The CPA Desk

A Thought Leader Production by PKFTexas

The Role Social Media Plays in a Crisis

Russ: This is the PKF Texas Entrepreneur’s Playbook. I’m Russ Capper, this week’s guest host, and I’m here once again with Chris Jones, Vice President at Pierpont Communications and head of their Energy in Crisis practices. Pierpont also plays a key role in the Profit and Peril Report. Chris, welcome back to the Playbook once again.

Chris: Thanks Russ, glad to be here.

Russ: You bet. Okay, so we’ve already talked about things that you need to do internally in your company to prepare for international expansion and then we talks about those things that you really need to be aware of in the destination country that you’re headed for. But are there aspects of going international that apply no matter where you’re moving too?

Chris: There certainly are. From a crisis management or planning perspective probably the best example that most everyone’s familiar with would be social media and the role it can play. Social media, as we know, it moves essentially at the speed of light; it can jump boundaries, it can cross time zones and it can really short circuit your crisis communications plans.

Russ: Okay, so what would one do to prepare for that?

Chris: What we like to do is begin monitoring before there’s ever a crisis. We like to have a background monitoring program in place so we understand the normal chatter and the normal sentiment. Then when and if a crisis incident comes along we’ve got a base of and we can see how severe is this incident, who are the influencers in the conversation that allows us to begin to address that.

Russ: Okay, sounds like an aspect of business these days that you have to pay attention to no matter what.

Chris: You cannot ignore that one.

Russ: All right Chris thanks so much.

Chris: Appreciate it.

Russ: You bet. For other international topics visit This has been another Thought Leader Production brought to you by PKF Texas Entrepreneur’s Playbook.

Tax Plans to Help Pay Tuition

Section 529 plans provide a tax-advantaged way to help pay for college expenses. Here are just a few of the benefits:

  • Although contributions aren’t deductible for federal purposes, plan assets can grow tax-deferred.
  • Some states offer tax incentives for contributing in the form of deductions or credits.
  • The plans usually offer high contribution limits, and there are no income limits for contributing.

Prepaid tuition plans

With this type of 529 plan, if your contract is for four years of tuition, tuition is guaranteed regardless of its cost at the time the beneficiary actually attends the school. This can provide substantial savings if you invest when the child is still very young.

One downside is that there’s uncertainty in how benefits will be applied if the beneficiary attends a different school. Another is that the plan doesn’t cover costs other than tuition, such as room and board.

Savings plan

This type of 529 plan can be used to pay a student’s expenses at most postsecondary educational institutions. Distributions used to pay qualified expenses (such as tuition, mandatory fees, books, supplies, computer equipment, software, Internet service and, generally, room and board) are income-tax-free for federal purposes and typically for state purposes as well, thus making the tax deferral a permanent savings.

The biggest downside may be that you don’t have direct control over investment decisions; you’re limited to the options the plan offers. Additionally, for funds already in the plan, you can make changes to your investment options only twice during the year or when you change beneficiaries.

But each time you make a new contribution to a 529 savings plan, you can select a different option for that contribution, regardless of how many times you contribute throughout the year. And every 12 months you can make a tax-free rollover to a different 529 plan for the same child.

As you can see, each 529 plan type has its pluses and minuses. Whether a prepaid tuition plan or a savings plan is better depends on your situation and goals. If you’d like help choosing, please contact us.

Three Steps to Becoming Compliant with the New Overtime Rules

Karen: This is the PKF Texas Entrepreneur’s Playbook and I’m Karen Love; I’m the Host and Founder of the show. I‘m here with Wilka Toppins and she is the Principle and Founder Lawyer of the Toppins Law Firm and we’re having her back again to talk about overtime and new laws and I would like to know based on the first two segments we did with you, it seems like there’s steps that employers or team member, employees, would need to take. Could you do an overview of what those steps would be to become compliant?

Wilka: Absolutely Karen. The first thing we are asking employers to do is to first educate themselves.

Karen: Okay.

Wilka: Go to the website; the Department of Labor has a lot of information on its website. It’s, it’s right there on the front page.

Karen:, okay.

Wilka: Educate yourselves; call your advisor whether it’s your Human Resource advisor, whether it’s your Accountant, whether it’s your attorney or someone like ourselves – an outside firm – could be hired to educate and inform about the law. You need to understand the law, it’s going to apply to you no matter what, whether you know it or not.

Karen: Right.

Wilka: The second thing is once you educate about the law you can perform what’s called an audit – an internal audit – just to see if you have to make any changes to become compliant with any law. It may be that you don’t need any changes; it may be that you’re fine and you document that and you put it away in your audit file.

Karen: So it’s just a diagnostic tool to actually figure out whether you’re in compliance or not.

Wilka: Or what do you need to do to become compliant December the 1st. Because I want to point out Karen to the audience as well that there is no grace period, so the law will become the law on December the 2nd; the next day.

Karen: Right, this is important.

Wilka: So you have 4 months to do this audit, to become complaint, talk to your advisor, educate yourself, talk to your HR professionals and put some steps into play. Some of the things we’re suggesting after you do an audit and you see that you do have to make some adjustments; you can either raise the salary above the threshold to avoid the overtime – well, that’s going to be expensive, right? Not everybody can just raise salaries the next day; you may have to prepare for that. You may not be able to raise salaries at that point, what you can do is really, really modify or come up with a good overtime policy. So you avoid overtime.

Karen: Okay, so just another step there.

Wilka: Right, so you have to look at your policies. Last thing is if you do have the overtime that make sure you have a policy to record the work in excess of the 40 hours per week so that you can then pay accordingly. So those are the suggestions at this point.

Karen: First steps; well thank you very much, those are very helpful and we could reach out to the Department of Labor to look at what the compliance issues are.

Wilka: That’s right,

Karen: Fantastic, thank you very much.

Wilka: Sure.

Karen: I think we need to have you back again to talk a little bit more on this.

Wilka: Okay, perfect.

Karen: Thank you. This had been another Thought Leader Production brought to you by the PKF Texas Entrepreneur’s Playbook. Tune in again.

The Rules for Documenting Deductions

If you have incomplete or missing records and get audited by the IRS, your business will likely lose out on valuable deductions. Here are two recent U.S. Tax Court cases that help illustrate the rules for documenting deductions.

Case 1: Insufficient records

In the first case, the court found that a taxpayer with a consulting business provided no proof to substantiate more than $52,000 in advertising expenses and $12,000 in travel expenses for the two years in question.

The business owner said the travel expenses were incurred ”caring for his business.“ That isn’t enough. ”The taxpayer bears the burden of proving that claimed business expenses were actually incurred and were ordinary and necessary,“ the court stated. In addition, businesses must keep and produce ”records sufficient to enable the IRS to determine the correct tax liability.“ (TC Memo 2016-158)

Case 2: Documents destroyed

In another case, a taxpayer was denied many of the deductions claimed for his company. He traveled frequently for the business, which developed machine parts. In addition to travel, meals and entertainment, he also claimed printing and consulting deductions.

The taxpayer recorded expenses in a spiral notebook and day planner and kept his records in a leased storage unit. While on a business trip to China, his documents were destroyed after the city where the storage unit was located acquired it by eminent domain.

There’s a way for taxpayers to claim expenses if substantiating documents are lost through circumstances beyond their control (for example, in a fire or flood). However, the court noted that a taxpayer still has to ”undertake a ‘reasonable reconstruction,’ which includes substantiation through secondary evidence.“

The court allowed 40% of the taxpayer’s travel, meals and entertainment expenses, but denied the remainder as well as the consulting and printing expenses. The reason? The taxpayer didn’t reconstruct those expenses through third-party sources or testimony from individuals whom he’d paid. (TC Memo 2016-135)

Be prepared

Keep detailed, accurate records to protect your business deductions. Record details about expenses as soon as possible after they’re incurred (for example, the date, place, business purpose, etc.). Keep more than just proof of payment. Also keep other documents, such as receipts, credit card slips and invoices. If you’re unsure of what you need, check with us.

How to Know if You Are Eligible for the New Overtime Rules

Karen: This is the PKF Texas Entrepreneur’s Playbook and I’m Karen Love; I’m the Host and Founder. I‘m here again with Wilka Toppins and she’s the Founder and Principle Lawyer at Toppins Law Firm. Welcome back to the Playbook Wilka, I’m so glad you’re here.

Wilka: I’m glad to be back.

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The New Overtime Rule Explained

Karen: This is the PKF Texas Entrepreneur’s Playbook and I’m Karen Love; I’m the Host and Founder. I‘m here with Wilka Toppins; she is the Founder and Principle Lawyer at the Toppins Law Firm and I’d like to say welcome to the Playbook Wilka.

Wilka: Thank you very much Karen, it’s my pleasure to be here.

Karen: Thank you. Now I was astounded when I became alerted to the new overtime rules that is affecting employers and our clients I know here at PKF Texas so I thought it would be really great to have you on the show if you will to give us an overview of what’s happening this year.

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Kenny Polcari Discusses How Major Events Can Affect Capital Markets

Russ: This is the PKF Texas Entrepreneur’s Playbook. I am Russ Capper, this week’s guest host, and I’m here with Kenny Polcari, Managing Director of Equities at O’Neil Securities and a Market Analyst at CNBC. Kenny, welcome to the Playbook.

Kenny: Thank you for having me.

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Should You Bunch Your Itemized Deductions?

Many expenses that may qualify as miscellaneous itemized deductions are deductible only to the extent they exceed, in aggregate, 2% of your adjusted gross income (AGI). Bunching these expenses into a single year may allow you to exceed this “floor.” So now is a good time to add up your potential deductions to date to see if bunching is a smart strategy for you this year.

Should you bunch into 2016?

If your miscellaneous itemized deductions are getting close to — or they already exceed — the 2% floor, consider incurring and paying additional expenses by Dec. 31, such as:

  • Deductible investment expenses, including advisory fees, custodial fees and publications
  • Professional fees, such as tax planning and preparation, accounting, and certain legal fees
  • Unreimbursed employee business expenses, including vehicle costs, travel, and allowable meals and entertainment.

But beware …

These expenses aren’t deductible for alternative minimum tax (AMT) purposes. So don’t bunch them into 2016 if you might be subject to the AMT this year.

Also, if your AGI exceeds the applicable threshold, certain deductions — including miscellaneous itemized deductions — are reduced by 3% of the AGI amount that exceeds the threshold (not to exceed 80% of otherwise allowable deductions). For 2016, the thresholds are $259,400 (single), $285,350 (head of household), $311,300 (married filing jointly) and $155,650 (married filing separately).

If you’d like more information on miscellaneous itemized deductions, the AMT or the itemized deduction limit, let us know.

How to Detect Risk Areas in Your Business

Byron: Hi, my name is Byron Hebert, and this is a quick Tool Time Update brought to you by PKF Texas and The Entrepreneur’s Playbook. What I want to talk to you today about is FMEA, Failure Mode Effect Analysis. And the purpose of this tool is to help you detect risk areas in your processes in your business, and then maybe if you can detect where the risk areas are you can do something to reduce those risks. So let’s talk about how we would use this tool.

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Everything You Need to Know About the 2016 Houston CPA Society Energy Conference

With panels and presentations on topics ranging from an Oil & Gas outlook to accounting and SEC updates, some of the energy industry’s best and brightest as speakers and panelists will be at the 14th Annual Houston CPA Society Energy Conference. It is sure to be a day filled with insightful discussion and substantive interaction. You’ll hear from several industry leaders including the luncheon keynote speaker John Hofmeister, founder of Citizens for Affordable Energy and former President of Shell.

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