Revenue Code (IRC) S. 461 governs the timing of deduction for certain expenses incurred by accrual method taxpayers. A common expense for which many companies provide an accrual is incentive compensation. The IRS released Revenue Ruling 2011-29 on November 9, 2011, providing guidance on how a plan should be structured in order to permit a deduction in the year the services are provided.

S. 461 and its associated regulations require the following tests be considered in order to determine the timing of a deduction:

• All events must have occurred to establish the fact of the liability,
• The amount of the liability must be able to be determined with reasonable accuracy
• Economic performance must occur for the liability.

The economic performance rule as it relates to deductions for bonus payments, as defined in IRC S. 404, is straightforward. Regulations S.1.404(b)-1T prescribes that economic performance is deemed to occur in the current taxable year as long as payment is made by the 15th day of the 3rd month following such taxable year.

The New Ruling:

The first test, in which all events must have occurred to establish the fact of the liability, is the focus of Rev. Rul. 2011-29. This has been a topic scrutinized in various court cases and previous Internal Revenue Service (IRS) rulings. The Washington Post Co. v. United States case allowed deduction of a bonus accrual even when the employer provided a general bonus accrual at the end of the year but did not specifically identify the bonus recipient and the amount payable to that particular recipient prior to the end of the taxable year.

IRS Rev. Rul. 76-345 stated that the IRS would not follow the holding in that case. This suggested that individual recipients and the amounts payable to such recipient do need to be specifically identified prior to the end of the year in order for the all events test to be met. Rev. Rul. 2011-29 revokes Rev. Rul. 76-345.

The new ruling states that the following facts are now acceptable evidence to prove the all events test has been met in determining the timing of the deduction:

• The taxpayer’s liability to pay a minimum amount of bonuses to a group of eligible employees is fixed as the end of the year in which the services are rendered,
• The taxpayer is obligated under the program to pay the group the minimum amount of bonuses determined by the end of the taxable year, and
• Any bonus allocable to an employee who is not employed on the date on which bonuses are paid is reallocated to other eligible employees.

In order to satisfy the above conditions, the incentive compensation plan should specifically identify which employees are eligible to participate. The plan requirements should be communicated to eligible employees prior to the end of the taxable year. Lastly, the exact amount of the bonuses payable should be determinable through a formula in effect prior to the end of the taxable year. It is advisable that the plan be formally documented. If all the conditions noted further above are met, all events which fix the liability should be deemed to have occurred and the accrual should be determined with reasonable certainty. Provided the economic performance rule is also met, the tax deduction should be permitted in the year the services are provided.

Observation:

Changes in a taxpayer’s treatment of bonuses to conform to this ruling constitute a change in accounting method under Revenue Procedure 2011-14. This procedure allows for an automatic accounting method change. An automatic change is permitted to be submitted with the taxpayer’s timely filed tax return, including extensions, and no user fee is required.

Limitation:

A distinction should be noted with respect to bonuses paid to related parties. The related party rules under IRC S. 267 require the matching of income and deductions arising from transactions between related parties. Related parties include individuals owning more than 50% in value of the outstanding stock of the company. The law requires that even if all events have occurred to fix the liability and the economic performance rules are met, the deduction may not be claimed until the year in which the related party recognizes the income. Thus, in the instance of a bonus payment to a greater than 50% shareholder, the amounts will not be deductible by the company until the period in which the income is recognized by the shareholder.

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SEC Provides Disclosure Guidance Relating to Cybersecurity Risk Disclosure

Release Date: Monday, November 07, 2011

In today’s day and age, it’s hard to imagine any company that is not using the internet or internal technology to drive their business. However, companies, their boards and shareholders may not always understand the full extent of the risk that lies in that technology. Prompted by the irrefutable amount of attention to high-profile cybersecurity incidents, the Division of Corporate Finance of the Securities and Exchange Commission has focused on this issue and recently provided their views on registrants’ cyber risk disclosure obligations.

The Division states, “Registrants should disclose the risk of cyber incidents if these issues are among the most significant factors that make an investment in the company speculative or risky.”

Why is cybersecurity such a critical issue?
Virtually all activities today rely on computers and the internet – communication (internet, smartphones), shopping (online stores, credit cards), personal records (medical, employee and customer information), accounting records, etc. Cybersecurity entails protecting this information by protecting from, detecting, and responding to attacks.

What risks and consequences do you need to consider?
The risks companies should consider are: 1) misappropriation of sensitive data including proprietary information, 2) corrupted data and 3) operational disruption. These may be carried out by someone gaining unauthorized access or causing processing disruptions. Attacks may lead to consequences such as additional costs, lost revenues, litigation as well as reputational damage.

Which companies are most at risk?
Everyone who maintains data in an electronic environment. Zeena Patel, a leader in EisnerAmper’s Technology Audit and Advisory Services group, notes: “The Division was prompted to provide their views when several large companies were involved in significant attacks. However, data shows that criminals are just as likely to invade smaller and medium-sized organizations who may not have the resources to detect and prevent attacks quickly.”

What disclosures may be required?
The guidance, which does not change the existing rules and regulations, requires companies to disclose any aspects of a company’s business that could have material costs and consequences.

A significant attack, or high risk of attacks (even if currently undetected), may require quantitative and qualitative information within the “Risk Factor” disclosure.

Further consideration must also be given as to the inclusion of costs and consequences in Management’s Discussion and Analysis and Financial Statements.

Lastly, further, lacking operating cybersecurity controls may lead to ineffective Disclosure Controls and Procedures.

How should companies respond to the guidance?
Zeena further states: “Companies should be preparing a risk assessment which also includes third-party providers. Understanding the magnitude and likelihood of potential attack within your current controls will allow you to determine your disclosure requirements.”

The guidance can be found at http://www.sec.gov/divisions/corpfin/guidance/cfguidance-topic2.htm

For more information, please contact Saltmarsh, Cleaveland & Gund, (850) 435-8300.

© 2011 EisnerAmper LLP

• The guidance can be found at www.sec.gov.

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Saltmarsh Wins 1st Place for Small Business at YMCA Corporate Cup Games

Release Date: Monday, October 24, 2011

Saltmarsh won 1st place in the small business division at the 2011 YMCA Corporate Cup games which were held at the University of West Florida on October 22, 2011.


Members of the winning team included:
Aimee Brady, Angelika Cope, Cedric Durre, Christina Maslen, Christopher Stark, Danny Brady, Diane Martinez, Jared Tyler, Kate Tyler, Leslie Jackson, Lisa Fairbanks, Rob Harms, Robby Hinson, Robin Larrieu, Ron Jackson, Stephanie Hirst, Stephen Hirst, Stephen Reyes

1st place events:
Obstacle course
Crazy Raft Relay
4x50 Quick Change Relay

2nd place events:
Eggesecutive Toss
3rd place events:
One-Mile Run
Closet to the Pin
Pumpkin Swim Relay

Go Team Saltmarsh! We can't wait to participate again next year!

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Treasury Issues Proposed Regulations Addressing Tax Treatment of Credit Default Swaps

Release Date: Friday, October 14, 2011

On September 15, 2011, the Treasury issued proposed regulations which would include Credit Default Swaps (“CDS”) in the definition of a Notional Principal Contract (“NPC”) under Treas. Regulation 1-446.3. The proposed regulations also confirm that swaps, including a CDS, would not fall under the Section 1256 regime and proposes significant changes to the existing NPC regulations. The proposals also provide conforming revisions to other relevant regulations.

What is a Credit Default Swap?

Seven years ago, the Treasury issued Notice 2004-52 seeking comments from users and their advisors on how a CDS should be treated for tax purposes. The popular view was that a CDS should be considered an NPC while others suggested treatment as option, or an insurance product, or a guarantee. These new proposed regulations have ended this debate. The proposed regulations, when finalized, will treat most CDS contracts as NPCs.

What changes have been made to the existing NPC regulations?

Under existing law, an NPC is defined as a financial instrument that provides for the payment of amounts by one party to another at specified intervals, calculated by reference to a specified index upon a notional amount, in exchange for specified consideration or a promise to pay a similar amount. The proposed regulations revise this definition by stating that an NPC requires two or more payments to a counterparty. However, the “fixing” of an amount is treated as a payment even if the actual payment is to be made at a later date. The practical effect of this new definition is to prohibit creating an instrument, such as a “bullet” swap, where all of the anticipated payments are netted and made as one back end payment. Rather than looking at the sole ultimate payment, the proposed regulations require an understanding of the calculation of the expected payment. To the extent the ultimate payment consists of two or more calculations (i.e., dividend payments plus change in value) then the instrument will be considered an NPC.

What are some of the negative tax implications of a NPC?

As more instruments will fall under the expanded definition of an NPC, it is important to understand the potential negative tax treatment that these instruments carry. Under existing regulations most NPC payments, excluding a termination payment (i.e., an unscheduled payment made to extinguish the remaining obligations of any party under the contract), will be considered a Section 212 deduction if the taxpayer is not considered to be engaged in a trade or business. Section 212 deductions are considered miscellaneous itemized deductions at the individual tax level, subject to limitation in part or in full, depending on the taxpayer’s facts and circumstances. In addition, these Section 212 deductions are not deductible in many state jurisdictions.

In addition to taking into account the payments described above, proposed regulations issued in 2004 require taxpayers to adopt a method of accounting to take into account contingent nonperiodic payments (i.e., a final swap payment at end of the contract). Prior to issuance of these 2004 regulations, most taxpayers adopted a “wait and see” method on these payments. Under these proposed regulations, taxpayers are required to utilize the complex noncontingent swap method or, as an alternative, adopt a mark-to-market method. In practice, most taxpayers utilize a mark to market approach. This approach requires a taxpayer to annually include as “other” ordinary income any unrealized appreciation each year. Unrealized depreciation would also need to be taken into account as an expense. However, to the extent the taxpayer was not engaged in a trade or business, this amount would be included as a Section 212 deduction. Significant “whipsaw” can result for any taxpayer not engaged in a trade or business, as a taxpayer may be required to pick up ordinary income in a year of appreciation but not get the benefit of the deduction for a future’s year depreciation.

The newly issued proposed regulations do not address whether or not a CDS would be required to adopt the timing and inclusion rules of contingent nonperiodic payments. Presumably, if a CDS contract is now considered to be a NPC, the argument not to consider these as contingent nonperiodic payments are much weaker than were prior to issuance of the new proposed regulations.

To the extent that a taxpayer has not treated a CDS as a NPC, they may need to consider the application of the change in accounting method rules and filing requirements.

Exclusion of Swaps from Section 1256

The proposed regulations have clarified that “swaps” and “similar arrangements” are excluded from Section 1256. There has been previous uncertainty as to the treatment of swaps under provisions of the Dodd-Frank Act.

When is the effective date of the Proposed Regulation?

A hearing is scheduled on the proposed regulation for January 19, 2012. The regulations are intended to be effective for contracts entered into on or after the date the final regulations are published.

For further questions, please contact Saltmarsh, Cleaveland & Gund (850) 435-8300.

© 2011 EisnerAmper LLP

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Saltmarsh Technology Funnel and Community Bank Executive Forum

Release Date: Wednesday, October 12, 2011

On Thursday, October 6th and Friday October 7th, Saltmarsh hosted the annual Technology Funnel and Community Bank Executive Forum at the Tampa Club in Tampa, Florida.

More than 50 participants heard timely information regarding technology in community banking during the Thursday session, while more than 90 bank executives gathered for Friday's event.

Thanks to all of our participants! We look forward to seeing you again next year!

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Saltmarsh Hosts Anti-Money Laundering Seminar

Release Date: Friday, August 12, 2011

Orlando, FL - Saltmarsh hosted (together with the Anti-Money Laundering Association and the Association of Certified Fraud Examiners) a seminar, Understanding and Detecting Money Laundering - for financial institution clients and friends. The speaker was Jonathan Turner. Mr. Turner has appeared on ABC News and CNN and is an expert in the investigation and documentation of financial fraud. He brought his entertaining and informative presentation about how money is laundered - great and timely information.

Stephen Macbeth, Dede Nolan, Suzi Fernandez, William Borde, Julie Sbrocco, Kristen Stogniew, Nathan Botts and Lee Bell of Saltmarsh, Cleaveland & Gund were in attendance as well.

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Starratt Earns QPA Designation

Release Date: Thursday, June 30, 2011

Heather M. Starratt, ERPA, QKA, a Manager in the Retirement and Medical Plans Department at Saltmarsh, Cleaveland & Gund has received the designation of Qualified Pension Administrator (QPA) from the American Society of Pension Professionals & Actuaries (ASPPA). Starratt is also a Qualified 401(k) Administrator (QKA) and an Enrolled Retirement Plan Agent (ERPA).

The Qualified Pension Administrator (QPA) credential was created by ASPPA to recognize professionals who are qualified to perform the technical and administrative functions of qualified plan administration. QPA’s assist employers, actuaries, and consultants in performing functions such as determination of eligibility benefits, computation of benefits, plan recordkeeping, trust accounting and disclosure, and compliance requirements.

• Follow link for more information.

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Elkins earns the designation of Certified Public Accountant and promotion

Release Date: Wednesday, June 15, 2011

Jen Elkins, with Saltmarsh, Cleaveland & Gund, has recently earned the designation of Certified Public Accountant (CPA) and has been promoted to Senior. Elkins passed a four part exam that tested her knowledge in Auditing and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, and Regulation.

• Follow link for more information.

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IRS Provides Guidance on 100% Bonus Depreciation

Release Date: Monday, May 09, 2011

On March 29, 2011, the IRS released Rev. Proc. 2011-26 providing much-needed guidance on 100% bonus depreciation and associated issues. This effectively clarifies a number of issues including two which may be of interest to our clients: the ability to elect alternative 50% bonus depreciation; and the ability to depreciate components of self-constructed property.

Background

The Obama Administration’s Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (“the Act”) granted an additional 100% first-year depreciation for certain “qualified property” acquired or placed in service after September 8, 2010 and prior to January 1, 2012. The prior definition of “qualified property” remained intact – generally as acquired and placed in service after December 31, 2007 and prior to January 1, 2013 with original construction commencing with the taxpayer.

The Rev. Proc. provides much-welcomed guidance, inter alia, on self-constructed property in the context of 100% bonus depreciation; and on the ability to elect 50% bonus depreciation in lieu of 100% bonus depreciation or standard statutory depreciation deductions.

Self-Constructed Property

In general, for 100% depreciation purposes, self-constructed property is acquired when significant construction begins. Even if the construction of a property begins before the September 9, 2010 eligibility date, specific components of the project, with a proper election, may be eligible for 100% bonus depreciation if the component’s self-construction began or acquisition occurred after September 8, 2010.

Election of 50% Bonus Depreciation

Prior to the issuance of Rev. Proc. 2011-26, there was no ability to elect 50% bonus depreciation rather than 100% depreciation due to no affirmative guidance. For eligible property, taxpayers either opted for 100% bonus depreciation or elected out of the bonus depreciation regime entirely.

Fortunately, the new guidance permits taxpayers to elect – if preferable due to their particular tax positions – 50% bonus depreciation instead of 100% bonus depreciation. Because this has been released very close to the April 15, 2011 tax return filing deadline, taxpayers who have already filed their 2010 returns may opt for 50% bonus depreciation on an amended return filed prior to next year’s return or file an automatic accounting method change for either the first or succeeding years.

If the taxpayer elected out of bonus depreciation for a class of property, the taxpayer may revoke the election by June 17, 2011 or, if later, by the time it files next year’s tax return.

If you have any questions about this Alert, please contact Saltmarsh, Cleaveland & Gund (850) 435-8300.

© 2011 EisnerAmper LLP

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Fryer Promoted to Manager at Saltmarsh

Release Date: Thursday, April 14, 2011

Judy Fryer, Certified Section 125 Administrator, at Saltmarsh, Cleaveland & Gund, has been promoted to Manager in the Retirement and Medical Plans Department. Fryer, who has been practicing in this field since 1982, has management and medical billing experience with extensive CPT and ICD9 coding experience. She is a Certified Section 125 Administrator through the HR certification Section 125 Program. Fryer remains compliant with HIPAA training and active with the Employee Benefits Institution of America (EBIA).

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Starratt Promoted to Manager, Earns ERPA Designation

Release Date: Tuesday, April 12, 2011

Heather M. Starratt, ERPA, QKA at Saltmarsh, Cleaveland & Gund, has been promoted to Manager in the Retirement and Medical Plans Department. Heather is a Qualified 401(k) Administrator (QKA), a credential awarded by the American Society of Pension Professionals & Actuaries (ASPPA) and has now added the Enrolled Retirement Plan Agent (ERPA) designation to her title.

ERPA is a federally sanctioned designation that allows enrolled practitioners to practice before the IRS on pension and 401(k) plan matters. This includes determination letters, plan audits and negotiating on behalf of clients regarding compliance matters. The IRS created the ERPA designation to provide a credentialing process for third party administrators and benefit consultants of tax-exempt retirement plans.

To qualify for the ERPA designation, Starratt had to demonstrate special competence in retirement plan matters by passing written examinations. The IRS has contracted with the American Institute of Retirement Education, LLC (AIRE) to administer the ERPA-Special Enrollment Examination (ERPA-SEE).

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Elbert A. Botts Estate donates $1.4 million to Troy University

Release Date: Monday, March 28, 2011

TROY—The estate of Elbert A. Botts today presented a $1.4 million donation to Troy University which will support the School of Accountancy and geomatics program.

Dr. Jack Hawkins, Jr., Chancellor, expressed appreciation for the gift and said it would help advance two of the University’s strongest academic programs.

“The investment of this bequest reflects the value placed on this university by the Botts family and for that we are grateful,” Dr. Hawkins said.

A native of Pike County, Ala., Elbert Botts attended Troy University (then called Troy State Teachers College) in the 1940s. He went on to open a successful garden center in Augusta, Ga., The Green Thumb West, which he worked at until his death in 1995. He was known both as a civic leader and a statewide pioneer in the horticulture industry.

Botts’ nephews, Richard and Nathan Botts (Director of Financial Institution Services at Saltmarsh), made the presentation to TROY officials during a luncheon ceremony at the University’s Foundation Office.

“Uncle Elbert believed in education and felt that [his college education] allowed him to become as successful as he was,” Nathan Botts said.

“He really thought a lot about the community that he grew up in and thought a lot about education,” Richard Botts said. “This gift is going to a great place and you will do great works with it.”

The donation will support scholarships for future geomatics students, said Dr. Steve Ramroop, director of the Surveying and Geomatics Program, and will allow the program to add new technology and faculty.

“As director, I want to thank the Botts family for this generous gift,” Dr. Ramroop said. “It will support scholarships for students who are committed to success in the program.”

The School of Accountancy will use the gift to fund a professorship in accounting, said program director Dr. Kaye Sheridan.

“We can’t thank [the Botts family] enough for this timely gift,” Dr. Sheridan said. “To have a great program you need great faculty, and this gift will give us an advantage when it comes to attracting great faculty members.”

• Follow link for more information.

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Retirement Plan Sponsors

Release Date: Friday, March 25, 2011

Retirement Plan Sponsors - Fiduciaries Need to Plan Now to Comply with DOL’s Final Regulation on Transparency of Fees and Expenses

Beginning January 1, 2012 (for calendar year plans), the Department of Labor’s Employee Benefits Security Administration ("EBSA") will require retirement plans that allow participants to direct the investment of their accounts (typically 401(k) and 403(b) plans) to provide extensive information regarding fees and expenses related to a plan’s investment options so that plan participants can more easily compare the costs of various investment options. This annual disclosure must also include performance information for each investment option offered under a plan. Additionally, participants must receive quarterly disclosure of the amounts and nature of expenses deducted directly from their accounts.

The burden of this new and complex set of disclosures will rest with a plan’s fiduciaries, who are typically officers of the plan sponsor. The investment of a plan’s assets is a fiduciary act governed by the fiduciary standards in ERISA. Plan fiduciaries may allow participants to self-direct investments under ERISA section 404(c), which has always required the disclosure of information about a plan’s investments under a participant-directed plan. This requirement has typically been met by making available fund prospectuses (or equivalent information) or information generated by software providers that consolidate such information. Knowledgeable plan participants have been able to make informed investment decisions under the existing regulations; however, EBSA believed that enabling the average plan participant to make informed decisions required the use of standard methodologies when calculating and disclosing fee, expense, and investment return information in order to provide ease of comparison between investments. Consequently, the final regulation requires plan fiduciaries to provide the information discussed below.

Initial and Annual Disclosure

The information below must be given to participants on or before the date they can first direct their investments, and then annually thereafter.

Plan-related information
• General plan information, which consists of information about the structure and mechanics of the plan, such as an explanation of how to give investment instructions, a current list of the plan’s investment options, and a description of any brokerage or similar arrangement that enables the selection of investments beyond those designated by the plan.
• Administrative expense information, which is an explanation of any fees and expenses for general plan administrative services that may be charged to or deducted from individual participant accounts (for example, fees and expenses for legal, accounting, and recordkeeping services).
• Individual expense information, which is an explanation of any fees and expenses that may be charged to or deducted from the individual participant’s account based on the actions taken by the participant (for example, fees and expenses for participant loans and for processing qualified domestic relations orders).
Investment-related information
• Performance Data: Participants must be provided specific information about historical investment performance. The one-, five-, and ten-year investment returns must be provided for investment options, such as mutual funds, that do not have fixed rates of return. For investment options that have a fixed or stated rate of return, the annual rate of return and the term of the investment must be disclosed.
• Benchmark Information: For investment options that do not have a fixed rate of return, the name and returns of an appropriate broad-based securities market index over one-, five-, and ten-year periods (matching the performance data periods above) must be provided. Investment options with fixed rates of return are not subject to this requirement.
• Fee and Expense Information: For investment options that do not have a fixed rate of return, the total annual operating expenses of the investment expressed as both a percentage of assets and as a dollar amount for each $1,000 invested, and any shareholder-type fees or restrictions on the participant’s ability to purchase or withdraw from the investment, must be provided. For investment options that have a fixed rate of return, any shareholder-type fees or restrictions on the participant’s ability to purchase or withdraw from the investment must be provided.
• Internet Web Site Address: Investment-related information includes the requirement to provide an internet web site address that is sufficiently specific to provide access to additional information about the investment options available under a plan for those participants who want more detail or more current information.
• Glossary of terms: Investment-related information includes a general glossary of terms to assist participants in understanding the plan’s investment options, or an internet web site address that is sufficiently specific to provide access to such a glossary.
Quarterly Disclosure

In addition to the above information, participants must receive statements, at least quarterly, showing the dollar amount of the plan-related fees and expenses actually charged to or deducted from their individual accounts along with a description of the services for which the charge or deduction was made. These disclosures may be (but are not required to be) included in the quarterly benefit statements that are required to be provided to plan participants who participate in participant-directed plans.

Other Requirements

The investment information required under the final regulation must be furnished in a chart or similar format designed to facilitate a comparison of each investment option available under the plan. The good news is that the final regulation includes a model comparative chart that may be used by a plan administrator to satisfy the regulation’s requirement that a plan’s investment option information be provided in a comparative format. The bad news is that the information required is extensive and plan fiduciaries are going to need to spend a considerable amount time and money if their plan’s investment advisor can not produce the information in a compliant format. If requested by a participant, the plan sponsor or plan fiduciaries must also furnish prospectuses, financial reports and statements of valuation of assets held by an investment option under a plan.

Impact on Plan Sponsors and Fiduciaries

This new requirement will create additional work and/or costs for plan sponsors. Plan sponsors and fiduciaries need to begin now in order to identify and quantify all expenses paid from their plan’s assets and then decide on a compliant format and medium for communicating this information to plan participants. Additionally, discussions should begin now with the plan’s investment advisor or investment provider to determine whether compliant performance data, performance benchmarks, and a glossary of terms will be provided timely for inclusion with the general information required under the final regulation, as well as how such information will be maintained and updated.

The final regulation will become applicable for plan years beginning on or after November 1, 2011. For calendar year plans, compliance will be required on January 1, 2012.
For more information, please contact Saltmarsh, Cleaveland & Gund.

This publication is intended to provide general information to our friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.

This publication has been prepared by EisnerAmper LLP for informational purposes only. These materials do not constitute accounting, tax or legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.

Redistributed by Saltmarsh with permission.

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SEC Cracks Down on Sales Taxes – Significant Penalties Result

Release Date: Friday, March 25, 2011

Although the SEC has not historically been involved in above-the-line taxes, such as sales taxes, “the times they are a-changin’.” The SEC has sanctioned and fined several companies for failure to properly collect, remit, and/or account for sales taxes.

In one instance a company was fined $200,000 for failure to maintain proper internal controls and books and records relating to sales taxes. The company was found to not have proper controls in place to properly tax and track the transactions in question over a period of several years. As a result the company was found to be in violation of § 13(b)(2)(B) of the Exchange Act.

In another instance, the SEC found that a company had improperly released a reserve related to sales taxes which resulted in a 12% overstatement of income. Further, the company was found to be lacking in the tracking of its exemption certificates, and to not be registered as required in many jurisdictions.

As illustrated by these examples, the penalties for improperly accounting for sales taxes can be more than paying back taxes and related interest. Penalties from taxing authorities and other oversight organizations can be significant. While sales tax audit defense services are often viewed as the first line of defense, there are several ways the public and private companies can become compliant in the areas of sales and use taxes and remediate historical exposures, including:

1. Policies and Procedures Review – Review the company’s current sales tax policies and procedures with an eye toward seeking opportunities for improvement.

2. Voluntary Disclosure Agreements/Amnesties – Historical exposures can be remediated by entering into voluntary disclosure agreements and/or amnesty agreements which may limit the prior periods for which uncollected taxes must be paid, and which waive penalties and/or interest.

3. Nexus Studies and Taxability Matrices – Determine where companies have filing responsibilities and the taxability of various revenue streams to help ensure compliance with applicable sales/use tax laws.

4. Reverse Audits – Not all problems result in underpayments/exposure. Many times when companies do not understand the intricacies of sales/use taxes the results include over payments. Companies can identify overpayments and apply for refunds to ensure they are not paying more than their fair share of taxes.

If you have any questions regarding the above content, please contact Saltmarsh, Cleaveland & Gund (850) 435-8300.

This publication is intended to provide general information to our friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.
This publication has been prepared by EisnerAmper LLP for informational purposes only. These materials do not constitute accounting, tax or legal advice and cannot be relied upon by any taxpayer for the purpose of avoiding penalties imposed under the Internal Revenue Code.
Redistributed by Saltmarsh with permission.

• Follow link for more information.

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Noble Among Elite Group at Advanced Financial Planning Conference

Release Date: Wednesday, January 19, 2011

W. Gregg Noble, CPA, PFS at Saltmarsh, Cleaveland & Gund, attended the 2011 Advanced Personal Financial Planning Conference in Las Vegas where he gained enhanced education on investments, insurance, tax, estate, retirement and elder planning from some of the world’s foremost experts on those issues.

The conference is held annually by the American Institute of Certified Public Accountants exclusively for CPA personal financial planners to learn new tools and techniques that can help clients achieve their financial goals; gain up-to-the minute information on changes by lawmakers and rule makers that could affect clients’ finances; and network with an elite group of financial planners from around the country to share best practices.

Noble is a Shareholder in the Pensacola office of Saltmarsh, Cleaveland & Gund. He is also a registered investment advisor and member of Saltmarsh Financial Advisors, LLC. Noble has been practicing accounting since 1981. His experience includes auditing, taxation, consulting and accounting services. Gregg has also concentrated on estate and fiduciary taxation, estate planning, individual taxation and investment advisory services since 1987.

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Scharf Appointed to Executive Committee at Saltmarsh, Cleaveland & Gund

Release Date: Tuesday, January 11, 2011

Glenn Scharf, CPA, at Saltmarsh, Cleaveland & Gund, has been selected to serve on the Executive Committee effective January 1, 2011.

Scharf is a Shareholder in Saltmarsh’s Fort Walton Beach office. He began his career in 1991 after graduating from the University of Florida with a Masters in Tax. Scharf brings to Saltmarsh expertise in a variety of fields including: taxation, accounting, process engineering, business consulting and tax management solutions. He was previously employed by Deloitte & Touche, LLP and Arthur Andersen, LLP in Atlanta.

The Executive Committee consists of Ron Jackson, President, Charles Gund, Jr., Shareholder and newly elected Glenn Scharf.

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Schulte, Jackson, Kent and Woods promoted at Saltmarsh

Release Date: Tuesday, December 28, 2010

The Shareholders of Saltmarsh are pleased to announce the following promotions effective January 1, 2011:

James Schulte has been promoted to Senior in the Audit Services Department of Saltmarsh, Cleaveland and Gund. His areas of concentration include manufacturing and transportation companies, nonprofit organizations, governmental entities and employee benefit plans.

Josh Jackson, CPA has been promoted to Senior Manager in the Financial Institution/Audit Services Department of Saltmarsh, Cleaveland & Gund. He works extensively with our financial institution clients in delivering accounting and auditing services, directors’ examinations, and loan and credit quality reviews. Jackson also has experience in asset-liability management and business valuations.

Andrew Kent has been promoted to Senior Manager in the Litigation and Valuations Consulting segment of Saltmarsh, Cleaveland & Gund. He is a Certified Business Appraiser (CBA), a Certified Machinery and Equipment Appraiser (CMEA) and holds both a J.D. and M.B.A. from the University of Florida.

Kendra Woods has been promoted to Senior in the Retirement and Medical Plans Department of Saltmarsh, Cleaveland & Gund. She works exclusively with our flexible spending account clients. Woods is currently working on her M.B.A in the field of Healthcare Administration.

• Follow link for more information.

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Gaines joins Saltmarsh, Cleaveland & Gund

Release Date: Tuesday, December 07, 2010

Benny Gaines has joined our firm as Senior Manager in our Retirement and Medical Plan (RAMP) Consulting Department. He has been practicing public accounting since 1989. Prior to joining Saltmarsh, Gaines worked with the international accounting firm of Deloitte & Touche for over 16 years, having served clients in Nashville, TN, Dallas, TX, and McLean, VA. His career has included an extensive employee benefits consulting background in both public accounting and private industry.

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Florida Trend Ranks Saltmarsh, Cleaveland & Gund Among Top Firms

Release Date: Thursday, November 11, 2010

The November 2010 issue of Florida Trend Magazine lists its picks of the “Top Rank Florida Accounting Firms.” Saltmarsh is recognized on the list with 88 professionals, three Florida Offices and Ronald E. Jackson, CPA, President, as the Senior Executive. Other firms of note include PricewaterhouseCoopers, Ernst & Young and KPMG.

Saltmarsh is in its fourth generation of ownership with staff of over 100, and 14 shareholders. The firm serves clients all through the Southeast from its three offices throughout the State. They provide a full range of services, including auditing, accounting, management consulting, corporate and individual tax planning and preparation, business valuation, litigation support, financial and estate planning, computer systems evaluation, retirement and medical billing, implementation and administration.

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Government Contractor Planning Workshop

Release Date: Monday, October 18, 2010

Join us for our free Government Contractor Planning Workshop! To sign-up, click on the below link:

• Follow link for more information.

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Stogniew & Associates Merges with Saltmarsh, Cleaveland & Gund

Release Date: Monday, September 27, 2010

Stogniew & Associates and Saltmarsh, Cleaveland & Gund are merging effective October 1, 2010. Joining the Tampa office of Saltmarsh as a shareholder is Stogniew & Associates executive director, Kristen J. Stogniew, who has more than 20 years of experience in regulatory and consumer compliance issues. The addition of the Stogniew team will benefit both firms as well as their financial institution clients. The merger further increases the two firms’ expertise and reputation for excellence in providing internal audit, loan review and compliance consulting services to financial institutions.

Saltmarsh has been a leader in providing professional services for more than 65 years. Its reputation has been built on the principles of honesty and integrity, creativity, respect and quality service to clients and community. Both firms believe that client satisfaction and personal attention are key in building successful relationships.

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Andrew Kent joins Saltmarsh, Cleaveland & Gund

Release Date: Wednesday, August 18, 2010

Andrew Kent has joined our firm as Litigation and Valuation Consultant in the Business Advisory Group. He provides business valuation, general consulting and litigation support services to firm clients. Kent is a Certified Business Appraiser (CBA), a Certified Machinery and Equipment Appraiser (CMEA) and holds both a J.D. and M.B.A. from the University of Florida. Prior to joining Saltmarsh he spent several years practicing real estate and business law with a regional law firm before serving as the managing-member of a closely-held company in the construction services industry.

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Cathy Gianotto, QPA, QKA elected to Board of Directors of FWCEBC

Release Date: Monday, August 16, 2010

Cathy Gianotto, at Saltmarsh, Cleaveland & Gund, has been elected a member of the Board of Directors for the Florida West Coast Employee Benefits Council (FWCEBC) in Tampa.

The purpose of the council is to advance the knowledge of its colleagues by exchanging practical application of new legislation, case studies and compliance for procedures and practices relating to all levels of benefits management.

Gianotto is a Manager in the Retirement & Medical Plans Department of Saltmarsh, Cleaveland & Gund. She has more than 20 years of experience in employee benefits administration and management. Gianotto has obtained the “Qualified Pension Administrator” (QPA) designation and the “Qualified 401(k) Administrator” (QKA) designation from the American Society of Pension Professionals & Actuaries (ASPPA).

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Crist appoints Nathan Botts to Bay Bridge Authority

Release Date: Thursday, July 01, 2010

Gov. Charlie Crist announced two appointments to the Santa Rosa Bay Bridge Authority — which governs the Garcon Point Bridge — on Wednesday:

Ira Mae Bruce, 69, of Navarre, owner of Century 21 Island View Realty, succeeding Pamela Langham.

Nathan O. Botts, 67, of Milton, certified public accountant with Saltmarsh, Cleveland and Gund, succeeding Elaine Willis.

Both of their terms began on Wednesday and run through Jan. 3, 2014.

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Gulf Oil Spill: Questions and Answers

Release Date: Friday, June 25, 2010

Q-1: Is a taxpayer required to include in gross income payments the taxpayer receives for lost business income, lost wages, or lost profits?

A-1: Yes. The law requires that a taxpayer include in gross income payments the taxpayer receives for lost business income, lost wages, or lost profits. For information on whether estimated tax payments may be required, see Publication 505, Tax Withholding and Estimated Tax.

A self-employed individual who receives a payment that represents compensation for lost income of the individual’s trade or business should include the amount of the payment in net earnings from self-employment for purposes of the self-employment tax. For more information about reporting self-employment income and paying self-employment tax, see Publication 334, Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ).

Generally, a payment to an individual to compensate for lost wages will not be wages for purposes of the social security tax and Medicare tax because it is not an actual payment for employment within the meaning of the law. These payments will also generally not be subject to income tax withholding, unless backup withholding applies. See A-2, below, for a discussion of backup withholding. However, if the payment is made by an employer to its own employees, or by a third party to employees of another employer in satisfaction of an obligation of that employer to its employees, the payment may be subject to social security tax, Medicare tax, and income tax withholding.

Q-2: Are payments that are made to an individual for lost business income, lost wages, or lost profits required to be reported to the IRS by the person making the payment?

A-2: Generally yes. A person making payments to an individual for lost business income, lost wages, or lost profits must report the payments to the IRS on a Form 1099-MISC, Miscellaneous Income, if the payments aggregate $600 or more. Generally, these payments are subject to backup withholding at a rate of 28 percent if the individual fails to furnish the individual’s taxpayer identification number to the payor at or before the time of payment.

A payment that is treated as a payment of wages is subject to reporting on Form W-2, Wage and Tax Statement, and to the same social security tax, Medicare tax, and income tax withholding rules that apply to regular wage payments made by an employer to an employee. For more information about withholding from employees’ wages, see Publication 15, (Circular E) Employer’s Tax Guide.

Under current law, a person making payments to a corporation for lost business income or lost profits is not required to report those payments to the IRS. However, a person who makes payments to a partnership, limited liability company or other non-corporate entity for lost business income or lost profits generally is required to report those payments to the IRS in the same manner as for payments to individuals, and the payments are subject to backup withholding at a rate of 28 percent if the entity fails to furnish its employer identification number to the payor at or before the time of payment.

Q-3: Is a taxpayer required to include in gross income payments the taxpayer receives for property damage or destruction?

A-3: A taxpayer is not required to include in gross income payments the taxpayer receives for property damage or destruction if the payments do not exceed the taxpayer’s adjusted basis in the damaged or destroyed property. If the payments for property damage or destruction exceed the taxpayer’s adjusted basis in the damaged or destroyed property, the taxpayer will realize gain for federal income tax purposes. If the damage or destruction is an “involuntary conversion,” the taxpayer may defer the tax on any gain if the taxpayer purchases qualifying replacement property that costs at least as much as the payments received for the damaged or destroyed property. (Tax is deferred until the qualifying replacement property is later sold.) An involuntary conversion occurs when a taxpayer’s property is destroyed, stolen, condemned, or disposed of under the threat of condemnation and the taxpayer receives other property or money in payment, such as a condemnation award or insurance. See Publication 544, Sales and Other Dispositions of Assets. A person making payments for property damage or destruction is not required to file information returns with the IRS reporting the payments.

Q-4: Can a taxpayer claim a casualty loss deduction if payments the taxpayer receives for property that has been damaged or destroyed are less than the taxpayer’s adjusted basis in the property?

A-4: A taxpayer may be able to claim a casualty loss deduction if the payments (including insurance proceeds or payments for damages) the taxpayer receives, or reasonably expects to receive, are less than the taxpayer’s adjusted basis in the property. See A-5, below, for a discussion of how to compute the possible deduction.

Q-5: How does a taxpayer determine the amount the taxpayer may claim as a casualty loss deduction?

A-5: With respect to personal-use property, the taxpayer generally may claim as a casualty loss deduction the lesser of (1) the difference between the fair market value of the property immediately before and after the casualty; or (2) the adjusted basis of the property. The amount of the deduction is reduced by any insurance proceeds or other payments the taxpayer receives or reasonably expects to receive. An individual taxpayer must reduce the amount claimed for each casualty loss deduction for personal-use property by $100, and reduce the total amount of casualty loss deductions claimed for personal-use property for one taxable year by 10 percent of the taxpayer’s adjusted gross income.

With respect to business or income-producing property that is partially destroyed, the taxpayer generally may claim as a casualty loss deduction the lesser of (1) the difference between the fair market value of the property immediately before and after the casualty; or (2) the adjusted basis of the property. The amount of the deduction is reduced by any insurance proceeds or other payments the taxpayer receives or reasonably expects to receive. However, if business or income-producing property is completely destroyed and its adjusted basis exceeds its fair market value, the taxpayer may claim a casualty loss deduction equal to the adjusted basis of the property, reduced by payments the taxpayer receives or reasonably expects to receive for the property (including insurance proceeds or payments for damages).

Q-6: How does a taxpayer establish the decrease in the fair market value of the property after a casualty?

A-6: A taxpayer may use either an appraisal or the cost to repair or clean up the property to determine the decrease in fair market value of the property after a casualty.

Q-7: How does a taxpayer report a casualty loss deduction on the tax return?

A-7: A taxpayer claims a casualty loss deduction on the tax return for the year in which the casualty occurred. An individual taxpayer claims a casualty loss deduction for personal-use property by reporting the amount of the loss on Form 4684, Casualties and Thefts, and claiming an itemized deduction on Schedule A, Itemized Deductions, of the taxpayer’s return. A taxpayer claims a casualty loss deduction for business or income-producing property on Section B of Form 4684, and on Form 4797, Sales of Business Property, if required. For more information on casualty losses, see Publication 547, Casualties, Disasters, and Thefts, and Publication 584, Casualty, Disaster, and Theft Loss Workbook.

Q-8: Is an individual required to include in gross income payments the individual receives for personal physical injuries or physical sickness, or for emotional distress that is attributable to personal physical injuries or physical sickness?

A-8: No. An individual generally is not required to include in gross income payments the individual receives on account of personal physical injuries or physical sickness. Personal physical injuries include observable bodily harm such as bruises, cuts, swelling, and bleeding. Likewise, an individual is not required to include in gross income payments the individual receives for emotional distress that is attributable to personal physical injuries or physical sickness. Payments for personal physical injuries or physical sickness, or emotional distress attributable to personal physical injury or physical sickness, are not required to be reported on an information return filed with the IRS by the person making the payment.

Q-9: Is an individual required to include in gross income payments the individual receives for emotional distress (or symptoms of emotional distress such as insomnia, headaches, or stomach disorders) that is not attributable to personal physical injuries or physical sickness?

A-9: Yes. The law requires an individual to include in gross income payments the individual receives for emotional distress (or symptoms of emotional distress such as insomnia, headaches, or stomach disorders) that is not attributable to personal physical injuries or physical sickness. However, an individual excludes from gross income payments for emotional distress up to the amount of medical care expenses the individual paid related to the emotional distress if the individual did not deduct the expenses in a prior taxable year.

Q-10: Are payments made to an individual for emotional distress that is not attributable to personal physical injuries or physical sickness required to be reported to the IRS by the person making the payment?

A-10: Yes. A person making a payment to an individual for emotional distress that is not attributable to personal physical injuries or physical sickness must report the payment to the IRS on a Form 1099-MISC, Miscellaneous Income, if it is $600 or more. If the individual does not furnish the individual’s taxpayer identification number to the payor, the payor must backup withhold on the payment at a rate of 28 percent.

Samuel F. Froio
Internal Revenue Service
Small Business/Self Employed Div.
Jacksonville, Fl

IRS Provides Tax Help, Guidance to Gulf Oil Spill Victims;
Special Assistance Day Planned for July 17...

• Follow link for more information.

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Oury earned the designation of Certified Public Accountant (CPA)

Release Date: Tuesday, May 25, 2010

Allyson Oury, with Saltmarsh, Cleaveland & Gund, has recently earned the designation of CPA – Certified Public Accountant. Oury passed a four part exam that tested her knowledge in Accounting and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, and Regulation.

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de Boer earned the designation of Certified Public Accountant (CPA)

Release Date: Monday, May 24, 2010

Philip de Boer, with Saltmarsh, Cleaveland & Gund, has recently earned the designation of CPA – Certified Public Accountant. He passed a four part exam that tested his knowledge in Accounting and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, and Regulation.

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What Health Care Reform Means to Your Business

Release Date: Monday, May 17, 2010

Health care reform is now the law of the land. And nearly every individual and business in the U.S. will be affected by the new law’s provisions.

The extent to which health care reform impacts you depends on many factors including: the size of your business, your current health benefit plan, the demographics of your work force and more. We hope this explanation of the “Patient Protection and Affordable Care Act” helps you understand the changes that every business will face in 2010 and over the next several years.

Please click on the link below to view the electronic version of the HC Reform booklet:
<a href=http://www.newkirk.com/onlinepub/oprs.cfm?key=165551>http://www.newkirk.com/onlinepub/oprs.cfm?key=165551</a>

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Help for small businesses affected by the Deep Water BP Oil Spill

Release Date: Saturday, May 15, 2010

SBA is making low-interest loans available to Florida small businesses suffering financial losses following the Deepwater BP oil spill that shut down commercial and recreational fishing in the Gulf.

Loans up to $2,000,000 provide working capital to a small businesses to meet the ordinary and necessary operating expenses that it could have met, but was unable to meet because of the oil spill.

These loans help small businesses meet financial obligations such as fixed debt payments, payroll, accounts payable and other bills until normal operations resume.

The interest rate is 4 percent with terms up to 30 years. SBA determines loan amounts and terms based on each applicant’s financial condition.

The declaration covers eligible small businesses in Alachua, Bay, Calhoun, Charlotte, Citrus, DeSoto, Escambia, Franklin, Gilchrist, Gulf, Hardee, Hernando, Hillsborough, Holmes, Jackson, Jefferson, Lafayette, Leon, Levy, Liberty, Madison, Manatee, Marion, Okaloosa, Pasco, Pinellas, Polk, Santa Rosa, Sarasota, Sumter, Taylor, Wakulla, Walton and Washington counties.

Eligible small businesses include those engaged in shrimping, crabbing and oyster fishing in the waters affected by the closure (employees or crew members are not small businesses and are not eligible); small businesses dependent on the catching or sale of shrimp, crabs and oysters, suppliers of fishing gear and fuel; docks, boatyards, processors, wholesalers, shippers, retailers and other small businesses dependent on revenue from fishing, recreational and sports fishing small businesses, and coastal small businesses.

SBA representatives are at the following locations to meet one-on-one with small business owners to answer questions about SBA’s disaster loans, issue loan applications, explain the application process, and help each business owner complete their application. No appointment is necessary.

Bay County
Panama City Beach Chamber of Commerce
309 Beckrich Avenue
Panama City, FL 32407

Escambia County
Small Business Development Center
401 E. Chase Street - Ste. 100
Pensacola, FL 32502

Franklin County
Apalachicola Bay Chamber of Commerce
122 Commerce Street
Apalachicola, FL 32320

Gulf County
Chamber of Commerce
150 Captain Fred’s Place
Port St. Joe, FL 32456

Okaloosa County
Community Center Annex (Senior Center)
108 Stahlman Avenue
Destin, FL 32541

Santa Rosa County
Navarre Beach Chamber of Commerce
8543 Navarre Parkway
Navarre, FL 32566

Wakulla County
Wakulla Agriculture Center
84 Cedar Avenue
Crawfordville, FL 32327

Walton County
Walton Area Chamber of Commerce
63 S. Centre Trail
Santa Rosa Beach, FL 32459


Business owners unable to visit one of the centers may obtain applications and information by:

• calling SBA at 800-659-2955 Monday through Friday from 8 am to 6 pm Saturday and Sunday 9 am to 5:30 pm EDT (800-877-8339 for people with speech or hearing disabilities)


• emailing SBA at disastercustomerservice@sba.gov


• visiting SBA’s website at www.sba.gov/services/disasterassistance


• apply online at SBA’s secure website at https://disasterloan.sba.gov/ela/

Links to SBA’s website for:

SBA disaster information
Down load SBA Business disaster loan application

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SBA has approved disaster loan funds

Release Date: Monday, May 10, 2010

The following information has been provided by the office of Senator Bill Nelson:

On Friday, May 14, 2010, the U.S. Small Business Administration (SBA) has approved disaster loan funds for businesses along Florida’s Gulf coast that have been impacted by the Deepwater Horizon incident. Click on this link for a copy of the SBA press release.

The disaster declaration includes the primary Florida counties of Bay, Citrus, Dixie, Escambia, Franklin, Gulf, Hernando, Hillsborough, Jefferson, Levy, Manatee, Okaloosa, Pasco, Pinellas, Santa Rosa, Sarasota, Taylor and Walton. The neighboring counties of Alachua, Calhoun, Charlotte, Desoto, Gilchrist, Hardee, Holmes, Jackson, Lafayette, Leon, Liberty, Madison, Marion, Polk, Sumter, Wakulla and Washington; the Alabama counties of Baldwin, Covington, Escambia and Geneva, and the adjacent Georgia counties of Brooks and Thomas are also included in this declaration.

Economic Injury Disaster Loans can help eligible small businesses meet the necessary financial obligations they could have met, had the disaster not occurred. Eligible small businesses include those engaged in shrimping, crabbing and oyster fishing in the waters affected by the closure (employees or crew members are not small businesses and are not eligible); small businesses dependent on the catching or sale of shrimp, crabs and oysters, suppliers of fishing gear and fuel; docks, boatyards, processors, wholesalers, shippers, retailers and other small businesses dependent on revenue from fishing, recreational and sports fishing small businesses, and coastal small businesses.

These loans are designed to provide small businesses with working capital until the business recovers. The loans can’t be used to expand the business. Appropriate expenses include rent, accounts payable, and debt service.

• Interest rates for businesses and small agricultural cooperatives are as low as 4 percent;


• Interest rates for non-profit organizations rates are as low as 3 percent;


• Loan repayment terms up to 30 years;


• Loan amounts and terms are set by the SBA and are based on each applicant’s financial condition with a maximum of $2 million; and


• Deadline for loan applications for economic injury is the close of business February 14, 2011.

SBA customer service representatives will be on hand throughout the declared counties to assist affected business owners and non-profit organizations with the application process. The SBA will be setting up Business Recovery Centers in locations throughout the impacted counties. SBA will announce these locations in the next few days.

Affected business owners can visit the SBA Web site at www.sba.gov/services/disasterassistance for more information or call 1-800-659-2955.

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BP and the MC252 Oil Well Incident in The Gulf of Mexico

Release Date: Monday, May 10, 2010

CFO Sink provided the following tips for businesses:

First: Take detailed records of cancelled reservations. News reports suggest that many condominium owners, hotels and restaurants are already having increased cancellations, and it’s important that when these cancellations occur, the cancelling party is questioned whether the cause is because of the oil spill. If the answer is yes, keep a record of the person’s name and contact information, and also the revenues lost as a result of the cancellation.

Second: Calculate estimated losses for a six-week period and be able to provide records, sales receipts and documentation to support such a claim. A good idea would be to compare business now to a five-year average of revenues between May and June, which can offer insight as to the damages incurred.

Third: Make a detailed list of assets – including non-structural – and include appropriate records to support the list. For example: if your member’s hotel or restaurant is within walking distance to the beach and that beach has oil reach its shores, the business’ assets are damaged even though there is no physical damage to the structure, and it is important to record this depreciation.

Fourth: Be wary of insurance settlement scams. For businesses who may have already begun the claims filing process with BP, first, make sure you are dealing with authorized representatives from BP and not scam artists; and be careful not to sign waivers of liability too quickly without getting adequate legal and financial counsel.

For lost profits, supporting documentation may include, but not necessarily be limited to:

Photographs
Tax returns for loss year and previous three years,
Income Statements for loss year and previous three years,
Balance Sheets for loss year and previous three years,
Cash Flow Statements for loss year and previous three years,
Receipts or other proof of revenue combined with proof of expenses
Reports from the Federal On-Scene Coordinator (FOSC), fire department, police, or other responder

Information on Coast Guard or EPA notification

Newspaper reports describing the spill

Any other documentation you feel supports your claim

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Saltmarsh, Cleaveland & Gund Acquires Lundy, Minnich & Linnville’s Clients

Release Date: Tuesday, February 02, 2010

Saltmarsh, Cleaveland & Gund is proud to announce the acquisition of Lundy, Minnich & Linnville’s clients. Due to H.L. Minnich’s impending retirement, he has transferred clients of Lundy, Minnich & Linnville to Saltmarsh effective January 1, 2010.

Mr. Minnich began his distinguished career with Saltmarsh and we are honored that he has chosen to conclude his career here.

Saltmarsh has been a leader in providing professional services for more than 65 years. Our reputation has been built on the principles of honesty and integrity, creativity, respect and quality service to our clients and community. Both firms believe that client satisfaction and personal attention is key in making a successful relationship.

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Beth Skarda, CPA, promoted to Manager at Saltmarsh, Cleaveland & Gund

Release Date: Friday, January 08, 2010

Beth Skarda, CPA, at Saltmarsh, Cleaveland & Gund, has been promoted to Manager effective January 1, 2010.

Skarda is a Manager in the Tax & Accounting Services Department of Saltmarsh, Cleaveland & Gund. She has fifteen years of experience in all areas of taxation. Skarda graduated from Auburn University with a B.A. in Finance. She is a Certified Public Accountant in the State of Georgia.

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Diane Martinez promoted to Senior at Saltmarsh, Cleaveland & Gund

Release Date: Friday, January 08, 2010

Diane Martinez, at Saltmarsh, Cleaveland & Gund, has been promoted to Senior effective January 1, 2010.

Martinez is a Senior in the Audit Services Department of Saltmarsh, Cleaveland & Gund. Her areas of concentration include for-profit, non-profit, governmental and the hotel industry. Martinez graduated with a B.S.B.A. in Accounting from the University of West Florida.

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Angelika Cope, CPA promoted to Senior at Saltmarsh, Cleaveland & Gund

Release Date: Friday, January 08, 2010

Angelika Cope, CPA, at Saltmarsh, Cleaveland & Gund, has been promoted to Senior effective January 1, 2010.

Cope is a Senior in the Audit Services Department of Saltmarsh, Cleaveland & Gund. Her areas of concentration include non-profit, governmental, construction, condominiums, and the hotel industry. Cope has her Master’s of Accountancy and her B.S.B.A. in Accounting Information Systems from the University of West Florida.

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Philip de Boer promoted to Senior at Saltmarsh, Cleaveland & Gund

Release Date: Friday, January 08, 2010

Philip de Boer, at Saltmarsh, Cleaveland & Gund, has been promoted to Senior effective January 1, 2010.

de Boer is a Senior in the Audit Services Department of Saltmarsh, Cleaveland & Gund. His areas of concentration include non-profit, governmental, manufacturing industry and the hotel industry. DeBoer graduated with a Diploma in Business and Law from the University of Luneburg, Germany and a Master’s of Accountancy from UWF.

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Gianotto, QPA, QKA promoted to Manager at Saltmarsh, Cleaveland & Gund

Release Date: Friday, January 08, 2010

Cathy Gianotto, at Saltmarsh, Cleaveland & Gund, has been promoted to Manager effective January 1, 2010.

Gianotto is a Manager in the Retirement & Medical Plans Department of Saltmarsh, Cleaveland & Gund. She has more than 20 years of experience in employee benefits administration and management. Gianotto has obtained the “Qualified Pension Administrator” (QPA) designation and the “Qualified 401(k) Administrator” (QKA) designation from the American Society of Pension Professionals & Actuaries (ASPPA).

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Araba Knoblock promoted to Senior at Saltmarsh, Cleaveland & Gund

Release Date: Friday, January 08, 2010

Araba Knoblock, CPA, at Saltmarsh, Cleaveland & Gund, has been promoted to Senior effective January 1, 2010.

Knoblock is a Senior in the Financial Institutions Consulting Department of Saltmarsh, Cleaveland & Gund. She graduated with a Master of Accountancy from the University of West Florida and also has her B.S in Administration from the University of Ghana.

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Justin Smith promoted to Senior at Saltmarsh, Cleaveland & Gund

Release Date: Friday, January 08, 2010

Justin Smith at Saltmarsh, Cleaveland & Gund, has been promoted to Senior effective January 1, 2010.

Smith is a Senior in the Tax & Accounting Services Department of Saltmarsh, Cleaveland & Gund. His area of expertise includes corporate and individual tax specializing in construction contractors, homeowner’s associations and non-profit organizations. Smith graduated with a B.S.B.A. in Accounting from the University of West Florida.

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Justin Smith earned the designation of Certified Public Accountant (CPA)

Release Date: Monday, December 28, 2009

Justin Smith, with Saltmarsh, Cleaveland & Gund, has recently earned the designation of CPA – Certified Public Accountant. Smith passed a four part exam that tested his knowledge in Accounting and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, and Regulation.

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Lee Bell quoted in Tampa Bay Business Journal

Release Date: Monday, December 28, 2009

Defining moments of 2009: Bank failures, workouts grow
One hundred forty banks and thrifts failed through the first 50 weeks of 2009, including 14 in Florida and four in the Tampa Bay area, and industry experts anticipate that pace will continue through 2010.

Banks with high loan losses relative to their capital already are in trouble, and an expected increase in commercial foreclosures could cause the failure of more community banks, said David Hendrix, shareholder at the law firm GrayRobinson. “It doesn’t take many losses at a community bank for the losses to exceed the capitalization rate and for the [ Federal Deposit Insurance Corp.] to find a larger bank to take over the assets.”

Hendrix expects to see more transactions structured similar to BB&T Corp.’s acquisition of Colonial Bank. BB&T (NYSE: BBT) and the FDIC agreed to share losses on Colonial’s loan portfolio.

“We picked up some losses, and the employees stayed employed,” said Bill Klich, BB&T’s Florida president.

Unknown is how much capital investors are willing to sink into banks to prop them up, said Lee Bell, leader of the business adviser group at Saltmarsh Cleaveland & Gund and shareholder in charge of the CPA firm’s Tampa office. Banks based out of state, such as IberiaBank, which bought the failed Century Bank FSB in Sarasota, and Stearns Bank, the buyer of failed First State Bank and Community National Bank of Sarasota County, will continue to enter Florida through acquiring failed or struggling community banks, but in-state buyers will gain ground as well.

Bell, whose firm serves about 100 community banks primarily in Florida, said institutions that survived have been very conservative in their lending approach. He expects to see conservative lending for the foreseeable future.

“You have bankers that have been lenders and today they are workout specialists. They’re focused on figuring out how to help their clients,” Bell said.

Alternative lenders have turned off the spigot but traditional banks continue to make cautious loans, Klich said.

“We’re all trying to build capital and generate revenue,” he said. Also, bankers’ criteria changed from real estate based lending to asset-based lending, Hendrix said. Real estate loans won’t rebound until existing inventory shrinks and prices rise. In their stead, banks will lend to small businesses that pay their bills and have collateral.

“Asset-based lending means banks won’t fail 10 years from now,” Hendrix said.

Why should we care about this in 2010: A few banks will fail, and new companies will enter or existing ones will expand through acquisitions.

• Follow link for more information.

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Our very own Nathan Botts quoted in the Jacksonville Business Journal

Release Date: Thursday, December 10, 2009

Our very own Nathan Botts quoted in the Jacksonville Business Journal

• Follow this link to download article.

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Kendra Branch has achieved certification as a 125 Cafeteria Plan Administrator

Release Date: Wednesday, September 30, 2009

Saltmarsh is pleased to announce that Kendra Branch has achieved her certification as a 125 Cafeteria Plan Administrator. This valuable certification demonstrates her command of the complex IRS and DOL rules and regulations governing tax advantaged spending plans such as medical, dependent care, insurance, transportation and adoption expenses as well as HRA, HSA and the Debit Card convenience offered by Saltmarsh.

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Trevia Buckner earned the designation of Certified Public Accountant (CPA)

Release Date: Monday, September 28, 2009

Trevia Buckner, with Saltmarsh, Cleaveland & Gund, has recently earned the designation of CPA – Certified Public Accountant. Buckner passed a four part exam that tested her knowledge in Accounting and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, and Regulation.

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Greg Storey has achieved the Certified Internal Auditor Designation

Release Date: Thursday, September 17, 2009

Greg Storey, CPA, CHAE, a Senior Manager in the Audit Services Department of Saltmarsh, Cleaveland & Gund, has received his Certified Internal Auditor (CIA) designation. This is a very rigorous program sponsored by the Institute of Internal Auditors that tests proficiency and competency in the field of internal auditing. The CIA designation is the only globally accepted certification for internal auditors and remains the standard by which individuals demonstrate their professionalism in the internal auditing field.

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Stephen MacBeth Graduates from the Alabama Banking School

Release Date: Tuesday, August 11, 2009

Karen Sullivan, Chairman of the Board and School Director of the Alabama Banking School, has announced that Stephen MacBeth graduated on July 31 from the Alabama Banking School in Mobile, Alabama.
The School is sponsored by the Alabama Bankers Association along with the Mitchell College of Business at the University of South Alabama in Mobile. Students receive instruction from Alabama bankers, University of South Alabama faculty, academicians, attorneys and consultants. The three-year program requires students to spend one week a year at the Alabama Banking School and successfully complete an intensive curriculum on bank related courses to include six home study problems and exams at the conclusion of the first and second years of study. The highlight of the School is in the third year when students participate in the BankExec program and operate a bank through simulation exercises.
MacBeth is a Senior Bank Consultant with Saltmarsh, Cleaveland & Gund, Certified Public Accountants and Consultants. He has over fifteen years of experience in financial institutions, with concentration on compliance, operations and policy and procedures.
Sullivan, who is a Senior Vice President for BankTrust in Mobile, stated that the School was pleased to have 41 bankers graduate this year, bringing the total number of ABS graduates to 1824. Enrollment in 2009 for the 34th annual session was 105 students.

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Florida Financial Services Acting Commissioner, Alex Hager, Takes Shareholder Position with Saltmarsh, Cleaveland & Gund

Release Date: Tuesday, June 30, 2009

After serving the State of Florida for more than 30 years, Acting Commissioner of the Florida Office of Financial Regulation, Alex Hager, recently joined Saltmarsh, Cleaveland & Gund, a Florida accounting firm, as a Shareholder in the firm’s Financial Institution Advisory Group. In his new position, Hager will assist banks with informal and formal enforcement actions, serve as an expert witness and consult on mergers and acquisitions to facilitate directives from federal and state bank regulators.

“My decision to join Saltmarsh underscores a desire to help bankers resolve problems and complexities created by the most severe economic downturn since the market crash of 1929,” said Hager. “I am extremely proud of our industry and the services provided by Florida’s community banks to consumers and small businesses.”

Saltmarsh, Cleaveland & Gund’s Financial Institution Advisory Group works with bank clients, primarily in the Southeast, which range in size from $20 million to more than $1 billion in assets. Shareholders in the Group provide financial institutions with audit, accounting, taxation, and advisory services.

“We strive to help banks work through intricate regulatory actions so they can focus on taking care of banking needs in the community,” said Bill Massey, CPA, CFSA and Shareholder in Saltmarsh’s Financial Institution Advisory Group. “Mr. Hager embraces the dedication to service and integrity required to successfully assist banks during these challenging times. We are thrilled to tap into his experience to ease regulatory issues for financial institutions.”

Hager has already demonstrated his level of commitment to the financial industry by participating in the Florida Banking Association (FBA) Conference in Orlando and the CenterState Bank Investment Conference in Destin. He is slated to speak on Dealing with a Formal Regulatory Agreement at PKF, an International Association of CPA Firms, Financial Institution Forum in Chicago at the end of July. He looks forward to assisting current Saltmarsh clients and other financial institutions in need of regulatory consultation.

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The United States Tax Court Issues Taxpayer-friendly Decision Regarding R&D Tax Credits

Release Date: Monday, April 06, 2009

On March 10, 2009, the United States Tax Court issued an opinion regarding Research and Development tax credits (R&D credits) claimed by Union Carbide. Union Carbide Corporation and Subsidiaries, TC Memo 2009 – 50, Code Sec(s) 41; 174. (hereinafter the UCC Opinion).

The claimed R&D activities centered on a manufacturer that conducted R&D activities in its manufacturing facilities and plants. The opinion covers a broad range of topics pertaining to the R&D tax credit, from substantiation of the underlying R&D credit to establishing a fixed base period and expansion of substantial rights. The vast majority of legal holdings in this case rejected IRS arguments for heightened standards on the R&D tax credit. Although the taxpayer in this case had its credits substantially reduced due to certain improperly included supply costs, this opinion is a victory for taxpayers who are electing to claim the R&D tax credit.

Key Holdings
Ding-Dong, the Discovery Rule is DEAD!
Prior to trial, the IRS conceded that the claims would be decided under the current Treasury regulations (TD 9104) and not the prior Treasury regulations that included the Discovery Test (TD 8930). This is of significance as the IRS has been inconsistent in its treatment of the Discovery Test, especially when auditing R&D Claims from tax years prior to 2004. The instant case involved tax years 1994 and 1995, and furthermore, the amended claims for R&D credits were filed in 1999 before the proposed regulations (eliminating the Discovery Test) were even issued. Again, this is a critical concession, as the IRS has been trying to raise the Discovery Test from the dead, and now appear to have finally accepted the position that it should not be used under any circumstance.

Tax Court Gives Taxpayers Relief on Substantiating the R&D Credit
Since the IRS issued its Tier I Directive in April 2007, the IRS has demanded that taxpayers provide contemporaneous documentation to substantiate their R&D tax credit claims. These demands have been made by the IRS despite the absence of legal authority establishing this as a requirement. Throughout the UCC opinion, the Court dismissed IRS assertions that the testimony relied upon was insufficient to substantiate UCC’s R&D credits. In fact, the Court accepted oral testimony by UCC employees, 15 years after the R&D activities occurred, and found it to be sufficient to substantiate both the various R&D tax credit claims and the fixed base percentage.

Specific Holdings by the Tax Court Concluded That:
• Taxpayers were not required to have the same documentation for the base period as it had for the
claim years
• Reliance on “informal documentation” such as emails and notes was permissible
• Estimates were permissible in the absence of underlying documentation
• Estimates for a base period company were allowed in the absence of any accounting records for
that particular entity

Conclusion
The significance to taxpayers is that IRS examiners have sought to undermine the use of estimates during examination and assert that oral testimony is insufficient. This case should stop the IRS dead in its tracks from using this tactic during examination, as estimates have, once again, been validated for use in quantifying R&D credits and in determining the Fixed Base Percentage for a taxpayer.

This is clearly good news for taxpayers and their advisers as they seek to take advantage of one of the most important incentives for business in the tax code, the R&D Tax Credit.

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Saltmarsh, Cleaveland & Gund Expands Technology Service Offerings to Assist Customers in Current Economy

Release Date: Thursday, February 19, 2009

Saltmarsh, Cleaveland & Gund announced a new technology arm dedicated to meeting the comprehensive business needs of customers throughout Northwest Florida. The expanded portfolio of offerings includes custom web design, online web applications, flash presentations, e-commerce and Internet Marketing from Grendelfly Studio, a new division of SC&G Technology Solutions.

"The current economic environment is challenging for everyone,” says President of Saltmarsh Ron Jackson. “Our expanded technology division helps businesses streamline their operations and improve competitive positioning through web services that impact sales and marketing efforts.”

Saltmarsh will use its new division to provide customers with front-to-back technology solutions. “We are continually thinking about new business opportunities for our clients and staff,” says Technology Manager Stephen Reyes. “We are excited about leveraging our relationship with Grendelfly Studio to support our clients’ aspirations for growth, sustainability and success. Grendelfly Studio is at a dynamic stage of its development and will become a key driver of our web services division.”

Grendelfly Studio began in 2004 as an independent website and graphic design firm led by founder George Johnson. As an award-winning firm, it serves hundreds of website and hosting customers throughout Northwest Florida and the nation. Upon reaching its five-year anniversary, the company decided to expand its technical capabilities by integrating with Saltmarsh, Cleaveland & Gund’s extensive technology and research resources.

Johnson says the synergy of Grendefly Studio and Saltmarsh are excellent. By joining forces, the new division offers better technical support, more in-house engineers and fresh creative services.

“A great website does more than just look good,” says Johnson. “When combined with a solid strategy, a website increases awareness of products and services, reinforces branding, provides valuable information to customers and ultimately makes the business more money.”


About Saltmarsh, Cleaveland & Gund
Founded in 1944, Saltmarsh, Cleaveland & Gund specializes in a vast array of services including management consulting, retirement and medical plans, tax planning, audit and assurance, accounting and regulatory compliance for financial institutions, healthcare, manufacturers, government, small business and law firms. The firm has served clients for the past 64 years and maintains offices in Pensacola, Fort Walton Beach, and Tampa.

About Grendelfly Studio, a division of SC&G Technologies
Grendelfly Studio provides creative direction and high-end website development services to small and medium-size business across a wide span of industries. Specialties include online application development, e-commerce solutions, web marketing and graphic design to customers throughout the nation.

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Ron Jackson Awarded PACE Professional Leader of the Year

Release Date: Wednesday, February 18, 2009

Ronald E. Jackson, President of Saltmarsh, Cleaveland & Gund was awarded the 2009 PACE Professional Leader of the Year. He was selected based on his long-term professional experience, service to professional organizations, leadership and a desire to advance his profession.

The Pensacola Area Commitment to Excellence (PACE) Awards are given each year to honor and recognize the outstanding individuals in the community who have made significant contributions to Pensacola’s overall economic progress.

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Shannon Lands Earns Certification as a Senior Professional in Human Resources (SPHR)

Release Date: Tuesday, February 17, 2009

Shannon Lands, Human Resources Manager with Saltmarsh, Cleaveland & Gund has recently earned the certification as a Senior Professional in Human Resources (SPHR). The certification, awarded by the HR Certification Institute, signifies that Shannon possesses the theoretical knowledge and practical experience in human resource management necessary to pass a rigorous examination demonstrating a mastery of the body of knowledge in the field.
"Certification as a human resource professional clearly demonstrates a commitment to personal excellence and to the human resource profession," said Mary Power, CAE, Executive Director of the HR Certification Institute.
The HR Certification Institute is the credentialing body for human resource professionals and is affiliated with the Society for Human Resource Management (SHRM), the world’s largest organization dedicated exclusively to the human resource profession. The Institute’s purpose is to promote the establishment of professional standards and to recognize professionals who meet those standards

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Frank Riehle Appointed to Shareholder at Saltmarsh, Cleaveland & Gund

Release Date: Thursday, January 01, 2009

Frank has served as a Senior Manager in the Pensacola office of Saltmarsh, Cleaveland & Gund, for the past 10 years. Frank has over 17 years of public accounting experience and is a Certified Public Accountant in Florida and New York. He brings Saltmarsh expertise in the manufacturing, construction, retail, restaurant, and service industries. He also works with clients in the areas of tax planning and business planning.

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Lisa Fairbanks, CPA, promoted to Senior Manager at Saltmarsh, Cleaveland & Gund

Release Date: Thursday, January 01, 2009

Lisa Fairbanks, CPA, at Saltmarsh, Cleaveland & Gund, has been promoted to Senior Manager effective January 1, 2009.

Fairbanks is a Senior Manager in the Tax Services Department of Saltmarsh, Cleaveland & Gund. She has 20 years experience in public accounting, including substantial experience in tax compliance, research, and planning.

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Allison Jones, CPA, promoted to Senior Manager at Saltmarsh, Cleaveland & Gund

Release Date: Thursday, January 01, 2009

Allison Jones, CPA, at Saltmarsh, Cleaveland & Gund, has been promoted to Senior Manager effective January 1, 2009.

Jones is a Senior Manager in the Audit Services Department of Saltmarsh, Cleaveland & Gund. Her experience includes audits of small businesses, nonprofit organizations, governments, and employee benefit plans. Jones graduated from Florida State University with a B. S. in Accounting. She is a Certified Public Accountant in the State of Florida.

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Greg Storey, CPA, CHAE, promoted to Senior Manager at Saltmarsh, Cleaveland & Gund

Release Date: Thursday, January 01, 2009

Greg Storey, CPA, CHAE, at Saltmarsh, Cleaveland & Gund, has been promoted to Senior Manager effective January 1, 2009.

Storey is a Senior Manager in the Audit Services Department of Saltmarsh, Cleaveland & Gund. He has over 11 years of public accounting experience in audit, agreed-upon procedures, review services, and preparation of organizations exempt from income tax returns. His areas of experience include local governments, nonprofit organizations, nonprofit healthcare providers, hotels and condominiums associations.

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Beth Varhalla, CPA, promoted to Manager at Saltmarsh, Cleaveland & Gund

Release Date: Thursday, January 01, 2009

Beth Varhalla, CPA, at Saltmarsh, Cleaveland & Gund, has been promoted to Manager effective January 1, 2009.

Varhalla is a Manager in the Tax Services Department of Saltmarsh, Cleaveland & Gund. She has 18 years of experience in all areas of taxation. Varhalla graduated from the University of West Florida with a B.A. in Accounting. She is a Certified Public Accountant in the State of Florida.

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Amy Infinger Stachowicz, CPA, promoted to Senior at Saltmarsh, Cleaveland & Gund

Release Date: Thursday, January 01, 2009

Amy Infinger Stachowicz, at Saltmarsh, Cleaveland & Gund, has been promoted to Senior effective January 1, 2009.

Stachowicz is a Senior in the Audit Services Department of Saltmarsh, Cleaveland & Gund. Her areas of concentration include Healthcare, non-profit, governmental and the hotel industry. Stachowicz graduated with a B.S.B.A. in Accounting/Controllership from the University of West Florida.

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Molly Murphy Elected to Shareholder at Saltmarsh, Cleaveland & Gund

Release Date: Thursday, January 01, 2009

Molly has served as a Senior Manager in the Audit Services Department in the Pensacola office of Saltmarsh, Cleaveland & Gund for the past 7 years. She has over 17 years of experience in public accounting and is a Certified Public Accountant in Florida and North Carolina. Molly’s expertise at Saltmarsh is in a variety of fields including: audit, accounting, and consulting services. Her experience covers many types of entities, including manufacturing companies, construction contractors, nonprofit organizations, and healthcare organizations.

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