Archive for December, 2011
by Jim Wagoner, CPA | Partner, Tax Services Group
The IRS released the standard mileage rates for use in 2012. Taxpayers can use the optional standard mileage rates to calculate the deductible costs of operating an automobile.
Business use of an automobile remains at 55½ cents per mile. For medical or moving expenses, it is 23 cents per mile (a half-cent decrease from the second half of 2011). For services to charitable organizations, the rate (which is set by statute) is 14 cents per mile.
Rather than using the standard mileage rates, taxpayers may instead use their actual costs if they maintain adequate records and can substantiate their expenses. The rules for substantiating these amounts appear in Rev. Proc. 2010-51.
For automobiles a taxpayer uses for business purposes, the portion of the business standard mileage rate treated as depreciation is 23 cents per mile for 2012 (it was 22 cents per mile for 2011).
by Brandon Cook, CPA | Partner, Tax Services Group
The way things are now: Under a tax law passed last year, the usual 6.2 percent OASDI rate for employees was reduced by 2 percent. A comparable tax break is available to self-employed individuals. However, employers aren’t eligible for any reduction. For employers, the 6.2 percent OASDI tax rate continues to apply to amounts up to the wage base. The Medicare rate of 1.45% for employees, and 1.45% for employers continues to apply to all earnings, without a cap.
by Anita Sherman, CPA and Larry Greenwalt, CPA
Interest rate swaps have been used for a number of years to hedge against rising interest rates. In the last several years, this technique has become more commonly used with mid-sized companies. SWAPS are useful in hedging against intermediate and long term loan interest rate risk, which makes SWAPS ideal for owner occupied properties and lines of credit that tend to have a certain level of “permanent” borrowings.
Hans Michael Hurdle of PNC Bank, noted that we are experiencing a 60 year low in 10 year Treasury yields. In order to stimulate the economy, the Fed has been able to keep interest rates artificially low. Hans believes that as our economy continues to gradually improve, and if there is a Europe resolution, interest rates will pop up. There may be a 3 to 12 month window in which to take advantage of the current low rates. The market consensus is that LIBOR rates will increase over the next 5-6 years, and LIBOR is the basis used by most banks to determine their pricing.
by Marie Jett, CPA | Manager, Tax Services Group
Back on November 21, President Obama signed into law P.L. 112-56, “3% Withholding Repeal and Job Creation Act”. Back in 2005, Congress passed a law that would require federal, state, and local governments to withhold 3% from payments made to entities providing services or goods to those governments. Since then Congress has pushed back the start date of the withholding requirement with the updated date for payments made after 2011. This latest law has totally repealed the withholding requirement.
by Stacey L. Spencer, QKA | Manager, Employee Benefit Services Group
The Social Security Administration (SSA) recently announced cost-of-living adjustments (COLAs) for 2012. The purpose of the COLA is to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not drained by inflation. It is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the last year a COLA was determined to the third quarter of the current year. If there is no increase, there can be no COLA.
by Tim Ayler, CPA and Alicia Rader, CPA | Team Members of the Construction Services Group
Many contractors equate success to winning bids. While that certainly is partially true, there are several other factors which determine how successful the bidding process really is. As of late, many contractors are putting less markup in their bids in order to be more competitive and to increase their chances of winning the work. Others are struggling to win bids so they are expanding their geographic boundaries or bidding on types of work that they have not successfully completed in the past. Whatever your construction company is doing to win bids, we hope it has contributed to your company’s profitability.