Author: Steven Singer

Steven Singer is a partner at Greenstein, Rogoff, Olsen & Co., LLP (GROCO). An internationally recognized premier accounting firm. Serving the venture capital (VC), private equity, family office and ultra-high net worth communities, Steve’s specialty is guiding entrepreneurs and their families thru liquidity events, succession planning and a variety of Corporate and family issues. Companies his clients have helped grow: Tesla, Space X, Box & Google, just to name a few.

As an author, advisor and CFO to numerous high tech, real estate and companies in a variety of industries, Steve’s unique perspective gives insight into both exponential growth and tax strategies.

Currently serving as advisor or board member to several national and international organizations. Steve holds a B.S. degree in Business from U.C. Berkeley and Master degree in taxation from Golden Gate University.|Steven Singer is a partner at Greenstein, Rogoff, Olsen & Co., LLP (GROCO). An internationally recognized premier accounting firm. Serving the venture capital (VC), private equity, family office and ultra-high net worth communities, Steve’s specialty is guiding entrepreneurs and their families thru liquidity events, succession planning and a variety of Corporate and family issues. Companies his clients have helped grow: Tesla, Space X, Box & Google, just to name a few.

Travel and Entertainment Business Expense Deduction Summary

Post author By Steven Singer
Post date March 9, 2018
No Comments on Travel and Entertainment Business Expense Deduction Summary

The 2017 Tax Cuts and Jobs Act made some major modifications to the travel, entertainment, taxable fringe benefits and moving expense deductibility for taxpayers. Above is a summary that shows the difference in the current deductibility (or inclusion in income for employees) for certain of these deductions.

At GROCO, we assist high net worth clients and their families with wealth creation, family transfers, taxes and charitable giving. Please give me a call at 510-797-8661 if you need assistance or have questions on these new rules or would like to know how to make, keep and/or transfer your wealth.

Accounting Economics Entrepreneurship Industries Investing Management Personal Development Taxes

Highlights of the 2017 Tax Cuts & Jobs Act

Post author By Steven Singer
Post date March 2, 2018
No Comments on Highlights of the 2017 Tax Cuts & Jobs Act

CHANGES TO INDIVIDUAL RATES AND BRACKETS– lowered top bracket from 39.6% to 37%

Married Individuals highest bracket starts at $600,000; Single Individual $500,000; Trust and estate $12,500
NEW-Dependent children aged 18-24 in school must use trust rates not Parent’s rate
Capital gains rates remain unchanged
NEW-three year holding period for carried interest distributions, sales or redemptions for Long-term capital gains
AMT thresholds increased

CHANGES TO INDIVIDUAL DEDUCTIONS

Only deductions available: medical expense, Interest expense, charitable deductions and tax expense and business casualty loss
- Taxes limited to total of $10,000; Mortgage debt for existing loans limited to $1,000,000 and New home purchase $750,000. Cash contributions limit increase from 50% to 60% of adjusted gross income
No longer deductible expenses-Alimony paid for and alimony received under divorce contracts entered after 2018, tax prep fees, employee business and investment expenses and other miscellaneous itemized deductions moving expenses; personal casualty theft loss except for federally declared disasters
New 529 plans for elementary or secondary public private or religious schools.
Like kind exchanges now limited only to Real property so fast-food restaurant franchise licenses and patents; aircraft, vehicles, machinery and equipment, railcars, boats, livestock, crypto-currency, artwork and collectibles are no longer eligible.
Current year business operating losses including passive losses limited to $500,000 joint and $250,000 for other filers. Anything in excess cannot offset capital gain or investment income.
No carryback of Net operating business losses. Carryforward of future losses limited to 80% of taxable income.
Increased limits for expensing capital assets up to $1,000,000 for new & used property.
Non-owner of some private company employees may get up to 5 years to defer income on exercise of stock options or RSU’s.

CHANGES TO ESTATE TAX

Life time gift & GST exemption-2018 $11,200,000 single & $22,400,000 married couples. Will be adjusted for inflation each year.
Annual gift tax amount-2018 Increased to $15,000

CHANGES TO BUSINESS (SCHEUDLE C) AND PASS THRU ENTITIES

NEW- 20% deduction for pass thru or Schedule C qualified business income done at individual level
Limitation of business interest deduction limited to 30% of the business’s adjustable taxable income, exception for real estate companies who elect longer depreciable life for real estate.
NEW-Taxpayer’s average $25 million gross receipts- can use cash method of accounting and don’t have to use UNICAP rules for inventory capitalization.

At GROCO, we assist high net worth clients and their families with wealth creation, family transfers, taxes and charitable giving. Please give me a call at 510-797-8661 if you need assistance or have questions on these new rules or would like to know how to make, keep and/or transfer your wealth.

Accounting Economics Entrepreneurship Industries Investing Personal Development Taxes

Maximizing the Value of Your Carried Interest

Post author By Steven Singer
Post date February 20, 2018
No Comments on Maximizing the Value of Your Carried Interest

After the passage of the 2017 Tax Cuts and Jobs Act (ACT), many people are wondering how to maximize the value of their carried interest. There are some changes in the ACT that might affect how you proceed when selling or transferring your carried interest to achieve long-term capital gain treatment. These rules apply to taxable years ending after December 31, 2017.

NEW THREE-YEAR HOLDING RULE

Perhaps you’ve heard of the new three-year holding rule but you’re not sure if it applies to you.

Distributions and gains passed thru to you because of your carried interest

To receive long term capital gain rates (20%) on gains or distributions associated with your carried interest from the fund, the underlying investment at the fund level must be held for more than three years.

Sale or redemption of your Carried interest

If you decide to redeem or sell a portion or all your carried interest, your interest must be held for more than three years to get the long-term capital gain rate treatment.

Additional guidance from the IRS is needed to see if the underlying investments at the fund level must also be considered when you sell or redeem your interest.

Planning Point: The good news is that if stock is distributed to you and it has not yet met the three-year requirement, you can use the fund’s purchase date of the stock and hold on to it until it satisfies the three-year requirement to achieve long-term capital gain rates.

TRANSFERS OF CARRIED INTEREST-HIDDEN TAXABLE EVENT

Prior to the ACT, when you gifted your carried interest to a non-charity, typically your accountant would inform you that you may incur some gift taxes or if the proper structure was in place, no gift taxes at all.

Now, with the passages of the new ACT, you may get a call from your accountant asking you to not only pay gift taxes, but income taxes as well.

What? Income taxes? Yes.

Now, when you sell, transfer or gift your carried interest to a person related to you, you may recognize a short-term capital gain.

How much? Well, it’s complicated. That’s tax simplification.

Who is this person related to you? Well, that’s changed too. Now it includes not only your relatives but your colleagues, vendors and current or former employees.

Planning Points: Make sure that you talk to your tax advisor before making the transfer. Try to do the transfer on January 1 or December 31 when the fund can value the fund assets.

ENTITIES SUBJECT TO THESE RULES

These rules apply to individuals, trusts and estates, but not corporations.

Planning Point: It may be possible to hold the carried interest in an S Corporation and avoid these rules.

TYPES OF BUSINESS SUBJECT TO THESE RULES

The ACT only applies to partnership interest (which may include limited liability companies) that hold entities that raise or return capital from investors (VC’s, PE’s and hedge fund managers), investing in, disposing of, or developing securities, commodities, cash options or derivatives, (investment fund managers) and real estate held for rental or investment.

Entities not subject to the ACT

Farmers that hold land in which they actively farm are not subject to these new rules. Additionally, these rules generally should not apply to “profit interest,” granted to service providers who are employed by a related but separate entity (e.g. a management company).

The rules also do not apply to gains attributable to any asset not held for portfolio investment on behalf of third-party investors. We will have to wait for more guidance for this definition.

There are still many unanswered questions regarding these new rules, with hopefully more guidance coming from the IRS and Congress. Practically speaking, if you’re involved in investments, and hold the assets for more than three years, then these new rules will not have much impact. Furthermore, California has not adopted these rules.

However, there are still numerous traps for the unwary. At GROCO, we assist high net worth clients and their families with wealth creation, family transfers, taxes and charitable giving. Please give me a call at 510-797-8661 if you need assistance or have questions on these new rules or would like to know how to make, keep and/or transfer your wealth.

Accounting Growth Investing Management Personal Development Taxes

How to Get a Charitable Tax Deduction for Remodeling Your Properties

Post author By Steven Singer
Post date November 29, 2017
No Comments on How to Get a Charitable Tax Deduction for Remodeling Your Properties

If your home or rental property needs remodeling, consider getting a charitable tax contribution by helping a worthwhile cause. Many charities build and renovate homes for the needy. The tax law allows you to take a charitable deduction for donating used building materials removed from your house or rental property when they are used by a qualified organization.

How much you can deduct depends on the fair market value (FMV) of the materials you donate and when you donate them.

Amount of Your Charitable Deduction

For property held for more than 1 year, you will usually get a deduction of the FMV of the materials donated. If the property was used for business or rental purposes, you must reduce the FMV by any gain (if you sold the property) that is considered ordinary income. This is a simple calculation if you ask your tax advisor.
For property held less than 1 year, you will usually get a deduction of either the FMV or the cost basis (less any depreciation allowed) of the materials donated, whichever is less.
There may be limits depending on how much you contribute and your adjusted gross income, but the good news is, you can carry forward any unused deduction to later years.

Steps Needed to Get a Charitable Deduction

Before you begin your remodeling process:

Get your licensed contractor to give you two bid quotes. One for deconstructing the space that you are remodeling and another one for demolishing it. Deconstructing the space is more expensive than demolition because fixtures, sheetrock, wood studs and more are taken apart slowly and carefully by hand to recycle every last piece as opposed to demolition where they rip out the materials without any consideration for reusing them (e.g. they just go into the dump).

Deconstruction usually is 1.5 to 2 times more expensive than a demolition process. However, since demotion is only a small part of your remodel, it should not add a large cost to your overall remodel.

Find an appraiser that can appraise the reusable materials that result from the “deconstruction” process. Usually they can give you an idea of the FMV per sq. ft. of real property you are remodeling. Appraisal costs range but typically are around $2,000-10,000. They will need to see the materials before they are donated to a charity so they can issue an appraisal report.

Consult with your tax advisor. They usually know a qualified appraiser you can use in your area or one can be recommended by the charity to which, you are going to donate the materials.

Your tax advisor should also be able to determine whether it is cost beneficial to consider getting a charitable deduction. For example, if the appraisal cost is $5,000 and the additional contractor cost of deconstruction is $5,000, the donation you must receive must exceed $35,000 to give you a net tax benefit. Some of our clients have obtained charitable benefits of over $100,000.

Pick a 501(c)(3) US charity in your area that has as their mission to use the materials in their programs such as Habitat for Humanity.

After your remodeling process:

The appraiser will give you a signed appraisal report and an IRS form 8283 signed by both the appraiser and the charity to which, you contributed the material; both must be attached to your tax return.

If these steps are followed correctly, then there is an excellent chance that much of the costs of your next remodel can be claimed as a charitable contribution.

For more information about this and other tax strategies to help you pay only your fair share of taxes email him at ssinger@groco.com

Accounting Best Practices Entrepreneurship Human Resources Management Personal Development Taxes Technology

What Does It Mean to Be a Leader in the Age of AI? Part 1

Post author By Steven Singer
Post date November 28, 2017
No Comments on What Does It Mean to Be a Leader in the Age of AI? Part 1

With the advent of artificial intelligence (A.I.) and machine learning, it’s time to re-evaluate how we hire, train and lead our employees.

The ability to do a job faster or cheaper will no longer be what sets an organization apart from its competitors, but rather the ability of organizations and its human component to critically and strategically think for the organization and its customers.

With improved critical thinking, machine learning and A.I., an organization will be able to move faster and more effectively than its competitors making it both more interesting and challenging for its human workforce and valuable to its customers.

In an A.I. environment, co-workers will be expected by its customers and the organization to work in teams, improve communication with customers, come up with original thoughts and strategies, explain how A.I. came up to its conclusions and implement their strategies. Objectives of the organization and its customers probably will not change (e.g. enhanced customer and trusted relationships, bottom and top line growth). However, the way the organization uses its human components will change dramatically.

What does it mean to critically think? According to the Foundation for Critically Thinking.org you and your co-workers should be able to:

Raise vital questions and problems, formulating them clearly and precisely.
Gather and assess relevant information, using abstract ideas to interpret it effectively.
Come to well-reasoned conclusions and solutions, testing them against relevant criteria and standards.
Thinking open-mindedly within alternative systems of thought, recognizing and assessing, as needs to be, their assumptions, implications, and practical consequences.
Communicate effectively with others (in teams) in figuring out complex solutions.

How to go about implementing and dealing with co-workers who are unfamiliar or unable to cope with the new paradigm?

Link their compensation and future to these management objectives so they realize the importance of these new organizational directives.
Identify your stars who understand and employ “critical thinking” methods and encourage them to lead by giving them authority and autonomy to do so.
Recognize, embrace and communicate this as a cultural shift that will enhance the well- being and livelihood of everyone involved.
Be prepared to promote team members that exhibit these skills and counsel out those who can’t adopt.
Prioritize these skill sets as a core competency of new hires.
Make it as a top goal for your organization.
Hire the right professionals.

Quick links

Follow Us