The CPA Desk

A Thought Leader Production by PKFTexas

Donating appreciated stock can offer substantial tax benefits

Are you planning to make charitable donations before year end? Do you own appreciated stock that you’d like to sell, but you’re concerned about the tax hit? Then consider donating it to charity rather than making a cash gift.

Appreciated publicly traded stock you’ve held more than one year is long-term capital gains property. If you donate it, you can both avoid the capital gains tax you’d pay if you sold the property and deduct its current fair market value.

Let’s say you donate $10,000 of stock that you paid $4,000 for, your ordinary-income tax rate is 33% and your long-term capital gains rate is 15%. If you sold the stock, you’d pay $900 in tax on the $6,000 gain. If you were also subject to the 3.8% net investment income tax (NIIT), you’d pay another $228 in NIIT. By instead donating the stock to charity, you save $4,428 in federal tax ($1,128 in capital gains tax and NIIT plus $3,300 from the $10,000 income tax deduction). If you donated $10,000 in cash, your federal tax savings would be only $3,300.

If you are charitably inclined or would like to minimize taxes related to your investment portfolio, we can help find the strategies that will best achieve your goals.

Change Readiness Model – Capabilities and Beliefs

Byron: Hi. This is Byron Hebert and this is another Tool Time Update brought to you by your friends at PKF Texas and the Entrepreneur’s Playbook. If you remember, we’ve been talking about the “Change Success” model. We went and talked, overall, about the beliefs and readiness capabilities of an organization to affect change. And, we talked about – the beliefs was 30% of that change; readiness 30 %, and capabilities 40%. Last week, I talked to you about “change readiness” and all the components that make up the “change readiness.” And, today, I want to talk to you about change – the capability of an organization to change – and their belief systems that need to be in place to affect positive change in your organization.

Let’s talk, first, about capabilities. This is where a company’s sustainable competitive advantage lies. This is the company’s ability to make a profit and, also, dynamic capabilities; their ability to improve the performance of the company and the profitability of a company. Personal capabilities; same thing. Capabilities of an individual to make a living and their dynamic capabilities to improve their living. And so, while these are important components – because it’s 40% of the change process – and, in fact, it’s a “non-starter” without these; these are, really, enablers is all it is. So, most organizations have focused, quite heavily, on their capabilities and that’s how they’ve gotten to the position they’re in now. But, these are things that we have to address in a change model.

Moving on to “beliefs.” Let’s talk about “beliefs.” So, that’s 30% of our change effectiveness. And, we’ve got three of those, there. So, we broke ‘em down, evenly, to 10%, each. First, let’s talk about significant others. This is an area that, a lot of times, we fail to address; and that is, “How about the peoples’ significant others; that they live with or they work with, here, in the organization? Do they believe in the change that we’re trying to make? Do they support it?” And that’s an important component that we have to take into consideration.

What about our attitude towards change? “What’s the organization’s attitude towards change? Do we believe in it? Do we like it?” The change participants attitude towards the change; “What is their belief, there?” “Perceived difficulty;” again, 10% of our belief systems will lie in, “How difficult do we think it is to make this change in the organization; whatever it may be?” So, that wraps up all of these areas in the last three Tool Time Updates that we’ve given you on change readiness, change capability and change beliefs.

My name is Byron Hebert. This has been a Tool Time Update brought to you by your friends at PKF Texas and the Entrepreneur’s Playbook.

2015 401k Limits

The IRS has announced limitations for 2015 Pension Plans. The maximum elective deferral for 401(k) is $18,000 up from $17,500.

Catch-up contributions for those over 50 years old is $6,000 up from $5,500

IRA maximum contribution remains the same at $5,500 as well as the catch-up amount at $1,000.

For more on other pension plans click here.

Watch out for the wash sale rule

If you’ve cashed in some big gains this year, consider looking for unrealized losses in your portfolio and selling those investments before year end to offset your gains. This can reduce your 2014 tax liability.

But if you want to minimize the impact on your asset allocation, keep in mind the wash sale rule. It prevents you from taking a loss on a security if you buy a substantially identical security (or an option to buy such a security) within 30 days before or after you sell the security that created the loss. You can recognize the loss only when you sell the replacement security.

Fortunately, there are ways to avoid the wash sale rule and still achieve your goals:

  • Immediately buy securities of a different company in the same industry or shares in a mutual fund that holds securities much like the ones you sold.
  • Wait 31 days to repurchase the same security.
  • Before selling the security, purchase additional shares of that security equal to the number you want to sell at a loss; then wait 31 days to sell the original portion.

For more ideas on saving taxes on your investments, please contact us.

Change Readiness as a Segment of the Change Success Model

Hi, my name is Byron Hebert. And this is another Tool Time update brought to you by your friends at PKF Texas and the Entrepreneur’s Playbook. This week, I want to follow up on our Change Success Model that I started explaining to you last week. As I said last week, there’s three main components of a Change Readiness Model, and that is your readiness, your capability, and your beliefs in an organization. Readiness, 30% of the effective change. Capability, 40%, and beliefs are 30%. So I want to focus this time on change readiness. We talked about that being 30% of the overall change process, and that’s broken down into five critical areas.

So each one of those we weighed at 6% each to get to our 30% effectiveness.

Six percent is leadership support. How involved engaged is the leader in the change initiative, emotionally and operationally. Are they involved in the change?

The need for change. Do all change participants realize the need for this change, understand why it needs to change, and what we’re shooting for as our goal.

The WIIFM is “what’s in it for me?” That’s the third component of five. What’s in it for me? Have we addressed for each of the change participants what’s in it for them in this change initiative? It may be monetary, and it may be not be. Maybe in a better work environment, better equipment, whatever it may be.

Change process, do all the change participants understand and believe in the change process that we’ve adopted to get this success model?

And last is confidence. Individual confidence and organizationally, do we have the confidence to affect this change? Past performance may be an indication of a play into that. So that may be something we have to address.

So again, change readiness, 30% of the effective change model. Leadership support, need for change, what’s in it for me, change process, and confidence are the components that make up change readiness.

And we will be back next week for more change detail talking about capabilities and beliefs and we’ll go into more detail on those as well. This is Byron Hebert. This has been a Tool Time update brought to you by your friends at PKF Texas and the Entrepreneur’s Playbook.

Using the Change Success Model to Implement New Initiatives in Your Business

Hi my name is Byron Hebert, and this is another Tool Time update brought to you by your friends at PKF Texas, and the Entrepreneur’s Playbook. What I want to talk to you about today is a change success model, and the importance of having a good change success model in your business. Unfortunately, the statistics show us that only about 30% of change initiatives in companies succeed. That means 70% of them fail, cost a lot of money, cost a lot of heart ache, and also frustrations with companies that can’t seem to get over the change model to change success. So what we’ve done is come up with a successful change model that addresses all the elements that are needed to have an effective change in your business, and I’m going to go into greater detail in these in other Tool Time updates, but first I want to just talk to you about the three main components.

Change readiness, how ready is your company for change, and we can break that down further. What are the capabilities with your organization? That’s where your sustainable competitive advantage lies, and in other areas, but from an organizational and a personal standpoint, what are your capabilities in that organization? Then last, which we always have to address are the beliefs. Do you believe that your company is able to make these changes? Do people believe that they can make that change in your company?

So we’re going to go in much more details in this, but about 30% of the issue lies in readiness, 40% in capabilities, and 30% in beliefs. So a good change model can help you succeed in your organization, and help you get those change initiatives in that you need. We’ll be back next week to give you some more details in each one of these change areas to help you affect change positively in your organization. This is Byron Hebert, and this has been a Tool Time update brought to you by PKF Texas, and your friends at the Entrepreneur’s Playbook.

Meeting User Needs Should be Paramount to Product Design

Jen: This is the PKF Texas: Entrepreneurs Playbook. I’m Jen Lemanski, this week’s guest host, and I’m here again with Kelsey Ruger, the Chief Experience Officer at CogMine and the President of the Houston Interactive Marketing Association. Welcome back to the Playbook, Kelsey.

Kelsey: Thanks, Jen.

Jen: So when we talked about your title as Chief Experience Officer, you mentioned design and design thinking. What does that mean?

Kelsey: Think about design and design thinking as a different way of solving problems. Typically when people think about design, they think about the way things look or the way they feel. But that’s just really the façade. Like there’s a lot that goes into getting to that endpoint, and the example I always like to use is how we define what users want from a system.

Typically, the way users are defined from a business perspective is what we call an inside-out perspective. So the business defines their goals and then they build software out to the user to meet those goals. When we’re thinking from a design perspective, we’re really starting from what the user is trying to accomplish and building in from there to meet those business goals.

So if you’re a user, your primary concern is, “Does this software help me get my job done?” There’s some business metrics in there; but what we want to do is make sure that we’re accomplishing what the users need so that you can actually end up with a happy medium.

Jen: So anybody who has client service responsibilities can use this design thinking to really help them think about what their client actually needs. Is that right?

Kelsey: Yeah, they can think through that. And the other thing I will tell you is try to avoid asking users what it is they want. Instead, ask them what problems they need to solve, and then you design for that.

Jen: That’s cool. That’s really cool. Well, thanks so much for sharing that with us today.

Kelsey: Thanks, no problem.

Jen: This has been another Thought Leader Production brought to you by the PKF Texas: Entrepreneur’s Playbook. Tune in next week for another chapter.

UH Energy Symposium Series: Critical Issues in Energy Featured in Forbes

PKF Texas was proud to co-sponsor the reception for the first UH Energy Symposium of year. This year’s series is focusing on Critical Issues in Energy. Tuesday’s event featured a panel speaking about US Energy Independence: Good for the Nation?. The panel included:

The event was featured in a great article, “Economist: To Protect Frackers, U.S. Should Restrict Oil Imports” in Forbes magazine yesterday. Friend of PKF Texas, photographer Kenn Sterns took some great shots, which are posted here:

The next event will be held on November 11, 2014 and will feature Charles Esser; Steve Magness, Pipeline Safety Trust; Carl Weimer, Cogent Energy and will be moderated by Candace Beeke, Houston Business Journal. To register or for more details visit the UH Energy Symposium website.


Keeping the Big Picture in Mind – Advice from an Entrepreneur

Jen: This is the PKF Texas Entrepreneurs Playbook. I’m Jen Lemanski, this week’s guest host, and I’m here with Rassul Zarnfar, the Founder and CEO of Buffalo Bayou Brewing Company. Welcome back to the Playbook, Rassul.

Rassul: Thank you so much for having me.

Jen: Now, you’re an entrepreneur.

Rassul: Yeah.

Jen: You get to be your own boss.

Rassul: Yeah.

Jen: Kind of tell me about that. How is that?

Rassul: You know, it’s funny. Everyone always says, “I want to get into entrepreneurship so I can be my own boss.” I don’t think it’s actually like that at all. In fact, you start thinking about it as like I’m not the boss of anyone. My investors tell me what to do. My customers tell me what to do. And an employee comes in; they’re having a bad day; I’ve got to cheer ‘em up and get ‘em the equipment or the tools that they need to get their job done and do it so that everything keeps flowing smoothly. So you get to the end of the day and you’re like, “I’m not really the boss of anything.” It’s like everyone’s my boss.

Jen: Now, is there anything that you kind of wish you had known before you started this?

Rassul: I think the biggest thing that took me a while to figure out was to keep your eye on the big picture and don’t tie your ego up in every little thing because, you know, we’ll be having a really bad sales week, and then we’ll turn around and we’ll have an incredible sales week the next day. Or something will cut against it, and then it’ll work out to where it works out in our favor in the long run. And I think when I’ve tied my ego and my self-esteem to the day-to-day, the tumultuous aspects of the day-to-day, like you just get caught in this roller coaster ride that you just can’t recover from. So you really have to – you really have to keep your eye on the big picture and have your mission statement ahead of you so that you know that you’re always making progress, even with a little bit of a setback.

Jen: That sounds great. Well, thanks for being back with us.

Rassul: Thank you so much for having me.

Jen: This has been another thought-leader production brought to you by PKF Texas Entrepreneurs Playbook. Tune in next week for another chapter.