Steve & Allison Martini Meet Sheryl Sandberg As Sponsors Of The Jewish Federation

January 19 2018

This week the Jewish Federation hosted a dinner for families who contribute $25K or more per year to the Jewish Federation of Los Angeles. Sheryl Sandberg, COO of Facebook, was the guest speaker at the dinner and she spoke about her two books:

  • Lean In: Women, Work and the Will to Lead
  • Option B: Facing Adversity, Building Resilience and Finding Joy

Steve and Allison were co-chairs at the event and are pictured with Sheryl and some of the other families who donate to the Federation.

If you would like more information about the work Martini Iosue & Akpovi does in the community please contact us at (818) 789 1179

 

 

Christopher Speights Returns To MIA For a Second Internship

January 18 2018

Chris Speights joins us for his second internship at MIA. Chris is a senior pursuing a B.S. in Accountancy with an option in Information Systems and he will graduate in May 2018. Upon the conclusion of the Summer 2017 internship, Chris declared audit as his specialization. During his current internship, Chris will be introduced to the many audit procedures and standards.

In his spare time, Chris enjoys playing basketball at Student Recreational Center at California State University, Northridge (CSUN) and is an avid Xbox gamer.

If you would like information about our internship program or working at Martini Iosue & Akpovi, please contact us by phone at (818) 789 1179

 

 

Your 2017 Tax Return May Be Your Last Chance To Take The “Manufacturers’ Deduction”

January 18 2018
While many provisions of the Tax Cuts and Jobs Act (TCJA) will save businesses tax, the new law also reduces or eliminates some tax breaks for businesses. One break it eliminates is the Section 199 deduction, commonly referred to as the “manufacturers’ deduction.” When it’s available, this potentially valuable tax break can be claimed by many types of businesses beyond just manufacturing companies. Under the TCJA, 2017 is the last tax year noncorporate taxpayers can take the deduction (2018 for C corporation taxpayers).

The basics

The Sec. 199 deduction, also called the “domestic production activities deduction,” is 9% of the lesser of qualified production activities income or taxable income. The deduction is also limited to 50% of W-2 wages paid by the taxpayer that are allocable to domestic production gross receipts (DPGR).

Yes, the deduction is available to traditional manufacturers. But businesses engaged in activities such as construction, engineering, architecture, computer software production and agricultural processing also may be eligible.

The deduction isn’t allowed in determining net self-employment earnings and generally can’t reduce net income below zero. But it can be used against the alternative minimum tax.

Calculating DPGR

To determine a company’s Sec. 199 deduction, its qualified production activities income must be calculated. This is the amount of DPGR exceeding the cost of goods sold and other expenses allocable to that DPGR. Most companies will need to allocate receipts between those that qualify as DPGR and those that don’t ? unless less than 5% of receipts aren’t attributable to DPGR.

DPGR can come from a number of activities, including the construction of real property in the United States, as well as engineering or architectural services performed stateside to construct real property. It also can result from the lease, rental, licensing or sale of qualifying production property, such as tangible personal property (for example, machinery and office equipment), computer software, and master copies of sound recordings.

The property must have been manufactured, produced, grown or extracted in whole or “significantly” within the United States. While each situation is assessed on its merits, the IRS has said that, if the labor and overhead incurred in the United States accounted for at least 20% of the total cost of goods sold, the activity typically qualifies.

Learn more

Contact us at (818) 789 1179 to learn whether this potentially powerful deduction could reduce your business’s tax liability when you file your 2017 return. We can also help address any questions you may have about other business tax breaks that have been reduced or eliminated by the TCJA.

© 2018

 

 

Don’t Be A Victim Of Tax Identity Theft: File Your 2017 Return Early

January 17 2018

The IRS has just announced that it will begin accepting 2017 income tax returns on January 29. You may be more concerned about the April 17 filing deadline, or even the extended deadline of October 15 (if you file for an extension by April 17). After all, why go through the hassle of filing your return earlier than you have to?

But it can be a good idea to file as close to January 29 as possible: Doing so helps protect you from tax identity theft.

All-too-common scam

Here’s why early filing helps: In an all-too-common scam, thieves use victims’ personal information to file fraudulent tax returns electronically and claim bogus refunds. This is usually done early in the tax filing season. When the real taxpayers file, they’re notified that they’re attempting to file duplicate returns.

A victim typically discovers the fraud after he or she files a tax return and is informed by the IRS that the return has been rejected because one with the same Social Security number has already been filed for the same tax year. The IRS then must determine who the legitimate taxpayer is.

Tax identity theft can cause major headaches to straighten out and significantly delay legitimate refunds. But if you file first, it will be the tax return filed by a potential thief that will be rejected — not yours.

The IRS is working with the tax industry and states to improve safeguards to protect taxpayers from tax identity theft. But filing early may be your best defense.

W-2s and 1099s

Of course, in order to file your tax return, you’ll need to have your W-2s and 1099s. So another key date to be aware of is January 31 — the deadline for employers to issue 2017 Form W-2 to employees and, generally, for businesses to issue Form 1099 to recipients of any 2017 interest, dividend or reportable miscellaneous income payments.

If you don’t receive a W-2 or 1099, first contact the entity that should have issued it. If by mid-February you still haven’t received it, you can contact the IRS for help.

Earlier refunds

Of course, if you’ll be getting a refund, another good thing about filing early is that you’ll get your refund sooner. The IRS expects over 90% of refunds to be issued within 21 days.

E-filing and requesting a direct deposit refund generally will result in a quicker refund and also can be more secure. If you have questions about tax identity theft or would like help filing your 2017 return early, please contact us by phone at (818) 789 1179.

© 2018

 

 

Meet Another Of Our Interns: J. Nataly Ruiz

January 16 2018

J. Nataly Ruiz has returned to Martini Iosue & Akpovi this winter.  Nataly is a senior pursuing a B.S. in Accountancy with an option in Information Systems, and will be graduating this fall. During the summer of 2017, Nataly worked in our audit and tax service lines. At the end of this winter internship she hopes to decide her specialization, and whether she should focus on audit or tax.

Nataly has been elected as the director of Charitable Events of CSUN’s Accounting Association and is looking forward for her Humanitarian Trip to Columbia in March with her non-profit, The San Fernando Valley Rotaract Club. Welcome back to the team Nataly!

If you would like more information about our internship program or working at Martini Iosue & Akpovi please contact us by phone at (818) 789 1179

 

 

Not Necessarily A Luxury: Outsourcing

January 16 2018

For many years, owners of small and midsize businesses looked at outsourcing much like some homeowners viewed hiring a cleaning person. That is, they saw it as a luxury. But no more — in today’s increasingly specialized economy, outsourcing has become a common way to cut costs and obtain expert assistance.

Why would you?

Outsourcing certain tasks that your company has been handling all along offers many benefits. Let’s begin with cost savings. Outsourcing a function effectively could save you a substantial percentage of in-house management expenses by reducing overhead, staffing and training costs. And thanks to the abundant number of independent contractors and providers of outsourced services, you may be able to bargain for competitive pricing.

Outsourcing also allows you to leave administration and support tasks to someone else, freeing up staff members to focus on your company’s core purpose. Plus, the firms that perform these functions are specialists, offering much higher service quality and greater innovations and efficiencies than you could likely muster.

Last, think about accountability — in many cases, vendors will be much more familiar with the laws, regulations and processes behind their specialties and therefore be in a better position to help ensure tasks are done in compliance with any applicable laws and regulations.

What’s the catch?

Of course, potential disadvantages exist as well. Outsourcing a business function obviously means surrendering some control of your personal management style in that area. Some business owners and executives have a tough time with this.

Another issue: integration. Every provider may not mesh with your company’s culture. A bad fit may lead to communication breakdowns and other problems.

Also, in rare cases, you may risk negative publicity from a vendor’s actions. There have been many stories over the years of companies suffering PR damage because of poor working conditions or employment practices at an outsourced facility. You’ve got to research any potential vendor thoroughly to ensure its actions won’t reflect poorly on your business.

To further protect yourself, stipulate your needs carefully in the contract. Pinpoint milestones you can use to ensure deliverables produced up to that point are complete, correct, on time and within budget. And don’t hesitate to tie partial payments to these milestones and assess penalties or even reserve the right to terminate if service falls below a specified level.

Last, build in clauses giving you intellectual property rights to any software or other items a provider develops. After all, you paid for it.

Need more time?

Outsourcing may not be the right solution every time. But it could help your business find more time to flourish and grow. We can help you assess the costs, benefits and risks. Contact us by phone at (818) 789 1179

© 2018

 

 

Meet One Of Our Interns – Ethan Brutzkus

January 15 2018

Ethan has joined Martini Iosue & Akpovi for a six week internship. He graduated from the University of Oregon last summer with a major in accounting and a minor in journalism.  Since graduation he has been studying for the CPA exam. When he’s not studying and working he enjoys golfing, hiking and watching the Chicago Cubs.

Welcome to the team Ethan!

If you would like more information about our internship program or working at Martini Iosue & Akpovi, please contact us by phone at (818) 789 1179

 

How Financial Statements Can Be Used To Value Private Businesses

January 15 2018

Owners of private businesses often wonder: How much is my business interest worth? Financial statements are a logical starting point for answering this question. Here’s an overview of how financial statements can serve as the basis for value under the cost, income and market approaches.

Cost approach

Because the balance sheet identifies a company’s assets and liabilities, it can be a good place to start the valuation process, especially for companies that rely heavily on tangible assets (such as manufacturers and real estate holding companies). Under U.S. Generally Accepted Accounting Principles (GAAP), assets are recorded at the lower of cost or market value. So, adjustments may be needed to align an item’s book value with its fair market value.

For example, receivables may need to be adjusted for bad debts. Inventory may include obsolete or unsalable items. And contingent liabilities — such as pending lawsuits, environmental obligations and warranties — also must be accounted for.

Some items may be specifically excluded from a GAAP balance sheet, such as internally developed patents, brands and goodwill. Value derived under the cost approach generally omits intangible value, so this estimate can serve as a useful “floor” for a company’s value. Appraisers typically use another technique to arrive at an appraisal that’s inclusive of these intangibles.

Income approach

The income statement and statement of cash flows can provide additional insight into a company’s value (including its intangibles). Under the income approach, expected future cash flows are converted to present value to determine how much investors will pay for a business interest.

Reported earnings may need to be adjusted for a variety of items. Examples of items that may require adjustments include depreciation rates, market-rate rents and discretionary spending, such as below-market owners’ compensation or nonessential travel expenses.

A key ingredient under the income approach is the discount rate used to convert future cash flows to their net present value. Discount rates vary depending on an investment’s perceived risk in the marketplace. Financial statement footnotes can help evaluate a company’s risks.

Market approach

The market approach derives value primarily from information taken from a company’s income statement and statement of cash flow. Here, pricing multiples (such as price to operating cash flow or price to net income) are calculated based on sales of comparable public stocks or private companies.

When looking for comparables, it’s essential to filter deals using relevant criteria, such as industrial classification codes, size and location. Adjustments may be required to account for differences in financial performance and to arrive at a cash-equivalent value, if comparable transactions include noncash terms and future payouts, such as earnouts or installment payments.

Independence and experience count

Business value is a critical metric, whether it’s used for financial reporting, M&A, tax planning or litigation purposes. But never base a major decision on a do-it-yourself appraisal. Contact us by phone at (818) 789 1179 for help calculating an estimate of value that you can count on.

© 2018

 

Tax Cuts And Jobs Act (2017 versus 2018)

January 12 2018

A summary of the rules for individuals (2017 versus 2018).

Contact us by phone at (818) 789 1179 for more information.

 

 

New Tax Law Gives Pass-Through Businesses A Valuable Deduction

January 11 2018

Although the drop of the corporate tax rate from a top rate of 35% to a flat rate of 21% may be one of the most talked about provisions of the Tax Cuts and Jobs Act (TCJA), C corporations aren’t the only type of entity significantly benefiting from the new law. Owners of noncorporate “pass-through” entities may see some major — albeit temporary — relief in the form of a new deduction for a portion of qualified business income (QBI).

A 20% deduction

For tax years beginning after December 31, 2017, and before January 1, 2026, the new deduction is available to individuals, estates and trusts that own interests in pass-through business entities. Such entities include sole proprietorships, partnerships, S corporations and, typically, limited liability companies (LLCs). The deduction generally equals 20% of QBI, subject to restrictions that can apply if taxable income exceeds the applicable threshold — $157,500 or, if married filing jointly, $315,000.

QBI is generally defined as the net amount of qualified items of income, gain, deduction and loss from any qualified business of the noncorporate owner. For this purpose, qualified items are income, gain, deduction and loss that are effectively connected with the conduct of a U.S. business. QBI doesn’t include certain investment items, reasonable compensation paid to an owner for services rendered to the business or any guaranteed payments to a partner or LLC member treated as a partner for services rendered to the partnership or LLC.

The QBI deduction isn’t allowed in calculating the owner’s adjusted gross income (AGI), but it reduces taxable income. In effect, it’s treated the same as an allowable itemized deduction.

The limitations

For pass-through entities other than sole proprietorships, the QBI deduction generally can’t exceed the greater of the owner’s share of:

  • 50% of the amount of W-2 wages paid to employees by the qualified business during the tax year, or
  • The sum of 25% of W-2 wages plus 2.5% of the cost of qualified property.

Qualified property is the depreciable tangible property (including real estate) owned by a qualified business as of year end and used by the business at any point during the tax year for the production of qualified business income.

Another restriction is that the QBI deduction generally isn’t available for income from specified service businesses. Examples include businesses that involve investment-type services and most professional practices (other than engineering and architecture).

The W-2 wage limitation and the service business limitation don’t apply as long as your taxable income is under the applicable threshold. In that case, you should qualify for the full 20% QBI deduction.

Careful planning required

Additional rules and limits apply to the QBI deduction, and careful planning will be necessary to gain maximum benefit. Please contact us by phone at (818) 789 1179 for more details.

© 2018

 

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