The Shermanator - Accounting Las Vegas, NV

The Shermanator
Issue 6
Fall 2010
A Newsletter from Mark Sherman, Certified Public Accountant
2010 Taxes and the
“Two-Minute Drill”
Hello,
End of the year tax planning is always important, but
it is even more so this year.
There have already been significant tax law changes, with
many more yet to be decided
on by Congress and the President. This means you have to
be ready for any contingency.
The strategy you normally
use may not apply this year.
For example, given the possibility of large increases in income tax rates on January 1,
you may want to accelerate
income and delay payments so
that income is taxed at the
lower 2010 rates.
As always, it has been a
pleasure to provide you with
accounting services this year.
We hope we have helped to
make it a prosperous one for
you, and we look forward to
continuing to serve you in 2011.
Mark Sherman, CPA
In football they have what is called the “two-minute drill,”
the steps you need to take in the last two minutes of the game to
either protect your lead or get a quick score when you are behind.
It is as Wikipedia states “a high-pressure and fast-paced situational strategy,” and if you don’t run it properly, you lose the game.
In 1999, UNLV was the beneficiary when Baylor University
failed to run the drill properly. In what ESPN ranked as one of
the top 100 moments that define college football, Baylor was up
24-21 with less than 20 seconds left and the ball on the Rebels’ 8
yard line. Instead of running out the clock and winning the game,
the Baylor coach opted to try to score. Baylor fumbled on the one
yard line; UNLV’s Kevin Thomas recovered the ball and returned it 99 yards for a touchdown and the win.
For business owners and individual taxpayers, this year has
its own version of the two-minute drill. As of mid-November, we
still don’t know:
 What the income tax rates will be for next year. Will the
Bush tax cuts be extended for some, all or none?
 Whether the bonus depreciation for equipment purchases
will expire as scheduled at the end of the year.
 Will the tax on capital gains rise from the current 15% (or
0% for those in the 5% and 10% brackets) to 20% for all?
 Will the estate tax, currently at 0%, be taxed at 35%, 45%,
50% or 55% in 2011?
It is typical that this time of year people come in to our office for end of the year tax planning so you can take the steps
needed to minimize your tax liability. This year, given all the
uncertainty on what actions Congress and the President will take,
you have to be prepared to
change direction instantly depending on what gets signed into
law. Your strategy needs to be
laid out in advance so you can
instantly respond to whatever
comes out of Washington. Otherwise, you may wind up sounding
like a losing coach.
"Hindsight is 20-20 and I
know what the textbook says,"
said Baylor coach Kevin Steele
after the game. "There's no defense for it. It was just stupid on Be prepared to quickly respond
to last minute tax changes.
my part.”
Meet Shannon Lewis
Las Vegas native Shannon
Lewis brings both business and
accounting experience to our
firm. A graduate of Faith Lutheran Jr./Sr. High School, she is currently pursuing an accounting degree at the College of Southern
Nevada. After working as a disbursement agent for a firm that
handles finances for construction
companies, she decided to take
some time off for the birth of her
daughter. When she was ready to
return to the workforce, we were
fortunate to be able to add her to
our team.
“The environment here is
awesome,” she says. “Everyone is
upbeat and gets along great.”
Starting out as an administrative assistant, she quickly moved
into a bookkeeper position where
she works full time handling payroll, human resources and contracts for one of our larger accounts.
“I will do anything I can to
help their operations run smoothly,” she says. “I especially enjoy
dealing with the human resources
aspects of the job, helping employees with any questions they
have about their insurance or if
they need a payroll stub. ”
Shannon met her husband
Donny, an electrician, through
mutual friends. They have a twoyear old daughter, Maddison.
Work, college and being a mother
keep her pretty busy, but when
she has the time she likes to relax
with a suspense novel.
What Our Clients are Saying
I have been in the restoration
business for 17 years and am certified by the Institute of Inspection,
Cleaning and Restoration Certification as a Master Water Restorer,
the only person in Southern Nevada to hold such certification. Currently I own and manage two businesses: Summit Restoration, which
restores buildings damaged by water, fire or mold, and Kept Swept,
which cleans homes and business-
es. With my training and experience, there is no problem delivering customers a high quality product with excellent customer service. We do quality work, keep our
customers happy and help them
put their lives back together after a
loss caused by fire, water or mold.
A business partner introduced
me to Mark Sherman when I
opened Summit Restoration in
2005 and his help was key in getting the business up and running
smoothly. For the first two years I
was on the phone with him monthly, getting his advice on the tax implications of any actions I was planning to take. He also arranged for
my office staff to take a training
class on QuickBooks data entry and
then taught them how to keep the
books in order to make things easier from an accounting standpoint.
Mark is a very keen accountant with a lot of business
knowledge, and is very willing to
pass on that business and accounting advice. Although he has
some extremely large accounts, I
never feel that I am too small to
get his attention. He always calls
me back personally, often within
the hour, something that accountants don’t usually do.
So, if your building is waterdamaged, call Summit; if you
need your house cleaned call Kept
Swept; and if you need a great
accountant, call Mark Sherman.
He is worth his weight in gold.
William Dellaechaie
Major Tax Changes to be
Aware of for 2010/2011
Tax Law
What
Personal Tax
Rates
Unless Congress acts, the tax rates return to the 2001 levels: the 10 percent bracket will be eliminated and the top
rate goes back to 39.6%, and all brackets in between will pay a higher tax rate. You should be prepared to get
additional income in hand before the end or the year, and delay expenses, in case the tax rates go up in 2011.
In 2010, tax payers in the 10% and 15% brackets are exempt from paying capital gains taxes, while those in highCapital Gains and er tax brackets pay 15%. Next year, those in the lowest racket will pay a 10% tax and others will pay a 20% rate.
Dividends
Dividends are taxed as capital gains in 2010 (0% to15%), but will be treated as normal income next year with
rates up to 39.6%
This change doesn’t go into effect until 2013, but you need to plan ahead for it. For couples earning over
$250,000, unearned income such as interest, dividends, rents, royalties, annuities and capital gains (including
Medicare tax on
selling your house) will be considered as ordinary income for purposes of calculating Medicare taxes. This
unearned income
means that, in addition to the capital gains rate rising from 15% to 20%, this income will also be subject to an
additional 3.8% tax.
Roth IRA
Conversions
AMT
Starting in 2010, individuals can covert their traditional IRA to a Roth IRA and spread the tax on the conversion
over two years. Individuals whose income is too high to use a Roth IRA can circumvent that limit by contributing to an IRA and then converting it to a Roth IRA.
The Alternative Minimum Tax exemption amounts have dropped this year to $33,750 for individuals and
$45,000 for joint filers.
Business Mileage The deduction rate for using your personal vehicle for business has dropped from 55¢ in 2009 to 50¢ for 2010.
Tax Brackets
Exemptions and
Deductions
The tax brackets for all income levels will start at about 4% higher than the 2009 brackets.
Personal exemptions for 2010 are the same as 2009, $3,650. The standard deduction for joint tax returns is also
the same as last year, $11,400. but single filers can deduct an extra $250. There are normally phase outs for
itemized deductions and personal exemptions for high-income taxpayers. Those have been repealed for 2010,
but are scheduled to return in 2011.
Section 179 allows small businesses to deduct 100% of the cost of new business property. In September, ConBusiness Property gress raised the Section 179 deduction limit to $500,000 for 2010 and 2011. The deduction reduces if the total
and Equipment cost of all Section 179 property exceeds $2,000,000. Congress also extended the “bonus depreciation” allowing
businesses to deduct 50% of the cost of qualified property placed into service by the end of 2010.
Energy-Saving
Home Improvements
A tax credit of up to $1,500 for making energy-saving home improvements. The credit is 30 percent of the cost
of qualified insulation, windows, outside doors, biomass fuel stoves and high-efficiency furnaces, water heaters
and central air conditioners.
Long-term Care
In 2011, all employees will be charged premiums for long-term care coverege, with the money taken out of
their paychecks, unless they specifically request to be exempt.
New Employees
The HIRE Act exempts businesses from paying the employer share of Social Security taxes (6.2%) for qualifying new hires made between February 3, 2010 and December 31, 2010. Small businesses can also receive a tax
credit of up to $1,000 on their 2011 taxes for new workers who stay employed for at least a year.
Deducting Losses
In 2008 and 2009, small businesses were allowed to deduct losses from taxes paid in the previous three to five
years. In 2010, they are limited to carrying losses back only two years.
Estimated Taxes
In 2009, the self-employed could avoid penalties by paying 90% of their prior year’s tax. This year it is back up
to 100%.
We Wish You
the Happiest of
Holidays,
a Prosperous
and Joyous
New Year!
Mark Sherman, CPA
601 S. Rancho Drive, D-32
Las Vegas, NV 89106
702-645-6318
Visit our new website
www.shermancpas.com
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