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Posted in General on Jan 17, 2012

Congratulations to Kimberly Hardy on passing the 2011 Certified in Financial Forensics (CFF) examination!  Way to go, Kim!

Last Updated by Matt Freeland on 2012-01-17 12:06:48

Posted in General on Oct 05, 2011

FRIENDLY REMINDER!!

The individual tax deadline is fast approaching for the 2010 tax year. The deadline for filing your 2010 individual tax return is Monday, October 17^th. If you have not done so, please bring your tax information to our office as soon as possible to ensure that your return is prepared in a timely manner. 

If you are not a client of Matthews Cutrer & Lindsay, PA please let us know if we can be of service to you by helping you with your tax return preparation and/or tax planning needs.

Last Updated by Admin on 2011-10-05 07:36:23

Posted in General on Oct 05, 2011

Good News!!!!! The optional standard mileage rate for the business use of an automobile has been increased from 51 cents to 55.5 cents per mile beginning July 1, 2011. If your policy is to reimburse employees at the Federal mileage reimbursement rate, you will need to implement this change.  The allowance for medical and moving mileage was also increased from 19 cents to 23.5 cents. However, the mileage rate for charitable contributions remains at 14 cents per mile because it is fixed under the Internal Revenue Code.

Last Updated by Admin on 2011-10-05 07:24:43

Posted in General on Oct 05, 2011

We are pleased to announce that Carter Smith has been promoted to Director of Business Advisory Services.  In this role, Carter will continue to organize, develop and recruit new clients in the business advisory and bookkeeping services we offer.  Please join us in congratulating him.

Last Updated by Admin on 2011-10-05 07:11:58

Posted in General on Sep 01, 2011

In June, we started a series on internal controls covering 4 different types of control activities; Preventive controls, Detective controls, Deterrent controls, and Compensating controls. We want to pick up where we left off to complete this series.

Deterrent controls are intended to discourage individuals from intentionally violating company policies or procedures. These usually take the form of constraints that make it difficult or undesirable to perform unauthorized activities or threats of consequences that influence a potential violator not to act.

Examples:

• Strong internal policies and procedures
  
• Warning messages in software applications
  
• Admonishing and discipline employees for improper behavior
  
• Physical controls may be deterrent or preventive controls
  

Last Updated by Admin on 2011-09-01 11:42:28

Posted in General on Aug 31, 2011

Just a reminder of the tax benefits that can offset college costs. These benefits are available to you, your spouse or a dependent for which you claim an exemption. Keep receipts to document these expenses.

• American Opportunity Credit - Credit up to $2,500 for the first four years of post-secondary education, 40% of the credit is refundable, qualifying expenses include tuition and fees, course related books, supplies and equipment. Credit is available when modified adjusted gross income is below $80,000 for single filers ($160,000 for MFJ filers)
  
• Lifetime Learning Credit -Credit up to $2,000 for qualified expenses, no limit on the number of years this credit can be claimed. Credit is available when modified adjusted gross income is below $60,000 for single filers ($120,000 for MFJ filers)
  
• Tuition and Fees Deduction - Deduction of taxable income up to $4,000.  Deduction is available when modified adjusted gross income is below $80,000 for single filers ($160,000 for MFJ filers)
  
• Student Loan Interest Deduction - Deduction of taxable income up to $2,500.  Deduction is available when modified adjusted gross income is less than $75,000 for single filers ($150,000 for MFJ filers)
  

Last Updated by Admin on 2011-08-31 08:32:34

Posted in General on Aug 30, 2011

Related party transactions are required to be disclosed on Schedule L, Part IV of Form 990. This schedule requires the organization to identify the name of the related party in a business transaction.

For Example: If the organization and ABC, Inc., share a common board member and engagement in a business transaction during the tax year, the nature of the transactions and the common board member should be disclosed on Schedule L.

Last Updated by Admin on 2011-08-30 07:46:43

Posted in General on Aug 29, 2011

If your business is an S Corporation you may want to use loans as part of your capital structure. For loss deduction purposes, S Corp shareholders are limited to the basis in their stock plus the amount of any loans made directly to the corporation. However, shareholders get no basis from debt inside the S Corporation, even if it's personally guaranteed. Fortunately, it's relatively easy to sidestep this problem. If the lender demands personal guarantees, simply have the loans made to the shareholder rather than the corporation. The shareholder can then make a loan to the S Corp and get the additional tax basis.

When an S Corp receives shareholder loans, make sure the IRS can't characterize the loans as equity. If that happens, the S Corp runs the risk of having a second class of stock.  Since S Corps can have only one class of stock this will terminate the S Election. S Corps can avoid this potential problem by structuring these loans to meet four requirements:

• Must be a written obligation to pay a sum certain on demand or on a specified due date.
  
• Interest rate and payment dates must be contingent on profits, the corporation's discretion or similar factors.
  
• Cannot be directly/indirectly convertible into stock or any other equity interest.
  
• Must be owed to an eligible S Corporation shareholder.
  

Last Updated by Admin on 2011-08-29 06:59:06

Posted in General on Aug 26, 2011

A payment made to another charitable organization, related or not, with the intent of supporting the organization's charitable mission is a grant and should be properly reported as such.

For example: If Charity A pays all the operating expenses of related Charity B and receives no benefit in return, the total of these operating expenses should be identifies as a grant expenses of Charity A's Form 990.

Last Updated by Admin on 2011-08-26 06:43:45

Posted in General on Aug 25, 2011

The IRS issued guidance on the time and manner for making the election not to have estate tax apply to estates of decedents who died in 2010. The election must be made by November 15, 2011. The IRS also provided detail on how executors who elect to not have estate tax apply can allocate an increase in basis to decedent's assets. As you may know, the Tax Relief Act of 2010 reinstated the estate tax for 2010 after it had been repealed. The act allowed executors to apply the Code as if the estate tax had not been reinstated.

Under this election, no estate tax would be due but assets would not receive a step-up in basis to FMV at date of death. Instead basis in assets are determined under the modified carryover basis rules with basis being the decedent's adjusted basis. However, the executor can elect to allocate up to $1.3 million to increase certain assets' basis to their FMV at date of death. This election must be made by filing Form 8939, Allocation of Increase in Basis for Property Acquired from a Decedent on or before November 15, 2011.

Last Updated by Admin on 2011-08-25 08:49:03

Posted in General on Aug 24, 2011

The length of time you should keep tax records depends on the action, expense or event the document records. Generally, you must keep your records that support an item of income or expense on a tax return until the period of limitation has expired. The period of limitation is the period of time in which you can amend your tax return which his 3 years from the due date (including extension). 

Other Records to Consider:

• Records connected to assets should be kept until the period of limitation expires for the year in which you dispose of the property in a taxable disposition.
  
• Filing a claim for refund/credit after you file your return; keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later.
  
• Filing a claim for a loss from worthless securities or bad debt calculation, keep records for 7 years.
  
• Keep all employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.
  
• When no return is filed records should be kept indefinitely.
  
• All other tax conditions, records should be kept for 3 years.
  

Last Updated by Admin on 2011-08-24 08:28:12

Posted in General on Aug 23, 2011

Many organizations make the mistake of only reporting salaries as compensation expense. Compensation of current officers, directors, trustees, and key employees (TDOKE) on the statement of Functional Expenses should include all forms of salary and benefits. This includes pension plan contributions, dental or medical insurance, and other employee benefits (whether or not taxable to the employee), not just wages.

To help us ensure that this information is presented properly, you should provide us with a copy of TDOKE?s W-2s and a list of all employee benefits with the dollar amount paid for each item. 

Last Updated by Admin on 2011-08-23 07:55:08

Posted in General on Aug 22, 2011

Medical flexible spending accounts (FSAs) are not as flexible in 2011. These workplace plans allow employees to put pretax money into accounts and then use the money to pay for medical expenses not covered by insurance. However, one category is no longer eligible for reimbursement over-the-counter medicines. Beginning in 2011, certain medical expenses are not reimbursable under a flexible spending arrangement unless a licensed health care professional states that the service or product is medically necessary. Plans will need a Letter of Medical Necessity (LMN) for these items to be reimbursable. Please note that certain expenses may require additional documentation to be reimbursable.

Last Updated by Admin on 2011-08-22 07:33:10

Posted in General on Aug 18, 2011

Many organizations do not understand how to properly identify individual's positions on the Form 990. The definitions of trustees, directors, officers, or key employees (TDOKE) are as follows:

Director or Trustee - a member of the organization's governing body at any time during the tax year, but only if the member has any voting rights. A member of an advisory board that does not exercise any governance authority over the organization is not considered a director or trustee.

Officer - a person elected or appointed to manage the organization's daily operations at any time during the tax year, such as a president, vice-president, secretary, treasurer, and in some cases, Board Chair. For purposes of Form 990, treat the organization's top management official (CEO, ED) and top financial official (CFO) as officers.

Key employees - an employee (other than an officer, director, or trustee) that receives reportable compensation in excess of $150,000 and has responsibilities, powers or influence over the organization as a whole similar to officers, directors, or trustees.

Last Updated by Matt Freeland on 2011-08-18 08:41:10

Posted in General on Jul 14, 2011

When you see Kimberly Hardy or Jonathan Whinery, please congratulate them on their promotions! Kim is now an audit manager and Jonathan is an audit senior.

Last Updated by Admin on 2011-07-14 07:10:18

Posted in General on Jul 11, 2011

Governor Haley Barbour signed the Mississippi Employment Protection Act (MEPA) which requires all employers to register with and use the federal government's internet-based E-Verify system. Effective July 1, 2011, all Mississippi employers must use this system to confirm the federal employment status and eligibility of all newly hired employees. Under MEPA an employer is a person or business that is required to issue a Form W-2 or Form 1099 to any employed or contracted personnel in Mississippi. Therefore, employers will need to verify new employees as well as those hired as subcontractors. Eligibility must be verified through E-Verify no later than the third business day after the employee starts work.

Registration for E-Verify can be done at https://www.vis-dhs.com/EmployerRegistration. Please contact our office if you have any questions or if we can be of any assistance.

Last Updated by Admin on 2011-07-11 12:05:41

Posted in General on Jun 27, 2011

The IRS announced an increase to the business standard mileage rate from 51 cents a mile to 55.5 cents a mile for all business miles driven from July 1, 2011 through December 31, 2011.  The IRS normally updates the mileage rates once a year in the fall for the next calendar year.  However, in recognition of the recent gasoline price increases, the IRS made this adjustment for the final months of 2011.

For medical purposes the mileage rate has gone from 19 cents per mile to 23.5 cents per mile.

For charitable purposes the mileage rate has remained the same at 14 cents per mile.

Last Updated by Admin on 2011-06-27 07:42:48

Posted in General on Jun 07, 2011

Last Updated by Admin on 2011-06-07 11:48:11

Posted in General on Jun 07, 2011

We have been extremely fortunate to see our tax practice grow with the addition of more varied and complex clients.  Our entire practice continues to grow due to referrals and repeat business from our good friends and valued clients.  As a result, we have openings in our firm that we would like for you to know about.  We are currently looking for an experienced tax professional to join our team on a full-time basis.  We are also looking for per diem tax professionals to join our team during tax season.

We seek energetic, career-oriented professionals to add to the MC&L team.  By finding quality staff members we can continue to provide top-quality service to our clients.  If you know of someone who might be interested, please ask them to send their resume to mcl@mclcpa.net

Again, we appreciate your support of Matthews Cutrer & Lindsay, PA.

Last Updated by Admin on 2011-06-07 07:59:58

Posted in General on Jun 07, 2011

In 2011 any individual can give up to $13,000 to any other individual each year without any gift tax consequence; this annual exclusion amount may change for 2012.  If both spouses consent, a married couple may give up to $26,000 to an individual.  In 2011 and 2012, every individual may give up to $5 million during his/her lifetime before incurring any gift taxes.  If no changes are made to the federal law, this exemption will drop to $1 million in 2013 and beyond.  Any gift that exceeds the annual exclusion in any year will reduce your available lifetime exclusion by the excess.  Taxpayers will only owe gift taxes if their lifetime gifts exceed the lifetime exclusion.

Exceptions include:

• Marital gifts to US spouses are unlimited
• Marital gifts to non-US spouses are limited to $134,000
• Section 529 Plans - individuals can give up to 5 years of gifts in one year
• No gift tax applies to funds given to charity, educational institutions and to medical facilities

Last Updated by Matt Freeland on 2011-06-07 07:45:05

Posted in General on Jun 07, 2011

Join leaders from Mississippi's most energized nonprofits and foundations at this year's premiere statewide Nonprofit Management Conference at the chic Hilton Garden Inn Jackson Downtown on June 9th and 10th.

Key Focus Areas:  Succeeding in the New Economy

Be sure to stop by our both and attend our session on "Ethics and Confidentiality for Staff and Volunteers?" presented by Michelle Stonestreet, CPA and Kimberly Hardy, CPA.

For more information, please visit http://www.msnonprofits.org/ .  Registration is available online until noon on Wednesday and onsite after that.

See you there!!!!

Last Updated by Matt Freeland on 2011-06-07 07:40:15

Posted in General on May 23, 2011

There are two training opportunities coming up.  Please mark your calendars:

June 9^th  and 10^th , 2011 -  The Ms Center for Nonprofits will hold their annual conference at the King Edward Hotel in Jackson.  Lots of good topics are being offered over the two days.  For more information, please check their website www.msnonprofits.org

November 4,  2011 - The CPA's Nonprofit Accounting Seminar will be held at the JSU e-Center.  Charles Lindsay has been asked to serve as the committee chairman again this year.  The committee is in the planning stages and more details will follow.  The seminar is being expanded to include three primary tracks which will include training for the CFO;  audit topics and tax related topics.  

Last Updated by Admin on 2011-05-23 08:40:29

Posted in General on May 04, 2011

As May 15^th quickly approaches, we would like to remind you of the Form 990 Filing Requirements.

Form 990 is required for organizations with Annual Gross Receipts of $200,000 or greater and/or Total Assets of $500,000 or greater

Form 990-EZ is required for organizations with Annual Gross Receipts of $50,000 or greater

Form 990-N: "Calibri","sans-serif";"> is required for all organizations with Annual Gross Receipts below $50,000

If your organization has a 12/31/10 year end, please be sure to file one of the forms listed above or an extension by Monday, May 16, 2011.

Last Updated by Admin on 2011-05-04 08:34:43

Posted in General on Mar 29, 2011

Problem: A major red flag in any internal control system is a lack of segregation of duties. With many nonprofit organizations, it is a challenge to implement an effective internal control system because the organization has a limited number of employees. So, how do you segregate payroll duties with a staff that consists of a bookkeeper and one other staff member?

Solution: Usually if an organization has a staff consisting of 3 individuals, there is a bookkeeper, another staff member and an executive director. In this case, the bookkeeper usually performs all payroll duties. To improve the internal controls, the organization should incorporate the other staff members or board members into the payroll process. For example the duties could be divided as follows:

Bookkeeper

·         Write payroll checks

·         Record general ledger entries (software data entry)

Other Staff or Executive Director

·         Approve employee time sheets

·         Approve payroll

·         Distribute payroll

Executive Director or Board Member

·         Sign employee contracts

·         Sign payroll checks (or authorize direct deposit)

By separating the duties in this manner, the organization ensures that no one individual has physical custody of payroll, can authorize payroll, or has the ability to record payroll transactions.

Last Updated by Admin on 2011-03-29 08:17:07

Posted in General on Mar 25, 2011

The Economic Growth Tax Relief Reconciliation Act of 2001 temporarily increased the maximum amount of eligible expenses for one dependent care credit from $2,400 to $3,000 (from $4,800 to $6,000 for more than one qualifying individual).  The 2010 Tax Relief Act extends the enhanced dependent care credit for two years, through December 31, 2012.  

Last Updated by Admin on 2011-03-25 07:24:31

Posted in General on Mar 25, 2011

Hayes Brian passes REG!  Going 4 for 4!  Way to go, Hayes!

Last Updated by Admin on 2011-03-25 07:23:44

Posted in General on Mar 22, 2011

Limited Liability Company (LLC) Annual Reports may now be filed under the Business Services tab of the Secretary of State's website at www.sos.ms.gov. This is the first year LLCs are required to file an annual report. The deadline to file LLC annual reports is April 15, 2011. LLCs which do not timely file their annual report may be administratively dissolved.

LLCs will need their company's business identification number to submit their annual report. The business identification number may be found on the Secretary of State's website as well.

Mississippi LLC's do not have to pay filing fee with their annual report. However, ?foreign? or out-of-state LLCs must submit a $250 filing fee with their annual report.

Should you have any questions, or if our Agency may be of further assistance, please do not hesitate to contact the Business Services Division of the Secretary of State's Office at (601) 359-1633.

Last Updated by Admin on 2011-03-22 08:47:02

Posted in General on Mar 22, 2011

Problem: For the next 3 weeks, we will discuss segregation of duties over payroll. A major red flag in any internal control system is a lack of segregation of duties. With many nonprofit organizations, it is a challenge to implement an effective internal control system because the organization has a limited number of employees. So, how do you segregate payroll duties with a staff that consists of only a bookkeeper?

Solution: Usually if an organization has a staff consisting of 2 individuals, there is a bookkeeper and an executive director. In this case, the bookkeeper usually performs all payroll duties. To improve the internal controls, the organization should have the executive director or a board member perform certain payroll duties. For example the duties could be divided as follows:

Bookkeeper

·         Write payroll checks

·         Record general ledger entries (software data entry)

Executive Director/Board Member

·         Sign employee contracts

·         Approve employee time sheets

·         Sign payroll checks (or authorize direct deposit)

·         Distribute payroll

By separating the duties in this manner, the organization ensure that no one individual has physical custody of payroll, can authorize payroll, or has the ability to record payroll transactions.  The smaller the staff, the harder it is to separate payroll duties.  We expect to see that someone other than the employee is approving the rate of pay.  

Last Updated by Admin on 2011-03-22 06:56:19

Posted in General on Mar 15, 2011

Problem: This week, we will discuss segregation of duties over accounts payable. A major red flag in any internal control system is a lack of segregation of duties. If an organization has this issue, it is guaranteed to be in a management letter as a material weakness or significant deficiency. An internal control system that lacks segregation of duties is a target for error, misstatements, or fraud.

Solution: As mentioned in the past few weeks, the key to Segregation of Duties is to separate custody, authorization and recording of assets. If an organization has lack of segregation of duties over accounts payable it is usually evident by one person having access to handling(custody of blank checks), recording and mailing of cash disbursements.  If one person has the responsibility for all of these actions, this condition could provide an opportunity for misappropriation of funds and concealment. To provide effective control it would be necessary to separate each of these duties. Use of a practical combination of the following could significantly improve internal controls:

·         A responsible official should review all checks and initial the related source documents before checks are mailed.

·         Dual signatures should be required on all checks over a specified amount

·         Someone other than the bookkeeper should sign the checks and be responsible for mailing

·         Access to blank checks should be limited to the personnel responsible for completing the checks

·         Proper cancellation of the vendor invoice using an indelible ink stamp to mark it ?PAID?

Last Updated by Admin on 2011-03-15 11:52:40

Posted in General on Mar 10, 2011

American Opportunity Tax Credit

The 2009 Recovery Act enhanced and renamed the Hope Education Credit as the American Opportunity Tax Credit (AOTC) for 2009 and 2010. 

• The 2010 Tax Relief Act extends the AOTC for another two years, through December 31, 2012.
• Also extended are the income limitations (the AOTC begins to phase out for single individuals with modified AGI of $80,000 and $160,000 for MFJ filers).
• The credit is completely phased out for single filers with modified AGI over $90,000 and $180,000 for married filing joint filers. The maximum annual credit remains $2,500.

Student Loan Deduction

The Economic Growth Tax Relief Reconciliation Act of 2001 eliminated a 60-month rule for the $2,500 above-the-line student loan interest deduction and expanded the modified AGI range for phase-out of this deduction.  This treatment was scheduled to expire after December 31, 2010.  The 2010 Tax Relief Act extends the enhancements for two more years, through December 31, 2012.

Last Updated by Matt Freeland on 2011-03-10 09:41:55

Posted in General on Mar 08, 2011

Problem: This week, we will discuss segregation of duties over cash receipts. A major red flag in any internal control system is a lack of segregation of duties. If an organization has this issue, it is guaranteed to be in a management letter as a material weakness or significant deficiency. An internal control system that lacks segregation of duties is a target for error, misstatements, or fraud.

Last Updated by Admin on 2011-03-08 08:44:46

Posted in General on Mar 03, 2011

Certain business tax incentives and energy credits have been extended by the 2010 Tax Relief Act.  These extenders include:

Ø  15 year recovery period for qualified leasehold improvements, restaurant building and improvements and retail improvements

Ø  Tax incentives for empowerment zones

Ø  New energy efficient home credit for qualified builders and manufactures (homes purchased before January 1, 2012)

Ø  Percentage depletion for oil and gas from marginal wells (two years)

Ø  Energy efficient appliance credit (one year)

Last Updated by Matt Freeland on 2011-03-03 08:21:05

Posted in General on Mar 01, 2011

Problem: A major red flag in any internal control system is a lack of segregation of duties. If an organization has this issue, it is guaranteed to be in a management letter as a material weakness or significant deficiency. An internal control system that lacks segregation of duties is a target for error, misstatements, or fraud.

Solution: The key to Segregation of Duties is to separate custody, authorization and recording of assets. If an organization has lack of segregation of duties over cash disbursements it is usually evident by one or two people approving disbursements (authorization), signing checks (custody), receiving and reviewing bank statements (recording), reviewing bank reconciliations. If one or two people have the responsibility for all of these actions, this condition could provide an opportunity for misappropriation of funds and concealment. To prevent this, a control can be created where someone other than the two employees (perhaps a board member) receives and reviews the unopened bank statements and cancelled checks. This control would take an hour or less each month, and it provides a supervisory control that can help prevent or detect improper or unauthorized disbursements. 

Last Updated by Matt Freeland on 2011-03-01 11:11:10

Posted in General on Feb 24, 2011

The Economic Growth Tax Relief Reconciliation Act of 2001 provided relief from the marriage penalty by increasing the basic standard deduction for a married couple filing a joint return to twice the amount for a single individual.  It also temporarily extended the size of the 15 percent income tax rate bracket for married couples filing joint to twice that of the single filers.  The 2010 Tax Relief Act extends this relief for two more years, through December 31, 2012.

The 2010 Tax Relief Act extends the $1,000 child tax credit for another two years, through December 31, 2012.  Also extended is the alternative minimum tax (AMT) benefit:  the credit is allowed against the AMT and the refundable portion is not reduced by the AMT.

Last Updated by Matt Freeland on 2011-02-24 13:39:20

Posted in General on Feb 22, 2011

Problem: Related party transactions occur between two or more parties with interlinking relationships. These relationships can involve board members, officers, agents, employees, or immediate family of these individuals. Organizations should strive to be transparent because they have a duty to be good constituents of public funds. One way to achieve this is to document and disclose any related party transactions.

Solution: When opportunities for related party transactions occur, the governing board should evaluate these transactions to ensure the transaction is based on a sound economic basis that is in the best interest of the organization. Organizations shall undertake related party transactions only in the following situations:

·         The audited financial statements of the organization fully disclose material related party transactions

·         Related parties are excluded from the discussion and approval of related-party transactions

·         There are competitive bids or comparable valuations

·         The organization's board approves the transaction as one that is in the best interest of the organization

Last Updated by Matt Freeland on 2011-02-22 06:52:40

Posted in General on Feb 17, 2011

Research Tax Credit - The Code Sec 41 research tax credit expired at the end of 2009.  The 2010 Tax Relief Act renews the credit for two years, through December 31, 2011 and is effective for amounts paid or incurred after December 31, 2009. 

Work Opportunity Tax Credit (WOTC) - The WOTC is intended to encourage employers to hire individuals from targeted groups.  The WOTC was scheduled to expire after August 31, 2011.  The 2010 Tax Relief Act extends the credit for individuals who begin employment after August 31, 2011 and before January 1, 2012, but with some modifications. 

Last Updated by Matt Freeland on 2011-02-17 05:47:44

Posted in General on Feb 15, 2011

Problem: As we mentioned last week, board minutes serve as the official record of the events that transpire during a meeting and they demonstrate that the board is fulfilling its duty of care. Many times, significant transactions that affect the organization transpire, but there is no written proof of the approval of these transactions.

Solution: During an audit or review, we look for evidence of approval of significant transactions. One of the strongest audit evidence of approval is when a board has discussed, approved transactions and documented this approval in the board minutes. This is a key procedure in a good internal control environment. Without board approval and evidence of the approval, the executive director or chief officer may be held accountable for actions that were taken without approval. Some examples of significant transactions boards should routinely include are:

·     Pay raises, fringe benefits and bonuses, including documentation of comparative analysis when adjusting the chief executive or chief financial officer

·      Approval to apply for a grant

·      Approval of the current year budget

·      Approval of expenditures that exceed budgeted items

·      Significant contributions/grants accepted

Last Updated by Matt Freeland on 2011-02-15 07:17:18

Posted in General on Feb 10, 2011

The IRS Code Sec 25C credit is designed to reward individuals who make energy efficiency improvements to their residences with a tax benefit. 

The 2009 Recovery Act credit amount is 30% of the sum of expenditures for qualified energy efficiency improvements and property, such as furnaces, water heaters, insulation materials, exterior windows and doors, and other items, for 2009 and 2010 property. 

The credit under current law is limited to a lifetime maximum credit of $1,500 for 2009 and 2010 property.  The 2010 Tax Relief Act extends the Code Sec 25C credit through 2011. 

The 2009 Recovery Act tripled what was a $500 credit.  The 2010 Tax Relief Act returns the credit to its pre-2009 Recovery Act parameters of $500.

Last Updated by Matt Freeland on 2011-02-10 06:45:24

Posted in General on Feb 10, 2011

&nbs

The IRS Code Sec 25C credit is designed to reward individuals who make energy efficiency improvements to their residences with a tax benefit. 

Ø  The 2009 Recovery Act credit amount is 30% of the sum of expenditures for qualified energy efficiency improvements and property, such as furnaces, water heaters, insulation materials, exterior windows and doors, and other items, for 2009 and 2010 property. 

Ø  The credit under current law is limited to a lifetime maximum credit of $1,500 for 2009 and 2010 property.  The 2010 Tax Relief Act extends the Code Sec 25C credit through 2011. 

Ø  The 2009 Recovery Act tripled what was a $500 credit.  The 2010 Tax Relief Act returns the credit to its pre-2009 Recovery Act parameters of $500.

Last Updated by Matt Freeland on 2011-02-10 06:42:41

Posted in General on Feb 10, 2011

The IRS Code Sec 25C credit is designed to reward individuals who make energy efficiency improvements to their residences with a tax benefit. 

Ø  The 2009 Recovery Act credit amount is 30% of the sum of expenditures for qualified energy efficiency improvements and property, such as furnaces, water heaters, insulation materials, exterior windows and doors, and other items, for 2009 and 2010 property. 

Ø  The credit under current law is limited to a lifetime maximum credit of $1,500 for 2009 and 2010 property.  The 2010 Tax Relief Act extends the Code Sec 25C credit through 2011. 

Ø  The 2009 Recovery Act tri pled what was a $500 credit.  The 2010 Tax Relief Act returns the credit to its pre-2009 Recovery Act parameters of $500.

Last Updated by Matt Freeland on 2011-02-10 06:40:47

Posted in General on Feb 08, 2011

Problem: Minutes of the Board of Directors meetings are an essential to the institutional memory of any organization. The minutes serve as documentation of the Organization's governance throughout the year. Many organizations fail to prepare minutes of the Board's meetings and/or committee meetings of the Board.  If prepared, some minutes are often incomplete.

Solution: The primary purpose of minutes is to create an official record of the events that transpire during a meeting and to demonstrate that the board is fulfilling its duty of care.  Minutes are legal documents that represent the actions of the board.  They should be documented and signed by the presiding officer or the board secretary. The minutes should include all significant matters discussed or approved by the board of directors. Examples of significant items are as follows:

·         Pay raises, fringe benefits and bonuses, including documentation of comparative analysis when adjusting the chief executive or chief financial officer

·         Bank account openings and closings

·         Approval of significant contracts ?i.e. lease agreements

·         Procedural or policy changes

·         Property and equipment additions and replacements

Last Updated by Matt Freeland on 2011-02-08 06:26:33

Posted in General on Feb 04, 2011

Due to the ice storm, our offices will be closed until noon today.

Last Updated by Matt Freeland on 2011-02-04 05:18:01

Posted in General on Feb 03, 2011

Problem: Often we find organizations with staff and a board of directors capable of handling the everyday accounting functions for internal reporting purposes, but the staff and board do not have sufficient expertise to prepare the required financial statements and related disclosures in accordance with generally accepted accounting principles (GAAP).

Solution: Management should have internal controls in place to detect, prevent, and correct any misstatements in their financial reporting process. External auditors cannot be relied upon to detect, prevent, or correct these misstatements. To fill this void, we suggest that organizations have a treasurer or bookkeeper with sufficient financial knowledge. If this individual is not familiar with generally accepted accounting principles, the organization might consider consulting with an accountant or firm on a monthly or quarterly basis to review the organization's financial records and ensure they are in accordance with GAAP. 

Last Updated by Matt Freeland on 2011-02-03 08:23:38

Posted in General on Feb 03, 2011

Last Updated by Matt Freeland on 2011-02-03 08:22:36

Posted in General on Feb 03, 2011

Congress has repeatedly increased the dollar and investment limits under Code Sec 179 to encourage business spending.  The 2010 Small Business Jobs Act increased the dollar and investment limits to $500,000 and $2m, respectively, for tax years beginning in 2010 and 2011.  The 2010 Tax Relief Act provides for a $125,000 dollar limit and a $500,000 investment limit for tax years beginning in 2012 (sunsetting after December 31, 2012).  The Tax Relief Act also extends the treatment of off-the shelf computer software as qualifying property if placed in service before 2013.

Last Updated by Matt Freeland on 2011-02-03 08:15:40

Posted in General on Jan 27, 2011

Do you itemize?  If so, you will be subject to the IRS tax filing delay this year.  With the late passing of the 2010 Tax Relief Act many of the 2010 forms have not been finalized by the IRS.  This delay is being caused by the deduction for state and local sales taxes, the change in AMT Patch amounts, the deduction for college tuition and the deduction for teacher expenses.  The income tax delay will apply to both paper filers and electronic filers who itemize on Form 1040 Schedule A.  The IRS announced that they expect to begin processing paper and e-filed returns subject to the delay by February 14^th.  

Last Updated by Matt Freeland on 2011-01-27 07:03:37

Posted in General on Jan 25, 2011

Prior to WorldCom and Enron, an auditor had the option of providing  a management letter upon completion of the audit.  The letter would contain items the auditor thought would help improve the client's internal controls or improve operating efficiencies.

Today, the management letter is not optional for an auditor who identifies certain weaknesses in a client's systems of internal control or financial reporting.  This letter is now referred to as a required communication to management and the Board of Directors. 

Under the new requirements, the auditor must communicate in writing any significant deficiencies and material weaknesses in internal control or financial reporting.  The new guidance provides that:

·      The auditor cannot be a part of the internal control system.  The client must establish and maintain internal controls to help deter fraud and catch errors in financial reports.

·      The client must have someone other than the auditor reviewing the work of a bookkeeper. 

·      The auditor can no longer make material audit adjustments without reporting this in writing as a weakness.

·      If a weakness comes to the attention of the auditor, the auditor must determine if it is serious enough to be considered one of the following:

Ø Material Weakness - An item that will likely result in a material or substantial misstatement of the financial reports or allow fraud to go undetected.

Ø Significant Deficiency- A situation in which there is could be more than a remote likelihood of a possible error in the financial reports being prevented or detected. (This is considered to have less potential for adverse impact).

·      If the auditor identifies a material weakness or a significant deficiency, the auditor must communicate it, in writing, to management and the Board of Directors. 

Last Updated by Matt Freeland on 2011-01-25 06:38:30

Posted in General on Jan 17, 2011

The 2010 Tax Relief Act boosts 50-percent bonus depreciation to 100-percent for qualified investments made after September 8, 2010 and before January 1, 2012.  The 2010 Tax Relief Act also makes 50-percent bonus depreciation available for qualified property place in service after December 31, 2011 and before January 1, 2013.  Certain long-lived property and transportation property is eligible for 100-percent expensing if placed in service by January 1, 2013.

Last Updated by Matt Freeland on 2011-01-17 11:47:52

Posted in General on Jan 11, 2011

The Pease limitation reduces the total amount of itemized deductions allowed to higher-income individuals. The 2010 Tax Relief Act extends full repeal of the Pease limitation through December 31, 2012. 

Also extended for one year is the deduction for mortgage insurance premiums, subject to some limitations. 

The personal exemption phase-out was repealed for 2010 and extended through December 31, 2012.

Last Updated by Matt Freeland on 2011-01-11 11:31:47

Posted in General on Jan 09, 2011

Due to the weather, our office will be closed until noon Monday, January 10.

Last Updated by Matt Freeland on 2011-01-09 20:28:13

Posted in General on Jan 04, 2011

For 2011, the employee's share of the old age, survivors, and disability insurance (OASDI) portion of Social Security taxes is reduced from 6.2% to 4.2% up to the taxable wage base of $106,800.  The employer's share of OASDI remains at 6.2%.  Please make sure you have updated your payroll tax software for 2011 to capture this change in the employee percentage.

Self-employed individuals will pay 10.4% (instead of 12.4%) for the OASDI portion of Social Security taxes on self-employment income up to the taxable wage base of $106,800.

Last Updated by Matt Freeland on 2011-01-04 09:26:49

Posted in General on Dec 30, 2010

Tammy joined the firm in September 2010 and brings over 10 years of public accounting experience.  She provides tax compliance and planning services for individuals, corporations, partnerships, and not-for-profit entities.  Tammy also provides audit and attestation services, financial statement compilation services, and QuickBooks consulting.

A graduate from Kansas State University, Tammy holds a Bachelor of Science Degree in Business Administration with a major in accounting.  She currently holds a CPA license in the state of Kansas and is applying for a reciprocal license in Mississippi.  She is a member of the American Institute of Certified Public Accountants. 

Tammy is a native of Lawrence, KS and moved to Florence, MS with her family in 2008.  She operated her own tax and accounting business from her home in Florence prior to joining MC&L.  Tammy and her husband Chad have two children, Colby and Baylee.   She serves as a PTO board member at Florence Elementary and is actively involved with Cub Scout Pack 85 in Florence.  In her free time she enjoys spending time with her family, scrapbooking, and visiting historical sites.  She is also an avid sports fan and enjoys watching major league baseball, college and NFL football, and college basketball.

Last Updated by Matt Freeland on 2010-12-30 09:54:36

Posted in General on Dec 29, 2010

Congratulations to Hayes Brian on passing the audit section of the CPA exam. 3 down, 1 to go!

Last Updated by Matt Freeland on 2010-12-29 14:19:30

Posted in General on Dec 08, 2010

IR-2010-119, Dec. 3, 2010

WASHINGTON ? The Internal Revenue Service today issued the 2011 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, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

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

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.

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 any vehicle used for hire or for more than four vehicles used simultaneously.

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

Revenue Procedure 2010-51 contains additional details regarding the standard mileage rates.

Last Updated by Matt Freeland on 2010-12-08 07:34:59

Posted in General on Dec 07, 2010

The 990 filing thresholds for the year 2010 and later (filed in 2011 and later) will change as follows for all organizations required to file a 990-series return:

• Organizations with gross receipts normally < $50,000 must file Form 990-N (but may choose to file a complete Form 990 or Form 990-EZ).  In prior years only organizations with gross receipts normally < $25,000 could file the Form 990-N ("e-postcard").
• Organizations with gross receipts > $50,000 and  < $200,000 and total assets < $500,000 must file Form 990-EZ or a complete Form 990.
• Organizations with gross receipts > $200,000 or total assets > $500,000 must file Form 990.
• Private foundations must file Form 990-PF. 

Last Updated by Matt Freeland on 2010-12-07 13:44:50

Posted in General on Dec 02, 2010

Congratu lations to Matthew and Taylor on the birth of Cecilia Anne Turnage born today at 12:33. 21.75 inches and 8.5 pounds!

Last Updated by Matt Freeland on 2010-12-02 14:41:35

Posted in General on Dec 02, 2010

Derek W. Knepple, CPA has joined Matthews Cutrer & Lindsay, PA, Certified Public Accountants in Ridgeland, MS as a senior accountant.  Derek completed his Bachelor of Business Administration with an emphasis in banking finance and managerial finance from the University of Mississippi.  He also studied at Lipscomb University in Nashville, TN.  Derek has worked in public accounting and commercial lending.  Derek will focus his practice on auditing and forensic accounting.

Last Updated by Matt Freeland on 2010-12-02 11:41:08

Posted in General on Nov 17, 2010

We concluded our firm retreat by dividing into teams and cooking dinner at Viking Cooking School.

Last Updated by Matt Freeland on 2010-11-17 19:43:42

Posted in General on Nov 17, 2010

Our managers did a great job of facilitating our annual firm retreat!

Last Updated by Matt Freeland on 2010-11-17 19:42:02

Posted in General on Nov 04, 2010

Join us in welcoming Derek Knepple, CPA to our team!

Last Updated by Matt Freeland on 2010-11-04 09:51:32

Posted in General on Nov 04, 2010

If an organization has gross Unrelated Business Income of $1,000 or more, it is required to file Form 990T with the IRS.  (For determining filing requirements, gross income is the income before any expenses).  This form is filed with the Organization's annual Form 990.  Form 990T is due to the IRS on or before the 15^th day of the fifth month after the close of an Organization's year. 

If you are a 501(c)(3), recent changes in the law have resulted in Form 990T being open for public inspection.  Your organization is required to make Form 990T, including attachments and schedules,  available to anyone who requests to see it.  It will be posted on the internet, once it is filed with the IRS. 

Last Updated by Matt Freeland on 2010-11-04 09:39:40

Posted in General on Nov 04, 2010

Starting in tax year 2011, the Affordable Care Act requires employers to report the value of the health insurance coverage they provide employees on each employee's annual Form W-2.  This reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers.  The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludible from an employee's income and it is not taxable.

Last Updated by Matt Freeland on 2010-11-04 09:33:52

Posted in General on Oct 25, 2010

Unrelated Business Income (UBI) is defined as the gross income an organization derives from any "unrelated trade or business" it regularly carries on, less allowable deductions directly connected with carrying on the trade or business.

A tax-exempt organization generally pays no tax on income derived from activities that fall within the scope of an exempt organization's exempt mission.  However, when an organization gets into activities outside it's exempt purpose, these activities may be subject to income tax at regular corporate income tax rates.  UBI rules result in the net income, after reasonable expenses, being taxed similar to a for-profit corporation.  Currently, this income is taxed at a rate of 34% federal tax and 5% state tax(Mississippi).

Last Updated by Matt Freeland on 2010-10-25 11:44:13

Posted in General on Oct 25, 2010

Please note that the IRS does not send unsolicited e-mails to taxpayers.  Further, the IRS does not discuss tax account information with taxpayers via e-mail or use e-mail to solicit sensitive financial and personal information from taxpayers.  Most scams impersonating the IRS are identity theft schemes.  Others try to lure taxpayers into revealing financial information by convincing them that their tax refund has been inadvertently sent to the wrong account number.  The scammer poses as a legitimate institution, such as the IRS, to trick consumers into revealing personal information to steal their identify or financial information that is then used to gain access to and steal from their bank, credit card or other financial accounts.  

Last Updated by Michelle Stonestreet on 2010-10-25 08:06:21

Posted in General on Oct 24, 2010

I had client of mine contact me earlier this month regarding an email they received regarding their payroll tax deposits through the EFTPS system.  I also spoke with a colleague at a seminar recently who informed me that by clicking on the link, you open yourself up for viruses that redistribute your email to infect your contacts.

According to the IRS, "The IRS does not send out unsolicited e-mails asking for personal information.  Don't be taken in by these criminals."  Additionally, the IRS never asks people for the PIN numbers, passwords or similar secret access information for their credit card, bank or other financial accounts.

For more on this article, please copy and paste the following link: 

http://www.irs.gov/privacy/article/0,,id=226755,00.html

Last Updated by Matt Freeland on 2010-10-24 20:20:17

Posted in General on Oct 19, 2010

With funding cuts and tougher economic times, many exempt organizations are seeking alternative revenue sources that are not within their mission of service.  Revenue from activities outside your charitable mission generally is taxable as UNRELATED BUSINESS INCOME.  Often, you will hear this referred to as UBI or the tax on it as UBIT. 

The concept of Unrelated Business Income dates back to 1950 when Congress added this provision to the tax code.  UBI tax provisions were added to eliminate the "unfair tax advantage" that exists between for-profit businesses and tax-exempt organizations conducting similar activities.

For the next few weeks, Nonprofit Solutions will focus on the impact of Unrelated Business Income on tax exempt organizations.  Should you have questions, please contact us. 

Last Updated by Matt Freeland on 2010-10-19 08:30:49

Posted in General on Oct 19, 2010

MC&L Tax Advisor - Business Stimulus Tip #17 - Small Business Jobs Act (Continued)

As we mentioned in our prior tax tip the Small Business Jobs Act signed into law on September 27, 2010 several enhanced business tax incentives.  We presented bonus depreciation and Sec 179 expensing in our prior tip, below are other incentives included in the act.

1.   S Corp Built-In Gain Period - The 2009 Recovery Act temporarily shortened the holding period from 10 years to 7 years for dispositions in tax years beginning 2009 and 2010.  The new law further shortens the holding period to 5 years for dispositions in tax years beginning in 2011.

2.   Extended Carryback on General Business Credit - The new law extends the carryback period to five years.  The extended carryback provision is effective for credits determined in the taxpayer's first tax year beginning after December 31, 2009.

3.   Qualified Small Business Stock - The new law raises the exclusion for qualified small business stock sold by an individual from 75% to 100% for gain on stock acquired after September 27, 2010 and before January 1, 2011.  

Last Updated by Matt Freeland on 2010-10-19 07:53:01

Posted in General on Oct 15, 2010

http://ammaxdigital.com/publication/?m=3522&l=1&p=7

Last Updated by Matt Freeland on 2010-10-15 09:17:18

Posted in General on Oct 04, 2010

MC&L Tax Advisor - Business Stimulus Tip #16 - Small Business Jobs Act

On September 27, 2010 the president signed into law a package of enhanced business tax incentives, as part of a larger Small Business Jobs Acts of 2010.  Some of the incentives include the following:

1. Bonus Depreciation - The new law extends the 50% first-year bonus depreciation through December 31, 2010; retroactive to January 1, 2010.  The new law also extends the additional year of bonus depreciation allowed for property with a recovery period of 10 years or longer, and for transportation property.
2. Sec 179 Expensing - The new law increases the maximum deduction to $500,000 and the investment limit to $2 million for tax years beginning in 2010 and 2011.
3. Start-Up Expense Deduction - The new law raises the deduction limit on qualified trade or business start-up expenses from $5,000 to $10,000 and increases the phaseout threshold from $50,000 to $60,000 for one year, 2010.
4. Self-Employment Income - Under new law, a SE individual can deduct their health insurance costs in calculating net earnings from self-employment for purposes of self-employment taxes.  The provision applies to the SE taxpayer's first tax year beginning after December 31, 2009.

Last Updated by Michelle Stonestreet on 2010-10-04 12:06:23

Posted in General on Oct 04, 2010

Last Updated by Matt Freeland on 2010-10-04 11:34:08

Posted in General on Oct 02, 2010

http://www.clarionledger.com/article/20101002/NEWS/10020342/Mental+health+cuts

Last Updated by Matt Freeland on 2010-10-02 10:05:23

Posted in General on Sep 29, 2010

Congratulations to Hayes Brian for passing the Financial section of the CPA exam! Way to go Hayes!

Last Updated by Matt Freeland on 2010-10-02 10:03:43

Posted in General on Sep 29, 2010

Congratulations to Jonathan Whinery for passing the Audit section of the CPA exam! Way to go Jonathan!

Last Updated by Admin on 2010-09-29 07:31:15

Posted in General on Sep 27, 2010

Last Updated by Admin on 2010-09-27 18:58:36

Posted in General on Sep 27, 2010

If Congress does nothing on tax policy before the end of the year massive tax changes will take place.  Below are just a few of the provisions that are set to expire December 31, 2010.  

1. Reduced capital gain rates - Long-term capital gains will go from 15% to 20% in 2011. 
2. Dividends taxed at capital gain rates - Dividends previously taxed at capital gain rates will be taxed at ordinary income tax rates in 2011.
3. Reduction in individual income tax rates - Income tax brackets will rise from 10, 15, 25, 28, 33 and 33 percent brackets to 15, 28, 31, 36 and 39.6 percent brackets in 2011.
4. The child credit increase to $1000 will return to $500.
5. Repeal of the personal exemptions phase-out for high-income taxpayers will expire at the end of 2010.
6. Repeal of overall limitation on itemized deductions will expire at the end of 2010. 

Last Updated by Admin on 2010-09-27 10:00:34

Posted in General on Sep 27, 2010

One of the basic purposes for wanting to inspect the records of an organization is to ensure that the organization is acting in a manner consistent with its non-profit and tax-exempt purposes. Other general purposes found to be proper include concerns about mis-management and specific improper transactions. The minutes of a nonprofit's board meeting can be accessed during discovery in litigation and governmental investigations. It is important to bear in mind as well that most every state non-profit statute has a provision allowing for access of members to certain records of the organization. Because of this, it is important for the minutes to reflect the board members' due diligence with decision making that affects the organization.

Last Updated by Matt Freeland on 2010-09-27 06:48:35

Posted in General on Sep 20, 2010

Occasionally a meeting calls for confidentiality, such as when sensitive personnel matters are being handled. In that case, the board may vote to go into executive session, restricting participation to members and invited guests only. The minutes of an executive session are read and approved only by those members attending the executive session. If they wish, the participants may opt to make the minutes available to all members, but the discussion must remain confidential. Executive session minutes are kept separate from regular minutes.

Last Updated by Matt Freeland on 2010-09-20 11:49:45

Posted in General on Sep 20, 2010

Last Updated by Matt Freeland on 2010-09-20 09:58:43

Posted in General on Sep 20, 2010

Last Updated by Matt Freeland on 2010-09-20 09:44:40

Posted in General on Sep 20, 2010

MC&L is pleased to announce that Tammy Wilkerson, CPA has joined our team as a senior tax accountant.    

Last Updated by Matt Freeland on 2010-09-20 09:10:44

Posted in General on Sep 20, 2010

Last Updated by Matt Freeland on 2010-09-20 08:57:37