The CPA Desk

A Thought Leader Production by PKFTexas

Spring 2015 Leading Edge Magazine Now Available

The newest ideas, insights and perspectives you’ve come to rely on for your business are ready to be accessed any time, anywhere at
If you have topics you would like us to cover, please connect with us. As always, we enjoy receiving comments and feedback from our clients and the friends for our firm.

Spring Issue Highlights:

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Texas Business to Benefit From Panama Canal Expansion

The Panama Canal is undergoing a $5.25 billion expansion, and as the leading goods export state and metropolitan region in the US, Texas and Houston are well positioned to take advantage of the expansion. More…

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What You Need to Know About Compilations, Reviews and Audits to Obtain a Loan or Line of Credit

Many new or existing business owners seeking a loan or line of credit face may be required by the issuing financial institution to have a compilation, a financial review or an audit. We look at the differences between the three. More…
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Empowering Middle Management to Achieve Success

PKF Texas’ newest team member Andy Ray shares how he works with middle managers in order to allow C-level executives to focus is on the next big thing, instead of day-to-day operations and continuous improvement. More…

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Cubester® Chat: The Challenges Companies Face When They Recruit Young Professionals

“Mentor” is a popular buzzword in any business environment, and as an action and a title, it conveys a sense of trust and knowledge. Our Cubesters® take a look at the role of a mentor early in a career. More…

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Team First: The ingredients for building and maintaining winning teams in business   

No matter what industry you’re in or how your organization is set up, effective team-building is among the most important skills that any manager or executive can possess. More…

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Tips for Doing Business in Portugal

Portugal is a stable, developed country, but with recent economic upheaval. If you’re thinking about conducting business or running a company in Portugal, here are some things to remember. More…

Creating a Radical Impact on Your Business

Russ: This is the PKF Texas Entrepreneur’s Playbook. I’m Russ Capper, this week’s guest host, and I’m here with Andy Ray, a Principal at PKF Texas and the author of Radical Impact: A Manager’s Playbook to Achieve Meaningful Results. Andy, welcome to the Playbook.

Andy: Thank you Russ.

Russ: You bet. Tell us about Radical Impact.

Andy: Radical Impact is written for middle managers. It’s been an under-served market in the business literature world; a lot of books written to CEOs, a lot of books written for technical folks. Middle managers are where everything happens in a business and so I wanted to write a book that would teach them how to create a result that mattered in their business and the first part of the book really kind of blows up some status quo conventional myths that may have them kind of trapped in a cycle of under performance. And then it walks them through how to actually create that result and that has real career game-changing impact for these guys and gals out there that are managing companies.

Russ: Sounds right on but let’s say somebody’s watching and they want to know more about it.

Andy: Love to invite them to our June 2nd Business Over Coffee event, 7:30 here at PKF Texas. At that event we’re going to be talking about the book, we’re going to be talking to some folks that have used some of the tools and rigor that are in the book. We’ll have a book signing and then we’ll be talking about some new service offerings around the book that we’ll be offering in the fall, specifically our Radical Impact Academy for managers where they can actually come get some guidance and practice on the tools that we talk about in the book.

Russ: Well Andy it sounds real neat and I’m going to be here for sure.

Andy: Thank you Russ.

Russ: You bet. For more on Middle Manager development visit This has been a Thought Leader production brought to you by PKF Texas Entrepreneur’s Playbook.

Got ISOs? You need to understand their tax treatment

Incentive stock options allow you to buy company stock in the future at a fixed price equal to or greater than the stock’s fair market value on the grant date. If the stock appreciates, you can buy shares at a price below what they’re then trading for.

ISOs must comply with many rules but receive tax-favored treatment:

  • You owe no tax when ISOs are granted.
  • You owe no regular income tax when you exercise ISOs.
  • If you sell the stock after holding the shares at least one year from the exercise date and two years from the grant date, you pay tax on the sale at your long-term capital gains rate. You also may owe the 3.8% net investment income tax.
  • If you sell the stock before long-term capital gains treatment applies, a “disqualifying disposition” occurs and any gain is taxed as compensation at ordinary-income rates.

There also might be alternative minimum tax consequences in certain situations. If you’ve received ISOs, contact us. We can help you determine when to exercise them and whether to immediately sell shares received from an exercise or to hold them.

Impact of Infrastructure Improvements at the Port of Houston

Karen: This is PKF Texas Entrepreneur’s Playbook; I’m Karen Love, the host and Founder. And so today I’m here with Frances Castañeda-Dyess and she’s the President of the Houston East End Chamber of Commerce. Welcome back to the playbook, Frances.

Frances: Thank you Karen for having me back.

Karen: Well you know manufacturing is still on the upswing and we really feel like it could be caused by the low cost of the natural gas and how the infrastructure is going to be really affected by that. So can you give us a little more on the infrastructure issues?

Frances: Absolutely. Well that’s on top of everyone’s mind, including the Port of Houston, who are investing lots of money in order to help with dredging, with railroad lines and also with road infrastructure.

Karen: Interesting.

Frances: In addition to that, we’ve got companies like Cedar Port Industrial Park who is investing about $22 million in their infrastructure to keep up with this big demand. They also have about 11,000 acres that are going to be developed near the Houston Ship Channel. So everyone knows how important infrastructure is and if we don’t get our roads and our rail and everything else in line then we’re going to be missing the boat. So it’s wonderful that these collaborations are happening.

Karen: Yes, from your mouth to God’s ears, that’s fantastic. Well thank you for sharing that with us and we’d like to talk more about the port and things that are affected by all of that as well.

Frances: I’d love to.

Karen: Fantastic, I’ll look forward to that. So for other port related topics visit And this has been another Thought Leader Production brought to you by the PKF Texas Entrepreneur’s Playbook.

Now’s the time to begin your 2015 tax planning

Whether you filed your 2014 income tax return by the April 15 deadline or filed for an extension, you may think that it’s a good time to take a break from thinking about taxes. But doing so could be costly. Now is actually the time you should begin your 2015 tax planning — if you haven’t already.

A tremendous number of variables affect your overall tax liability for the year, and starting to look at these variables early in the year can give you more opportunities to reduce your 2015 tax bill. For example, the timing of income and deductible expenses can affect both the rate you pay and when you pay. By regularly reviewing your year-to-date income, expenses and potential tax, you may be able to time income and expenses in a way that reduces, or at least defers, your tax liability.

In other words, tax planning shouldn’t be just a year end activity. To get started on your 2015 tax planning, contact us. We can discuss what strategies you should be implementing now and throughout the year to minimize your tax liability.

Manufacturing and Distribution Expansion in the East End of Houston

Karen: This is PKF Texas Entrepreneur’s Playbook, I’m Karen Love, the host and Founder. Today I’m here with Frances Castñeda Dyess and she’s the President of the Houston East End Chamber of Commerce. Welcome to the Playbook Frances.

Frances: Thank you Karen for having me.

Karen: Well, you know, I’m out in the marketplace on a daily basis and I’m seeing so much activity, I am wondering how the manufacturing and distribution is being effected and I think you will have some insight for me.

Frances: Yes, and it has been changing, especially with Houston being one of the fastest growing cities in America. There’s about 1,000 people that are moving into Houston a day and because of that growth manufacturing and retailers are building new manufacturing facilities to service them and to give them new products. For example, Silver Eagle Distributing had opened a new plant in Pasadena; this new manufacturing facility has created new job growth and it’s state of the art so they’re more efficient with what they’re doing.

Another example is Goya Foods; last year they opened a new manufacturing/distributing facility, it’s 350,000 square feet and they’ll be able to make 1,000 cans a minute, so it’ll be their manufacturing and distribution center. They have also created new job growth and become more efficient with state of the art programming.

Karen: Fantastic. Well that is extremely interesting and I just find it to be asking more questions about infrastructure so I’m wondering if you’ll come back and help us understand how all the growth is affecting infrastructure in the city?

Frances: I would love to Karen, thank you.

Karen: Wonderful, I look forward to that. So for other port related topics, visit This has been another Thought Leader production brought to you by PKF Texas Entrepreneur’s Playbook.

Facing an unexpected bill for the additional 0.9% Medicare tax?

The additional 0.9% Medicare tax applies to FICA wages and self-employment income exceeding $200,000 per year ($250,000 for married filing jointly and $125,000 for married filing separately). Unfortunately, the withholding rules have been tripping up some taxpayers, causing them to face an unexpected tax bill — plus interest and penalties — when they file their returns.

Employers must withhold the additional tax beginning in the pay period when wages exceed $200,000 for the calendar year — without regard to an employee’s filing status or income from other sources. So if your wages don’t exceed $200,000, your employer won’t withhold the tax — even if you’re liable for it. This might occur because you and your spouse’s combined wages exceed the $250,000 threshold for joint filers or because you have wages from a second job or have self-employment income.

If you expect to be in the same situation in 2015, consider filing a W-4 form to request additional income tax withholding, which can be used to cover the shortfall and avoid interest and penalties. Or you can make estimated tax payments. If you have questions about the additional 0.9% Medicare tax, please contact us.

Energy Companies Evaluate Their Business

Russ: This is the PKF Texas Entrepreneur’s Playbook. I am Russ Capper, this week’s guest host and I’m here once again with Scott Soles, a Director in PKF Texas’ Energy Practice. Scott, welcome back to the Playbook.

Scott: Thank you very much for having me again.

Russ: You bet. So last time we were talking about these energy companies that might be under pressure these days and they call and you go out and step one, I think you said it’s a holistic approach, which sounded real interesting, but give us detail about that holistic approach.

Scott: It starts with a conversation. We have to get in front of the client, sit down with them, understand what they’re thinking today about their business, what their concerns might be and just take that conversation deeper and deeper until we get to where the rubber meets the road. Eventually at some point we’re talking about evaluating their business; the technology, the people, the processes, other infrastructure, investments, assets on their books, costs. So it’s very in depth and essentially what that ends up coming back to in this conversation is we just think it’s time for the clients and for us to revisit the state of oil and gas today.

Russ: Oh, interesting, state of oil and gas today. Now you’ve written a piece called State of Oil and Gas today, right?

Scott: I have.

Russ: How could one find that?

Scott: Find State of Oil and Gas, click on it and you’ve got it.

Russ: Great. Well Scott, thank you so much for visiting with us again on the Playbook.

Scott: Thank you for having me once again.

Russ: You bet, you bet. This has been another Thought Leader production brought to you by PKF Texas Entrepreneur’s Playbook. Tune in next week for another chapter.

A net operating loss on your 2014 tax return isn’t all bad news

When a company’s deductible expenses exceed its income, generally a net operating loss (NOL) occurs (though of course the specific rules are more complex). If when filing your 2014 income tax return you’ve found that your business had an NOL, there is an upside: tax benefits.

When a business incurs a qualifying NOL, the loss can be carried back up to two years, and then any remaining amount can be carried forward up to 20 years. The carry-back can generate an immediate tax refund, boosting cash flow.

However, there is an alternative: The business can elect instead to carry the entire loss forward. If cash flow is fairly strong, carrying the loss forward may be more beneficial, such as if the business’s income increases substantially, pushing it into a higher tax bracket — or if tax rates increase. In both scenarios, the carry-forward can save more taxes than the carry-back because deductions are more powerful when higher tax rates apply.
In the case of flow-through entities, owners might be able to reap individual tax benefits from the NOL.

Please contact us if you’d like more information on the NOL rules and how you can maximize the tax benefit of an NOL.