By investing in qualified small business (QSB) stock, you can diversify your portfolio and enjoy two valuable tax benefits:
1. Tax-free gain rollovers. If within 60 days of selling QSB stock you buy other QSB stock with the proceeds, you can defer the tax on your gain until you dispose of the new stock. The rolled-over gain reduces your basis in the new stock. For determining long-term capital gains treatment, the new stock’s holding period includes the holding period of the stock you sold.
2. Exclusion of gain. Generally, taxpayers selling QSB stock are allowed to exclude up to 50% of their gain if they’ve held the stock for more than five years. But, depending on the acquisition date, the exclusion may be greater: The exclusion is 75% for stock acquired after Feb. 17, 2009, and before Sept. 28, 2010, and 100% for stock acquired on or after Sept. 28, 2010. The acquisition deadline for the 100% gain exclusion had been Dec. 31, 2014, but Congress has made this exclusion permanent.
The taxable portion of any QSB gain will be subject to the lesser of your ordinary-income rate or 28%, rather than the normal long-term gains rate. Thus, if the 28% rate and the 50% exclusion apply, the effective rate on the QSB gain will be 14% (28% × 50%).
Keep in mind that these tax benefits are subject to additional requirements and limits. For example, to be a QSB, a business must be engaged in an active trade or business and must not have assets that exceed $50 million.
Consult us for more details before buying or selling QSB stock. And be sure to consider the non-tax factors as well, such as your risk tolerance, time horizon and overall investment goals.
Karen: This is the PKF Texas Entrepreneur’s Playbook; I’m Karen Love, Host and Co-founder. I’m here with Bethany Andell, President of Savage Brands. Welcome to the Playbook again.
Bethany: Thank you Karen.
Karen: Well we had you here the first time to talk about the book Get Your Head Out of Your Bottom Line; I’m going to pick up the book now and put it so that our audience can see it. And we had talked about the Savage Thinking and the purpose, but what I was wondering if we could talk about is why now? Why the timing of this book?
Bethany: Sure. It’s actually – this type of methodology, this type of thinking – it’s perfect timing. Companies really have an obsession right now over the short term and you can blame it on Wall Street or whatever is going on, but we’re thinking more about long term success. And why this is happening is if you’re so short term focused and short term decision making, you’re not thinking about the inter-dependence of all of your stakeholders and what it takes to get them engaged and loyal with your company. And so some of the big problems we’re seeing is internally with culture where you’ve got very low employee engagement, they say about 30% of employees are engaged which means 70% are coming to work every day not that happy.
Karen: Which means turnover.
Bethany: Absolutely. There’s a distrust in leadership, I think it’s 18% of the American workforce trusts their leadership.
Karen: That’s scary.
Bethany: And then a huge opportunity is what we call the perfect storm where you have Baby Boomers that are looking behind and saying what’s the legacy I’m leaving; what’s the positive wake that’s going to be there behind me? Along with the Millennial workforce that’s coming in where money is not the priority, right? They want to make sure that their values are aligned with the company, that they’re making a contribution to the world. And if you can be a company that brings people along towards one common purpose, something they’re really contributing to the world, then you’re going to find yourself in a better place. We like to say that purpose drives performance and performance drives profit.
Karen: Well I love that and that’s Savage Thinking.
Bethany: That’s Savage Thinking.
Karen: And you can help companies do that?
Bethany: Yes ma’am.
Karen: Fantastic, well thank you for sharing that with us.
Bethany: Thank you Karen.
Karen: This has been another Thought Leader production brought to you by the PKF Texas Entrepreneur’s Playbook.
The Internal Revenue Service (IRS) announced on Tuesday, April 26 that victims of the deadly floods that took place on April 18, 2016 will have until September 1st to file their tax returns and make tax payments. Individuals who have homes or businesses in Fayette, Grimes, Harris and Parker Counties may qualify for the extension relief under Treas. Reg Sec. 301.7508A-1(d)2.
This extension includes 2015 income tax returns that were due April 18, the April 18 and June 15 deadlines for quarterly tax payments, along with a variety of business tax deadlines. The IRS will also waive late-deposit penalties for federal payroll and excise tax deposits if they are made by May 2, 2016.
The IRS will automatically apply the tax relief to those living in the above counties, but if you reside or have a business in a county outside of these and you were still affected by the floods, please call the IRS disaster hotline at 866-562-5227.
For more information, please visit the IRS webpage where they detail the extension and relief guidelines here.
As Houstonians, we love to see our city thrive and take pride in the unique mix of eclectic and traditional. We know the miscellany we find around every corner is a part of what makes our city so great. While the lack of zoning has been a topic of criticism in the past, it turns out it may be part of what makes the Bayou City so inclusive and accessible.
An article that ran in the Wall Street Journal claims Houston, along with Detroit, Singapore, Medellín and Vancouver, is a city leading the way in urban innovation. The article states for the first time in history, more humans are living in urban than rural areas. It cites a United Nations projection of nearly two-thirds of the world’s almost 10 billion people will be living in urban spaces by 2050. So where does Houston fit into the innovative idea?
Though our beloved city is growing at an extremely fast rate, our lack of zoning has allowed real estate developers to build new developments in virtually all areas of the city without dealing with rezoning. This, unlike cities such as New York City or San Francisco, has allowed prices to stay relatively affordable. Over half of the homes in Houston, with over 200,000 new units in the past six years, are considered affordable to median income families by the National Home Builders Association. To put that into perspective, only 15% of Los Angeles homes are considered affordable.
The balance between lack of zoning and high demand opens up opportunities for developers and designers, and home buyers for that matter, which they may not find elsewhere.
We at PKF Texas love our opportunity-filled city and love watching it flourish. A huge proponent of our company culture is giving back, which we do by partnering and being involved with organizations who make Houston so innovative.
The original article was written by Michael Totty, News Editor for The Journal Report, and can be found here.
Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, this week’s guest host, and I’m here with Carl Lewis, Olympic Medalist, University of Houston Alum and entrepreneur. Welcome to The Playbook Carl.
Carl: Great, thank you for having me.
Jen: So you have had so much success, you have gold medal, now you’re in business, what do you attribute that success to?
Carl: Well it really goes back to the core of how I was raised. My parents are both teachers; they were involved in the civil rights movement in the 60s and 50s and so they raised us to be independent, to be strong, but also merge all of the facets of your life together to try to have the most success.
Jen: Perfect. And how has that as Olympic Gold Medalist, now an entrepreneur with – what’s your company – Winning Sports?
Carl: Winning Dimensions, that’s one of my companies.
Jen: Winning Dimension Sports, that’s perfect. Now how have your skills as an athlete and former competitor, how has that translated to business?
Carl: The funny thing about it, when I started at University of Houston back in 1979 I knew that I wanted to be Carl Lewis the rest of my life, so therefore everything that I did in school was preparing myself for retirement. So I merged my athletic career, leveraged the success I could have and also the notoriety I could get to do the things that I wanted to do in business. So really it’s all the same and it’s hard work, discipline, structure, planning, presentation – these are all basic principles that you get in sports that you can apply to your business life.
Jen: That’s perfect. Well thank you so much for being with us on The Playbook, I really appreciate it.
Carl: Great, thank you.
Jen: This has been another Thought Leader Production brought to you by PKF Texas The Entrepreneurs Playbook, tune in next week for another chapter.
Now that the April 18 income tax filing deadline has passed, it may be tempting to set aside any thought of taxes until year end is approaching. But don’t succumb. For maximum tax savings, now is the time to start tax planning for 2016.
A tremendous number of variables affect your overall tax liability for the year. Starting to look at these variables early in the year can give you more opportunities to reduce your 2016 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.
In recent years, planning early has been a challenge because there were a lot of expired tax breaks where it was uncertain whether they’d be extended for the year. But the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) extended a wide variety of tax breaks through 2016, or, in some cases, later. It also made many breaks permanent.
For example, the PATH Act made permanent the deduction for state and local sales taxes in lieu of state and local income taxes and tax-free IRA distributions to charities for account holders age 70½ or older. So you don’t have to wait and see whether these breaks will be available for the year like you did in 2014 and 2015.
To get started on your 2016 tax planning, contact us. We can discuss what strategies you should be implementing now and throughout the year to minimize your tax liability.
The Rice Business Plan Competition, where start-ups from universities around the world compete for over $1 million in prizes, took place this past weekend. As the official accounting firm for the competition, PKF Texas handles the voting component during the weekend. Attendees learned about the innovative ideas that students around the world are bringing to life. The winners of the competition, Texas A&M’s TriFusion Devices, uses 3-D printing for healthcare and sports equipment. They were awarded over $300,000 in prizes along with the chance to ring the closing bell at the Nasdaq MarketSite in New York City.
The PKF Texas team members involved with the Rice Business Plan Competiton
Bob Charlet, Publisher, Houston Business Journal and Kenneth Guidry, President, PKF Texas
We are pleased to announce that this week marks our first week in our new office! With our clients and employees top of mind, we designed our new space to have a contemporary feel with an open concept layout to promote creative thinking and collaboration.
Our contact information has not changed, you can still reach us through our same emails and telephone numbers. We are in the same building on 5847 San Felipe, but now reside in Suite 2600.
Karen: This is PKF Texas Entrepreneur’s Playbook and I’m Karen Love; I’m the Host and Founder. I’m here with Bethany Andell, President of Savage Brands; welcome to the Playbook Bethany.
Bethany: Thanks for having me Karen.
Karen: I tell you, I am excited because I understand you have written a new book about ideology and methodology called Savage Thinking; now that’s not the name of the book is it?
Bethany: No, the name of the book is Get Your Head Out of Your Bottom Line and Build Your Brand on Purpose.
Karen: I love that. You’re talking to an accounting firm, we love that.
Bethany: We have to get attention. We’re a marketing firm right, so get some attention.
Karen: Exactly, exactly. Fantastic and so what I’m wondering is why is the time now a great time to do a book like that? It’s a fabulous idea.
Bethany: Thank you. In business circles we’re hearing a lot these days around companies leading with purpose, so when they say purpose what they mean is what’s the real value you bring in to the world? It’s no longer about just profit, growth, shareholder value but where do you uniquely sit in the world. And what happened and when we were studying it is it’s a very compelling thing to do, but the poster children for leading with purpose are companies like Southwest Airlines, Apple, Container Store, Whole Foods – and all great companies, but they all started with purpose. And so we’re sitting here saying how do we take an already great company that’s maybe traditionally used regular business profit first and transform it into a company that’s led with purpose.
Karen: With some new ideas, so it’s a culture change.
Bethany: It is and so we really had to figure out the methodology for not just how you connect with a purpose, but then how do you guide leaders into transforming the company culturally, like you said, be led with purpose.
Karen: Well I’m going to hold the book up now, Get Your Head Out of Your Bottom Line and Build Your Brand on Purpose. So I want to thank you for sharing this with us, I’ll let you hold this. This has been another Thought Leader Production brought to you by PKF Texas Entrepreneur’s Playbook.
Russ: This is PKF Texas, Entrepreneurs Playbook. I’m Russ Capper, this week’s guest host. And we’re continuing on the topic of Port Advisory services. And I’m here with Keith Miceli, International Business Adviser at PKF Texas. Welcome back to the Playbook, Keith.
Keith: Nice to be back!
Russ: With all of the exporting that’s taking place from Houston, Texas I would think, Keith, that there’s a lot of businesses actually considering now, maybe, exporting their product or services. What would you tell ’em?
Keith: Well, Russ, I think it’s important to note that 95 percent of the world’s population live outside of the United States. So, Houston companies have an opportunity to tap into that very large consuming market. And, in doing so, they can grow their business and create opportunities to diversify their income and revenues. And, generally speaking, companies need to do, at least, four basic things. They need to create an export plan, conduct market research, identify buyers and learn a lot more about export financing, insurance and shipping.
Russ: Sounds wise to me. I think there’s just gonna be a lot of activity and you’re probably gonna be involved in a lot of it.
Keith: Yes, sir!
Russ: Alright. There we go. This has been another Thought Leader Production brought to you by PKF Texas, Entrepreneurs Playbook. Tune in, next week, for another chapter.