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As chief financial decision maker within a business, the role for many CFOs looks different today than it has in the past. It can often be a journey into uncharted waters. In 2018 this critical c-suite role involves not only company financials, but a broader vison, strategic thinking, trend watching and keeping up on developments with potential impact on the business, including:

• Sweeping tax reform
• The skilled labor shortage
• Safety regulations
• Changes in revenue recognition
• Blockchain & other technology
• Fraud and cyber threats

When you subscribe to accounting firm Gilmore Jasion Maher’s (GJM) industry-specific newsletters you’ll gain access to articles offering solutions and solving problems. You’ll receive insight from GJM experts and additional articles on accounting issues and topics that impact your bottom line.

• Personal and business tax strategy
• Best practices and trends
• Clarification and insight on federal tax changes
• Technology/cybersecurity content
• Information on cost control and tax credits

Here’s a look at some recent articles you missed if you weren’t subscribed:

• “Gilmore Jasion Mahler Experts Explain New Tax Law”
• “Tax Reform and Pass-through Entities”
• “Construction Accounting Update: New Revenue Recognition Rules to “Go Live” Soon”
• “The Contractor’s Corner-How Helpful are Digital Documents and E-signatures?”
• “Quality vs. Volume-How Should Physician Compensation be Determined?
• “Surviving and Thriving in a Changing Practice Landscape”
• “Beware of Procurement Fraud”
• “Economic Damages 101: Learn the ABCs of Calculating Lost Profits and Diminished Value”
• “Are Your Prices Too High, Too Low or Just Right?” 
• “Smart Factories and Blockchain: How to Stay on the Cutting Edge of Technology”
• “Understanding “Nexus” – Know the Risks and Rewards of Operating Across State Lines”

GJM’s five quarterly newsletters include:

1. Focus: A quarterly publication dedicated to covering such topics as strategic business planning, estate planning, employee issues, customer relations issues, personal tax planning, and other aspects of business management and personal finance.
2. The Expert: The quarterly newsletter offers timely notifications on valuation and litigation support developments that may have an immediate impact on you and your business.
3. Practice Management Advisor: A quarterly newsletter providing accounting, tax and practice management insights for the health care industry.
4. On-Site: A quarterly newsletter providing accounting, tax and business insights for construction and real estate focused organizations.
5. Manufacturer: Offers tax tips, news and information pertinent to the manufacturing and distribution industries. A quarterly publication, Manufacturer addresses the daily challenges facing manufacturers and distributors as well as strategic and long-term planning initiatives.

Signing up is simple. Just click here and start having timely accounting information delivered right into your inbox. You can also sign up by clicking the big blue "subscribe now" button at the top of the sidebar to the right of this blog article. To be sure you continue to receive GJM newsletter content, we recommend the following:

1. Have your IT department add GJM’s domain name to your network’s whitelist. We recommend you also add the name of the platform we use to distribute our email newsletters, which is a company called BlueHornet (recently rebranded as Mapp Digital).

Domain names to add to your whitelist:

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Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting services and provides comprehensive services including assurance, business advisory, tax, risk advisory and healthcare management. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.  

Smart Phones and iPads and Video Conferencing, Oh My! It’s no secret that our personal and professional lives have changed dramatically in recent years, driven by technology. The accounting industry is no exception. There’s been a significant shift in the way we serve our clients at Gilmore Jasion Mahler, LTD. For many of the Firm’s business and individual clients, paper tax returns are but a memory. The documents are now often sent digitally, provided via email or on a flash drive.  

Another major shift has come for some of our clients including physician offices and other healthcare entities that rely on us for their accounting and bookkeeping needs. Gilmore Jasion Mahler’s cloud-based client portal GJM Connect saves them time and headaches.

“They are able to connect with us in real time 24 hours a day, 7 days a week. It’s helping improve efficiencies on their end and is as easy as banking or shopping online,” says GJM Partner Linda Hillstrom.

It’s also secure and convenient. GJM Connect offers clients round-the-clock access from any internet connection in the world.  The online portal allows for file sharing and accounting/bookkeeping work. Encryption, secure password protection and other measures bring heightened security.

Technology has also created a shift in the way Gilmore Jasion Mahler staff members do their work. Working from home and remote locations has never been easier. Video conferencing allows for more face to face time between GJM’s Maumee and Findlay offices. Cloud-based document storage has done away with the need for large filing cabinets, allowing access to archived documents with a click of the mouse.

Online communication helps clients and the public stay informed on tax law changes and other timely information that may affect their businesses. Digital newsletters, email alerts and social media messaging from GJM bring industry-specific information to those in manufacturing & distribution, construction, real estate & utilities and healthcare. Additional digital newsletters are specific to litigation and valuation and general tax information.

It truly is a whole new Technicolor world. We’re definitely not in Kansas, anymore, and that’s a good thing for the staff and clients of Gilmore Jasion Mahler, LTD.

Learn more about GJM Connect and our cloud-based accounting services or sign up for one of our industry-specific newsletters.

The new school year brings some welcome news for teachers. A popular and well-deserved deduction of $250 allowed for those who spend their personal money on classroom supplies was advantageously updated by the 2015 PATH Act.  The Act made the deduction permanent, tied it to inflation, and it now also covers personal money paid for professional development.

Married taxpayers filing jointly who are both eligible educators may each claim up to the maximum deduction of $500.

Keep those receipts! The rest of the unreimbursed educator expenses that exceed the $250/teacher ceiling may possibly be claimed as miscellaneous itemized deductions subject to the 2%-of-adjusted-gross-income (AGI) floor.

Of course there are rules and restrictions: An eligible educator must be a kindergarten through 12th-grade "teacher, instructor, counselor, principal, or aide" in a public or private elementary or secondary school. For more information, consult with your tax provider.

Guest blogger Amy Sigurdson contributed this article. Amy is a Tax Associate at Gilmore Jasion Mahler.

Late last month Congress passed the Bipartisan Budget Act of 2015 (the Act) which provided the funding the government needed to avoid a shutdown.  Part of that bill, however, closed two prominent “loopholes” in social security benefits that will require some individuals in or near retirement to act fast or risk forfeiting a substantial amount of benefits.

The first and more prominent loophole eliminated was the File and Suspend Method.  This method allows a lower-earning spouse to claim benefits based on the higher earning spouse’s earning record (i.e. spousal benefits) even though that spouse is not currently receiving any benefits.  Since spousal benefits can be as much as one-half of the higher-earning spouse’s benefits, they are typically more than the benefits based on that lower-earnings spouse’s records. This method works by having the higher-earning spouse claim benefits at full retirement age (currently age 66), but then immediately suspend taking those benefits until a later date (at age 70 or earlier).  Since suspending the benefits allows you to increase your benefits by 8% each year, the file and suspend method allows both spouses to receive maximum benefits.

As a result of the Act, after April 30, 2016 an individual can only receive benefits based on the higher-earning spouse’s earnings records if that spouse is actually receiving benefits.  Fortunately, those individuals who have already been using the file and suspend method are not affected as they are grandfathered under the Act.  However, those higher-earning spouses that will be at their full retirement age or are past their full retirement age must act by April 30, 2016 to take advantage of this method.

The second loophole closed by the Act is the elimination of the Restricted Application Method (also known as the Claim Some Now, Claim More Later Method).  This method allows lower-earning spouses eligible for both spousal benefits and retirement benefits (based on own earnings) to claim spousal benefits at full retirement age, but delay taking benefits under his or her earnings record until a later date (at age 70 or earlier).  By suspending the benefits, the lower-earning spouse can receive spousal benefits while still allowing his or her own retirement benefit to earn delayed credits until as late as age 70. At that time, the spouse can then switch over to their own higher benefit.

For those individuals who turn 62 after 2015, the Act eliminates the ability to file a restricted application for only spousal benefits.  Those individuals who are age 62 or older in 2015, however, should still be able to use this method. Spouses who are already collecting benefits on their partners earnings record can also continue to do so and switch to their own larger retirement benefit at a later date —up to age 70. Kathi Iott is a partner in the tax services area of the firm with over 15 years of public accounting experience. Learn more about Kathi's expertise.

With the Internal Revenue Code stretching to more than 70-thousand pages, everyone agrees that tax reform is an attractive idea, right? Economists generally believe that simplifying the code encourages growth in the overall economy by reducing the costs of compliance with the law. Both President Trump and leadership in the 115^th Congress have said that this is a priority. What would a modern tax reform look like, and why is the affordable housing industry so nervous about it?  Are they right to be?

Tax reform generally refers to some combination of reducing tax rates and simplifying the code. Usually this takes the form of eliminating certain deductions and credits, which have been added to the code over the years in various attempts to incentivize actions that are helpful to the economy or to aid a disadvantaged group. As a result, tax reform is always a heavier lift politically than expected. While everyone will benefit from the lower rates, some groups will find that valuable deductions they relied on for prior decisions are being discussed for removal from the code – and some will find that the lost deductions are a bigger financial hit than the lower rates provided in savings. With 70-thousand pages of code, there are a lot of groups that fall into this category.

The last time we saw significant tax reform at the federal level was the Tax Reform Act of 1986 that was signed by President Ronald Reagan. So although the code is long and complex and it would be great if it were simpler, a lot of inertia exists behind the status quo.

President Trump’s proposed tax reform would make a variety of changes to individuals’ income taxes, including trimming the number of tax brackets from seven to three, and reducing the highest rate from 39.6% to 35%. Corporate tax rates would be cut from a maximum of 35% to 15%. It is this proposed reduction in the corporate rate that has some surprising potential to impact the affordable housing industry and development plans that are underway or still being priced by the market. How big of a concern is this in the affordable housing industry? As a CPA and advisor specializing in this area, I speak with decision-makers just about every day who are watching the tax reform discussion very closely.

So, how exactly would reducing the corporate tax rate affect the development of affordable housing projects? Let’s look at a simple example of a project developed under the competitive, 9% low-income housing tax credits (LIHTC) that make up the majority of LIHTC development in Ohio.

• In 2016 the Ohio Housing Finance Agency (OHFA) awarded a total of $32M in annual credits to 42 projects.
• Credits run for 10 years but projects are required to operate as affordable housing for 15 years.
• For simplicity let’s say a typical project receives $720,000 in annual credits, which the investor can claim on its tax return.
• Since it’s a 9% credit, the basis required to produce this amount of credit is about $8M ($8M x 9% = $720,000).
• Assuming the whole $8M is made up of a building that will be depreciated over 27.5 years, the project will deduct depreciation expense of $291,000 per year, which the investor can deduct on its tax return. There would be other deductible losses as well, but this will keep our example simple.

So, the benefit to the investor is made up of two parts: the credits themselves, which are a dollar-for-dollar reduction in the investor’s tax liability, and the ability to deduct depreciation and other expenses, which reduce the investor’s taxable income (not its tax liability).

A lot of factors go into determining the amount an investor is willing to invest in a project, but here’s a simplified look at an $8M project funded with 9% credits, with investors hoping to see a 6% return. The first column is under current tax law, the second one reflects the impact of tax reform reducing rates from 35% to 15%.

Sorry for all the numbers. We accountants love numbers. The highlighted areas above really tell the story here. The total return to the investor drops by almost a million dollars under this scenario and required gap financing increases by $563,000. Gap financing represents additional grants, loans, or deferred developer fees that need to be obtained in order for the project to go forward at all.

So this would present a major challenge to developers of affordable housing if it comes to pass. How likely is this major tax reform?

In 2017? This accountant’s opinion: not going to happen. The 1986 Tax Reform Act took 10 months to get through Congress from the time full legislation was reported out of the House Ways and Means Committee to the time it reached President Reagan’s desk for signature. Even the Affordable Care Act took about 9 months from the initial introduction of legislation to the time it reached President Obama’s desk, despite Democratic supermajorities in both chambers of Congress.

While the Ways and Means Committee has held hearings on the subject of tax reform in May, and there are probably a number of proposals being debated behind the scenes, nothing I’ve heard suggests that anyone is ready to bring what will doubtless be a controversial bill forward any time soon. The Senate is preoccupied with debating the American Health Care Act, the ongoing confirmation of Administration appointees, and (of course) Russia. Until the Senate’s docket clears a bit, the House will not vote on anything controversial that will be months away from being taken up by the Senate, if at all.

What about 2018? That’s tougher to predict. Conventional wisdom says that if the Senate cleared the decks by the end of the year, then pushing through tax reform over the course of 9 or 10 months would have the final votes taking place on the eve of the November 2018 elections, which no one from either party would want to do. In spite of this, a consensus seems to be forming that it’s going to happen. One theory in circulation is that the run up in stock prices we’ve seen since the election represents the market pricing in a high likelihood of major tax reform. In that line of thinking, if it starts to look like reform won’t happen, a major correction to the market would occur, and a recession would become likely. While the two parties have shown little inclination to cooperate with each other on anything so far during President Trump’s Administration, perhaps avoiding a recession would be enough incentive to get the two sides to find some common ground and pull together.

Will this be enough to tip the scales in favor of moving forward with tax reform in the near term? Until the parties begin to show some cooperation and some attempts to find common ground, I’ll remain skeptical of the idea that major tax reform is imminent and will be enacted in what would be an election year. But the political world has made a habit of making conventional wisdom look silly over the past year. For the good of the nation’s economy I hope Congress defies the conventional wisdom one more time and is able to deliver some much-needed major tax reform.

As for affordable housing, in the meantime, pay attention to the House Ways and Means Committee’s Subcommittee on Tax Policy. Representative Pat Tiberi of Ohio’s 12^th District is a key member and is a reliable ally of affordable housing in Ohio. But Representative Tiberi is only one member. The message to all of Congress should be that major tax reform is an idea whose time is come – but it needs to be done carefully so as not to jeopardize the industry’s ability to develop safe, decent and affordable housing.

J Kenneth Saggese is a partner in the Audit Department of Gilmore Jasion Mahler. With the Firm since 2006, Ken is a member of GJM’s Construction and Real Estate Specialist Group. His area of expertise is affordable housing.