1. Grennan Fender Joins Local Business Leaders, Pledging $150,000 in Scholarships to Valencia College

    Grennan Fender joined over 20 member sponsors of the CEO Leadership Forums organization at a special event on July 19, 2018. Grennan Fender Senior Vice President Geoffrey Gallo, ChFC, CExP, serving as Co-Chair of the organization, announced the commitment to donate over $150,000 to Valencia College to provide student scholarships for its Baccalaureate degree students.

    Click here to read about the CEO Leadership Forums Valencia College Scholarship.

  2. Women to Watch Awards – Katie Drees Nomination


    At the Women to Watch Awards luncheon last Friday, our very own Katie Drees was recognized by the FICPA as one of seven nominees in the Emerging Leader category. Katie joined Grennan Fender Hess & Poparad as an undergraduate intern of the University of Central Florida in 2007. In 2009, upon graduation with a BS degree in Accounting, she became a full-time associate of the firm where she spent three years in the Tax Department. Then in 2012, the firm made a strategic decision to promote a new service line. The Outsource Accounting Department was born with Katie as its sole employee and leader. Today, Katie leads a department of 15 people that generates over 30% of firm revenues. With Grennan Fender now in the top 15 Central Florida CPA firms (according to the Orlando Business Journal), she runs a sizable small business in itself. “Katie has always demonstrated a desire and aptitude to run her department like a business”, says firm founder Jed Grennan, CPA. “This resonates with the millennial generation workforce she manages and certainly the many clients who rely on her to deliver the vital accounting services that run their businesses.”
    Congratulations to Katie for being recognized as a nominee and, hopefully, next year’s award winner!



  3. Orlando’s Next Economy


    Grennan Fender sponsored a HUGE Orlando event! Orlando’s Next Economy – a meeting of the most influential leaders in our community – discussed the creation of a regional strategy for enhancing our dynamism through entrepreneurship.


  4. Tax Reform Act Discussion

  5. New Tax Reform Act Summary and Details

    The Tax Cuts and Jobs Act of 2017 has finally passed and most everyone will realize significant tax relief! This post reports changes that affect the taxation of individuals. We have detailed the effective dates as well as the “sunset” dates that will apply, if any. Prior law provisions have been provided in order to place the specific new amendments into context.

    Given late passage, it will be difficult to perform last second 2017 tax planning moves to take advantage of provisions available now that won’t be available next year. Examples of taxpayer tactics before year end include:

    1. Making charitable contributions this year where the larger standard deduction next year might make itemizing not viable
    2. Accelerating discretionary medical expenses in 2017 because of medical expense limitations next year
    3. Payment of all of 2017 state and local taxes (“SALT”) this year (even if the due date for the last installment is in 2018) and prepayments, if permitted by local taxing authorities, (e.g., of property taxes) in light of the significant reduction in the SALT deduction going into effect next year.
    4. In short, consider ways of deferring income to take advantage of the lower rates going into effect next year.

    To get passed and potentially comply with certain budgetary constraints, the Act contained a “sunset,” or an expiration date, for many of its provisions. For example, changes apply for tax years beginning before Jan. 1, 2026. As a result, many of the individual tax provisions in this Reform are temporary (as opposed to the business provisions, which generally are permanent).

    New Income Tax Rates & Brackets

    To determine regular tax liability, an individual uses the appropriate tax rate schedule (or IRS-issued income tax tables for taxable income of less than $100,000). The Internal Revenue Code provides four tax rate schedules for individuals based on filing status – i.e., single, married filing jointly/surviving spouse, married filing separately, and head of household — each of which is divided into income ranges which are taxed at progressively higher marginal tax rates as income increases. Old rates for individuals were subject to six tax rates: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. The New Act applies from tax years 2018 through 2025. There are now seven tax rates and the tables below show the income brackets to which they apply.

    Taxable Income: Tax Cost:
    Not over $19,05010% of taxable income
    Over $19,050 but not over $77,400$1,905 plus 12% of the excess over $19,050
    Over $77,400 but not over $165,000$8,907 plus 22% of the excess over $77,400
    Over $165,000 but not over $315,000$28,179 plus 24% of the excess over $165,000
    Over $315,000 but not over $400,000$64,179 plus 32% of the excess over $315,000
    Over $400,000 but not over $600,000$91,379 plus 35% of the excess over $400,000
    Over $600,000$161,379 plus 37% of the excess over $600,000
    Taxable Income: Tax Cost:
    Not over $9,52510% of taxable income
    Over $9,525 but not over $38,700$952.50 plus 12% of the excess over $9,525
    Over $38,700 but not over $82,500$4,453.50 plus 22% of the excess over $38,700
    Over $82,500 but not over $157,500$14,089.50 plus 24% of the excess over $82,500
    Over $157,500 but not over $200,000$32,089.50 plus 32% of the excess over $157,000
    Over $200,000 but not over $500,000$45,689.50 plus 35% of the excess over $200,000
    Over $500,000$150,689.50 plus 37% of the excess over $500,000
    Taxable Income: Tax Cost:
    Not over $13,60010% of taxable income
    Over $13,600 but not over $51,800$1,360 plus 12% of the excess over $13,600
    Over $51,800 but not over $82,500$5,944 plus 22% of the excess over $51,800
    Over $82,500 but not over $157,500$12,698 plus 24% of the excess over $82,500
    Over $157,500 but not over $200,000$30,698 plus 32% of the excess over $157,500
    Over $200,000 but not over $500,000$44,298 plus 35% of the excess over $200,000
    Over $500,000$149,298 plus 37% of the excess over $500,000
    Taxable Income: Tax Cost:
    Not over $9,52510% of taxable income
    Over $9,525 but not over $38,700$952.50 plus 12% of the excess over $9,525
    Over $38,700 but not over $82,500$4,453.50 plus 22% of the excess over $38,700
    Over $82,500 but not over $157,500$14,089.50 plus 24% of the excess over $82,500
    Over $157,500 but not over $200,000$32,089.50 plus 32% of the excess over $157,500
    Over $200,000 but not over $300,000$45,689.50 plus 35% of the excess over $200,000
    Over $300,000 $80,689.50plus 37% of the excess over $300,000
    Taxable Income: Tax Cost:
    Not over $2,55010% of taxable income
    Over $2,550 but not over $9,150$255 plus 24% of the excess over $2,550
    Over $9,150 but not over $12,500$1,839 plus 35% of the excess over $9,150
    Over $12,500$3,011.50 plus 37% of the excess over $12,500
    Increase in the Standard Deduction

    To determine taxable income, a taxpayer’s Adjusted Gross Income (AGI) is reduced by either the standard deduction or the sum of itemized deductions. Prior to 2018, the standard deduction amounts, indexed to inflation, were to have been: $6,500 for single individuals and married individuals filing separately, $9,550 for heads of household, and $13,000 for married individuals filing jointly (including surviving spouses). Under the New Act through December 31, 2025 the standard deduction is increased to $24,000 for married individuals filing a joint return, $18,000 for head-of-households, and $12,000 for all other taxpayers, adjusted for inflation in tax years beginning after 2018. No changes were  made to the current-law additional standard deduction for the elderly and blind.

    Suspension of Personal Exemptions

    Generally, individual taxpayers determined their taxable income under prior law by subtracting personal exemptions (equal to $4,150 per individual in a household in 2018) from their adjusted gross income.  Subject to phase-outs for higher earners, personal exemptions were allowed for the taxpayer, the taxpayer’s spouse, and any dependents. Under the new law, the deduction for personal exemptions is zero.

    The IRS may administer withholding rules under Code Sec. 3402 for tax years beginning before Jan. 1, 2019 without regard to the above amendments — i.e., wage withholding rules may remain the same as present law for 2018.

    New Measure of Inflation Provided

    For tax years beginning after Dec. 31, 2017 (Dec. 31, 2018 for figures that are newly provided under the Act for 2018 and thus won’t be reset until after that year, e.g., the tax brackets set out above), dollar amounts that were previously indexed using CPI-U (Consumer Price Index for Urban Customers) will instead be indexed using chained CPI-U (C-CPI-U (Code Sec. 1(f), as amended by Act Sec. 11002(a)) This change, unlike many provisions in the Act, is permanent. In general, chained CPI grows at a slower pace than CPI-U because it takes into account a consumer’s ability to substitute between goods in response to changes in relative prices. Using CPI-U overstates increases in the cost of living because it does not consider the fact that consumers will not simply pay more for a particular good as prices rise. People will typically adjust their buying patterns in this case and pay less for a substitute.

    Kiddie Tax Changes

    Historically, “Kiddie Tax” provisions provided income shifting opportunities between parents and children. Net unearned income of a child up to $2,100 (for 2018) was taxed at the child’s rate. Net unearned income above this  was taxed at the parents’ tax rates if the parents’ tax rates were higher than the tax rates of the child. The remainder of a child’s taxable income (i.e., earned income, plus unearned income up to $2,100 (for 2018), less the child’s standard deduction), was taxed at the child’s rates. The kiddie tax applied to a child if: (1) the child had not reached the age of 19 by the close of the tax year, or the child was a full-time student under the age of 24, and either of the child’s parents was alive at such time; (2) the child’s unearned income exceeded $2,100 (for 2018); and (3) the child did not file a joint return.

    Going forward, the taxable income of a child attributable to earned income is taxed under the rates for single individuals, and taxable income of a child attributable to net unearned income is taxed according to the brackets applicable to trusts and estates, shown in table above. This rule applies to the child’s ordinary income and his or her income taxed at preferential rates

    Capital Gains Tax Changes

    Under prior law, individual capital gains were taxed at maximum rates of 0%, 15%, or 20%. They applied as follows:

    Ordinary Income Tax BracketCapital Gain Tax Rate
    10% and 15% brackets0%
    25%, 28%, 33%, 35%15%

    Under the new law, present-law maximum rates on net capital gains and qualified dividends as well as the breakpoints that currently exist under pre-Act law are retained. However, these breakpoints are indexed for inflation using C-CPI-U (Chain CPI)  in tax years beginning in 2018. For example, for 2018, the 15% breakpoint is: $77,200 for joint returns and surviving spouses (half this amount for married taxpayers filing separately), $51,700 for heads of household, $2,600 for trusts and estates, and $38,600 for other unmarried individuals. The 20% breakpoint is $479,000 for joint returns and surviving spouses (half this amount  for married taxpayers filing separately), $452,400 for heads of household, $12,700 for estates and trusts, and$425,800 for other unmarried individuals.


    New Holding Period Requirement

    In general, the receipt of a capital interest for services provided to a partnership results in taxable compensation for the recipient. However, under a safe harbor rule, the receipt of a profits interest in exchange for services provided is not a taxable event to the recipient if the profits interest entitles the holder to share only in gains and profits generated after the date of issuance (and certain other requirements are met). Hedge Fund managers typically act as general partners to an investment partnership, while outside investors act as limited partners. Fund managers are compensated in two ways:

    1. The amount invested as their own capital will permit sharing in the appreciation of fund assets.
    2. Fund Managers charge the outside investors two annual “performance” fees:
      1. a percentage of total fund assets, typically 2%
      2. a percentage of the fund’s earnings, typically 20%. The 20% profits interest is often carried over from year to year until a cash payment is made, usually following the closing out of an investment. This defines a “carried interest.”

    Carried interests under current law were taxed in the hands of the taxpayer (i.e., the fund manager) at favorable capital gain rates instead of as ordinary income. Under the new Tax Act, beginning in tax year 2018, a 3-year holding period requirement will be imposed in order for certain partnership interests received in connection with the performance of services to be taxed as long-term capital gain. (Code Sec. 1061, Partnership Interests Held in Connection with Performance of Services, added by Act Sec. 13309(a)) Assets not held for the three years with respect to an applicable partnership interest held by the taxpayer, the taxpayer’s gain will be treated as short-term gain taxed at ordinary income rates as stated in Code Sec. 1061(a).


    New Limitations on “Excess Business Loss”

    Passive loss rules under Code Sec. 469 generally limit deductions and credits from passive trade or business activities. Passive loss rules apply to individuals, estates and trusts, and closely held corporations. A trade or business activity in which the taxpayer owns an interest but does not materially participate represents a passive activity for this purpose. “Material participation” is defined as the taxpayer’s direct involvement in the operation of the activity on a basis that is regular, continuous, and substantial. (Reg. § 1.469-5) To the extent that they exceed income from passive activities, deductions from passive activities may not be deducted against other income and are carried forward and treated as deductions and credits from passive activities in the next year.

    IRS Code Sec. 469, under current law, included a limitation on excess farm losses that applies to taxpayers other than C corporations. If a taxpayer other than a C corporation received an applicable subsidy for the tax year, the amount of the “excess farm loss” was not allowed for the tax year, and was carried forward and treated as a deduction attributable to farming businesses in the next tax year. An excess farm loss for a tax year meant the excess of aggregate deductions that were attributable to farming businesses over the sum of aggregate gross income or gain attributable to farming businesses plus the threshold amount. The threshold amount was the greater of (1) $300,000 ($150,000 for married individuals filing separately), or (2) for the 5-consecutive-year period preceding the tax year, the excess of the aggregate gross income or gain attributable to the taxpayer’s farming businesses over the aggregate deductions attributable to the taxpayer’s farming businesses.

    According to the New Act, in subsequent tax years from 2018 through 2025, the excess farm loss limitation will not apply. Instead, a non-corporate taxpayer’s “excess business loss” is disallowed. Going forward, excess business losses are not allowed for the tax year but are instead carried forward and treated as part of the taxpayer’s net operating loss (NOL) carry-forward which can be applied in subsequent tax years. This limitation applies after the application of the passive loss rules described above. An excess business loss for the tax year is the excess of aggregate deductions of the taxpayer attributable to the taxpayer’s trades and businesses, over the sum of aggregate gross income or gain of the taxpayer plus a threshold amount.

    Indexed for inflation, threshold amounts are $500,000 for married individuals filing jointly and $250,000 for other individuals. In the case of a partnership or S corporation, the provision applies at the partner or shareholder level. Each partner’s or S corporation shareholder’s share of items of income, gain, deduction, or loss of the partnership or S corporation is taken into account in applying the above limitation for the tax year of the partner or S corporation shareholder; and regulatory authority is provided to apply the new provision to any other pass-through entity to the extent necessary, as well as to require any additional reporting as IRS determines is appropriate to carry out the purposes of the provision.

    Suspension of Deductions for Personal Casualty & Theft Losses

    Previously,  individual taxpayers were generally allowed to claim an itemized deduction when personal casualty losses, including those arising from fire, storm, shipwreck, or other casualty, or from theft were not compensated for.

    In the new law through the 2025 tax year,  the personal casualty and theft  loss deduction is suspended. However,  personal casualty losses incurred in a Federally-declared disaster continue to be permitted. In situations where the taxpayer has personal casualty gains where the loss does not exceed the gain, the loss suspension will not apply.

    Gambling Loss Limitations

    Historically, under Code Sec. 165 (d),  taxpayers could claim a deduction for wagering losses to the extent of wagering winnings. Miscellaneous expenses such as transportation to venue or admission fees connected to wagering could be claimed regardless of wagering winnings.

    The limitation on wagering losses under Code Sec. 165(d) is changed under the new law. All deductions for expenses incurred in carrying out wagering transactions, and not just gambling losses, are limited to the extent of gambling winnings.


    Child Tax Credit

    Prior to the law change, a taxpayer could claim a child tax credit of up to $1,000 per qualifying child under the age of 17. The credit phased out by $50 for each $1,000 of AGI over $75,000 for single filers, $110,000 for married filers, and $55,000 for married individuals filing separately. When the credit exceeded a taxpayer’s liability, a refundable credit (i.e., the additional child tax credit) equal to 15% of earned income in excess of $3,000 (the “earned income threshold”) was available. A Taxpayer Identification Number (TIN) was required for each qualifying child on a parent’s return.  Under the new law through tax year 2025, Code Sec. 24(h)(2), as amended, now provides an increase of the child credit to $2,000.

    The credit phases out beginning at higher income levels: $400,000 for married taxpayers filing jointly ($200,000 for all other taxpayers) (not indexed for inflation). In addition, a $500 nonrefundable credit is provided for certain non-child dependents.

    The amount of the credit that is refundable has been increased to $1,400 per qualifying child, indexed for inflation, up to the $2,000 base credit amount. The earned income threshold for the refundable portion of the credit is decreased from $3,000 to $2,500. The child’s SSN is required in order to be eligible for the credit.


    State and Local Tax Deduction

    Historically, state and local taxes, including real and personal property taxes, income taxes, and/or sales taxes could be deducted from taxable income as an itemized deduction.

    Through 12/31/2015,  local and foreign property taxes, and State and local sales taxes, are deductible only when paid or accrued in carrying on a trade or business or an activity described in Code Sec. 212 which discusses activities in the production of income. State and local income, war profits, and excess profits are not allowable as a deduction.

    However, a taxpayer may claim an itemized deduction of up to $10,000 ($5,000 for a married taxpayer filing a separate return) for the aggregate of (i) State and local property taxes not paid or accrued in carrying on a trade or business or activity described in Code Sec. 212; and (ii) State and local income, war profits, and excess profits taxes (or sales taxes in lieu of income, etc. taxes) paid or accrued in the tax year. As amended, Code Sec. 164(b) states that foreign real property taxes may not be deducted.

    In tax year 2017, with respect to a State or local income tax imposed for the 2018  tax year, the payment will be treated as paid on the last day of the tax year for which such tax is so imposed for purposes of applying the above limits. Therefore, as amended, Code Sec. 164(b)(6) provides that a taxpayer who, in 2017, pays an income tax that is imposed for a tax year after 2017, that taxpayer cannot claim an itemized deduction in 2017 for that prepaid income tax.

    Mortgage and Home Equity Indebtedness Interest Deduction

    Prior to passage of the Act, qualified residence interest, which included interest paid on a mortgage collateralized by a primary residence or a second home, was treated as an itemized deduction. Up to $1 million or mortgage debt ($500,000 in the case of a married individual filing a separate return), plus home equity indebtedness of up to $100,000 could qualify .

    Beginning 2018 through 2025, the New law Code Sec. 163(h)(3)(F), as amended, removes the deduction for interest on home equity indebtedness , and the deduction for mortgage interest is limited to underlying indebtedness of up to $750,000 ($375,000 for married taxpayers filing separately). The new lower limit doesn’t apply to any acquisition indebtedness incurred before Dec. 15, 2017. For tax years beginning Jan. 1, 2026,  the prior $1 million/$500,000 limitations  and $100,000 Home Equity indebtedness are restored, regardless of when the indebtedness was incurred.

    A special exception pertains for a taxpayer who has entered into a binding written contract before Dec. 15, 2017 to close on the purchase of a principal residence before Jan. 1, 2018, and who purchases such residence before Apr. 1, 2018. In this case, the taxpayer shall be considered to incur acquisition indebtedness prior to Dec. 15, 2017.

    The $1 million/$500,000 limitations continue to apply to taxpayers who refinance existing qualified residence indebtedness that was incurred before Dec. 15, 2017. This indebtedness resulting from the refinancing cannot exceed the amount of the refinanced indebtedness to maintain the advantage.

    Medical Expense Deduction Threshold Reduced

    Under prior law, a 10% of Adjusted Gross Income threshold had to be exceeded in order for a deduction to be permitted for medical expenses paid for care of the taxpayer, taxpayer’s spouse, and the taxpayer’s dependents. Expenses reimbursed by insurance or otherwise were not allowable for deduction. If medical expenses were reimbursed, then they had to be reduced by the reimbursement before the 10% threshold was applied.

    For tax years beginning 1/1/2017 and ending 12/31/2018,  Code Sec. 213(f), as amended, provides that the 10% of AGI medical expense deduction threshold is reduced to 7.5% for all taxpayers. In addition, the rule limiting the medical expense deduction for AMT purposes to 10% of AGI doesn’t apply to these same tax years.

    Charitable Contribution Deduction

    The deduction for an individual’s charitable contribution is limited to prescribed percentages of the taxpayer’s “contribution base.” Under pre-Act law, the applicable percentages were 50%, 30%, or 20%, and depended on the type of organization to which the contribution was made, whether the contribution was made “to” or merely “for the use of” the donee organization, and whether the contribution consisted of capital gain property. The 50% limitation applied to public charities and certain private foundations.

    For contributions made in tax years beginning during the 2018 through 2025 tax years, the 50% limitation under Code Sec. 170(b) for cash contributions to public charities and certain private foundations is increased to 60%. Contributions above the 60% limitation can be carried forward and deducted for up to five years, subject to the later year’s ceiling.

    Under current law, contributions of $250 or more were deductible only if the donor provided a contemporaneous written acknowledgment (CWA) from the charitable organization. Under the new law, for contributions made in tax years beginning 1/1/2017,  Code Sec. 170(f)(8)(D) requiring the charitable organization’s reporting exemption from the CWA requirement is repealed.

    Amounts Paid for College Athletic Seating Rights

    Under current law, special rules applied for payments to institutions of higher education in exchange for which the payor receives the right to purchase tickets or seating at an athletic event. In these situations, the payor could treat 80% of a payment as a charitable contribution where:  the amount was paid to the benefit of an institution of higher education and such amount would be allowable as a charitable deduction with the right to purchase tickets for seating at an athletic event in an sports stadium of such institution.

    For contributions made subsequent to the 2017 tax year, Code Sec. 170(l), as amended, states that no charitable deduction is permitted  where donor receives the right to purchase tickets or seating at an athletic event.

    Alimony Deduction by Payor/Inclusion by Payee Suspended

    Under current law, Code Sec. 215(a) treated alimony and separate maintenance payments as deductible by the payor spouse under and was includible as income by the recipient spouse under Code Sec. 71(a) and Code Sec. 61(a)(8) .

    The New Tax Act now states that any divorce or separation agreement executed after Dec. 31, 2018, or executed before that date but modified after it (if the modification expressly provides that the new amendments apply), alimony and separate maintenance payments are not deductible by the payor spouse and are not included in the income of the payee spouse. Rather, income used for alimony is taxed at the rates applicable to the payor spouse.

    Miscellaneous Itemized Deductions Suspended

    Prior to the New law, miscellaneous itemized deductions in excess of 2% of the taxpayer’s adjusted gross income were permitted. Under the new law, from  tax years 2018 through 2025,  the deduction for miscellaneous itemized deductions that are subject to the 2% floor is suspended.

    Overall Limitation (“Pease” Limitation) on Itemized Deductions

    Under pre-Act law,  higher-income taxpayers who itemized their deductions were subject to a limitation on these deductions.  The infamous Pease limitation was first incorporated into the Omnibus Budget Reconciliation Act of 1990 and it is named after former Congressman Donald Pease.  The purpose of the Pease limitation was to raise revenue by limiting some popular and common itemized deductions among high-income earners.  Pease limitations aim to reduce the benefit of itemized deductions such as Charitable Contributions, Mortgage Interest, and State, Local Property Taxes. Taxpayers who exceed the threshold, the otherwise allowable amount of itemized deductions was reduced by 3% of the amount of the taxpayers’ adjusted gross income exceeding the threshold. The total reduction couldn’t be greater than 80% of all itemized deductions, and certain itemized deductions were exempt from the Pease limitation.

    For tax years 2018 through 2025, the “Pease limitation” on itemized deductions is suspended.

    Qualified Bicycle Commuting Exclusion

    Under current law, an employee could exclude up to $20 per month in qualified bicycle commuting reimbursements as payment for reasonable expenses during a calendar year. For tax years 2018 through 2025, the exclusion from gross income and wages for qualified bicycle commuting reimbursements is suspended.

    Exclusion for Moving Expense Reimbursements

    Current law permitted an employee, under Code Sec. 3401(a)(15), Code Sec. 3121(a)(11), and Code Sec. 3306(b) (9), to exclude qualified moving expense reimbursements from his or her gross income and from his or her wages for employment tax purposes. These were for amounts received directly or indirectly, from an employer as payment/reimbursement for expenses which would be deductible as moving expenses under Code Sec. 217 if directly paid or incurred by the employee.

    For tax years 2018 through 2025, except for members of the Armed Forces on active duty (and their spouses and dependents) who move pursuant to a military order and incident to a permanent change of station, the exclusion for qualified moving expense reimbursements is suspended.

    Moving Expenses Deduction

    Prior law permitted taxpayers to take a deduction under Code Sec. 217 for moving expenses incurred in connection with starting a new job if the new workplace was at least 50 miles farther from a taxpayer’s former residence than the former place of work.

    From tax years 2018 through 2025, this deduction is suspended. The exception is specifically for members of the Armed Forces on active duty who move as a result of military order requiring change of station.

    Living Expenses Deduction for Members of Congress Eliminated

    Individual taxpayers generally can, subject to certain limitations, deduct ordinary and necessary business expenses paid or incurred during the tax year in carrying on a trade or business, including expenses for travel away from home. Under prior law members of Congress were allowed to deduct up to $3,000 of living expenses when they were away from home including, maintaining a residence in Washington, D.C. in any tax year.  For tax years beginning after the enactment date, Code Sec. 162(a), as amended, now states that members of Congress cannot deduct living expenses when they are away from home.

    Combat Zone Treatment Extended to Egypt’s Sinai Peninsula

    For purposes of various Code provisions that provide tax benefits to members of the Armed Forces serving in a combat zone, the Act provides that a “qualified hazardous duty area” (which the Act defines as including the Sinai Peninsula of Egypt), is treated in the same manner as a combat zone. Thus, under the Act, for services provided on or after June 9, 2015, combat zone tax benefits are, except as provided below, granted for the Sinai Peninsula of Egypt, if, as of the enactment date, any member of the U.S. Armed Forces is entitled to special pay under section 310 of title 37, United States Code (relating to special pay; duty subject to hostile fire or imminent danger), for services performed in such location. This benefit lasts only during the period such entitlement is in effect. However, the combat zone benefit under Code Sec. 3401(a)(1) relating to the withholding exemption for combat pay applies to remuneration paid after the date of enactment.


    Obama Care Individual Mandate Repealed

    The Affordable Care Act required that individuals who were not covered by a health plan that provided at least minimum essential coverage were required to pay a “shared responsibility payment” with their federal tax return. Unless an exception applied, this tax penalty was imposed for any month that an individual did not have minimum essential coverage.

    Beginning January 1, 2019, Code Sec. 5000A(c), as amended, permanently repeals the amount of the individual shared responsibility payment and it no longer applies.  However, the Act leaves intact the 3.8% net investment income tax and the 0.9% additional Medicare tax, both enacted by Obama Care.


    AMT Retained with Higher Exemption Amounts

    The alternative minimum tax (AMT) is a parallel tax system designed to prevent high income taxpayers from avoiding tax liability by using various exclusions, deductions, and credits.  At specific high income levels, AMT rates are applied to AMT income calculated net of any deductions, exclusions and credits recaptured in the formula. If the tax determined under these calculations exceeds the regular tax, the larger amount is owed.

    In computing the AMT, only alternative minimum taxable income (AMTI) above an AMT exemption amount is taken into account. The AMT exemption amount is set by statute and adjusted annually for inflation, and the exemption amounts are phased out at higher income levels.

    For 2018, the exemption amounts were scheduled to be:

    • $86,200 for marrieds filing jointly/surviving spouses;
    • $55,400 for other unmarried individuals;
    • 50% of the marrieds-filing-jointly amount for marrieds filing separately, i.e., $43,100;

    And, those exemption amounts were reduced by an amount equal to 25% of the amount by which the individual’s AMTI exceeded:

    • $164,100 for marrieds filing jointly and surviving spouses (phase-out complete at $508,900);
    • $123,100 for unmarried individuals (phase-out complete at $344,700); and
    • 50% of the marrieds-filing-jointly amount for marrieds filing separately, i.e., $82,050 (phase-out complete at $180,450).

    Additionally, married persons filing must add the lesser of the following to AMTI: (1) 25% of the excess of AMTI (determined without regard to this adjustment) over the minimum amount of income at which the exemption will be completely phased out, or (2) the exemption amount. So, for 2018, married persons filing separately must add the lesser of the following to AMTI: (1) 25% of the excess of AMTI over $254,450, or $43,100.

    For trusts and estates, for 2018, the exempt amount was scheduled to be $24,600, and the exemption was to be reduced by 25% of the amount by which its AMTI exceeded $82,050 (phase-out complete at $254,450).

    For tax years from 2018 through 2025, the Act increases the AMT exemption amounts for individuals as follows:

    • For joint returns and surviving spouses, $109,400.
    • For single taxpayers, $70,300.
    • For marrieds filing separately, $54,700. (Code Sec. 55(d)(4), as amended by Act Sec. 12003(a))

    Under the Act, the above exemption amounts are reduced (not below zero) to an amount equal to 25% of the amount by which the AMTI of the taxpayer exceeds the phase-out amounts, increased as follows:

    • For joint returns and surviving spouses, $1 million.
    • For all other taxpayers (other than estates and trusts), $500,000.

    For trusts and estates, the base figure of $22,500 and phase-out amount of $75,000 remain unchanged. All of these amounts will be adjusted for inflation after 2018 under the new C-CPI-U inflation measure discussed earlier.


    ABLE Account Changes

    ABLE Accounts under Code Sec. 529A provide individuals with disabilities and their families the ability to fund a tax preferred savings account to pay for “qualified” disability related expenses. Contributions may be made by the person with a disability, who notably could be the beneficiary, parents, family members or others. The annual gift-tax exemption, scheduled to be $15,000 in 2018 was the contribution limitation prior to the New law.

    For tax years 2018 through 2025, the New law increased contribution limitation to ABLE accounts for contributions made by the designated beneficiary. Code Sec. 529A(b) as amended, provides that after the 2018 $15,000 annual gift tax exemption is reached, an additional amount can be contributed up to the lesser of: (a) the Federal poverty line for a one-person household; or (b) the individual’s compensation for the tax year.

    In addition, the designated beneficiary of an ABLE account can claim the Saver’s Credit under Code Sec. 25B for contributions made to his or her ABLE account.  The Act also requires that a designated beneficiary/beneficiary’s designated person maintain adequate records for ensuring compliance with the above limitations.

    Amounts from qualified tuition programs (i.e. 529 Plans) are allowed to be rolled over to an ABLE account without penalty, provided that the ABLE account is owned by the designated beneficiary of that 529 account, or a member of such designated beneficiary’s family. These rolled-over amounts count towards the $15,000 overall limitation that can be contributed within a tax year, and any amount rolled over in excess of this limitation is includible in the gross income of the distributee.

    Expanded Use of 529 Account Funds

    Current law allows funds in a Code Sec. 529 college savings account to be used for qualified higher education expenses. Withdrawals from the account for non-qualified purposes was treated as containing a pro-rata portion of earnings and principal. The earnings portion of a nonqualified withdrawal was taxable as ordinary income and subject to a 10% additional tax unless an exception applied.

    “Qualified higher education expenses” included tuition, fees, books, supplies, and required equipment, as well as reasonable room and board if the student was enrolled at least half-time. Eligible schools included colleges, universities, vocational schools, or other postsecondary schools eligible to participate in a student aid program of the Department of Education. This included nearly all accredited public, nonprofit, and proprietary (for-profit) postsecondary institutions.

    The New law permits distributions from 1/1/2018 forward for “qualified higher education expenses” to include tuition at an elementary or secondary public, private, or religious school, up to a $10,000 limit per tax year.

    Student Loan Discharged on Death or Disability

    Gross income generally includes the discharge of indebtedness of the taxpayer. Under an exception to this general rule, gross income does not include any amount from the forgiveness of certain student loans, if the forgiveness is contingent on the student’s working for a certain period of time in certain professions for any of a broad class of employers.

    The Tax Act under Code Sec. 108(f), as amended provides that for discharges of indebtedness from tax years 2018 through 2025, certain student loans discharged on account of death or total and permanent disability of the student are also excluded from gross income.


    New Deferral Election for Qualified Equity Grants

    Code Sec. 83 governs the amount and timing of income inclusion for property, including employer stock, transferred to an employee in connection with the performance of services.  Code Sec. 83(a) general states that an employee must recognize income for the tax year in which the employee’s right to the stock is transferable or is not subject to a substantial risk of forfeiture. The amount includible in income is the excess of the stock’s fair market value at the time of substantial vesting over the amount, if any, paid by the employee for the stock.

    The Tax Act holds that transactions settled from 1/1/2018 forward, specifically to stock attributable to options exercised or restricted stock units (RSUs), a qualified employee can elect to defer, for income tax purposes, recognition of the amount of income attributable to qualified stock transferred to the employee by the employer. The election applies only for income tax purposes. The application of FICA and FUTA is not affected. The election must be made no later than 30 days after the first time the employee’s right to the stock is substantially vested or is transferable, whichever occurs earlier. If the election is made, the income has to be included in the employee’s income for the tax year that includes the earliest of:

    • The first date the qualified stock becomes transferable, including, solely for this purpose, transferable to the employer.
    • The date the employee first becomes an “excluded employee” , i.e., an individual who: (a) is one-percent owner of the corporation at any time during the 10 preceding calendar years; (b) is, or has been at any prior time, the chief executive officer or chief financial officer of the corporation or an individual acting in either capacity; (c) is a family member of an individual described in (a) or (b); or (d) has been one of the four highest compensated officers of the corporation for any of the 10 preceding tax years.
    • The first date on which any stock of the employer becomes readily tradable on an established securities market;
    • The date five years after the first date the employee’s right to the stock becomes substantially vested; or
    • The date on which the employee revokes his or her election.

    The election is available for “qualified stock” attributable to a statutory option. In such a case, the option is not treated as a statutory option, and the rules relating to statutory options and related stock do not apply. In addition, an arrangement under which an employee may receive qualified stock is not treated as a nonqualified deferred compensation plan solely because of an employee’s inclusion deferral election or ability to make the election.

    Deferred income inclusion also applies for purposes of the employer’s deduction of the amount of income attributable to the qualified stock. That is, if an employee makes the election, the employer’s deduction is deferred until the employer’s tax year in which or with which ends the tax year of the employee for which the amount is included in the employee’s income as described above.

    The new election applies for qualified stock of an eligible corporation. A corporation is treated as such for a tax year if: (1) no stock of the employer corporation (or any predecessor) is readily tradable on an established securities market during any preceding calendar year, and (2) the corporation has a written plan under which, in the calendar year, not less than 80% of all employees who provide services to the corporation in the US (or any US possession) are granted stock options, or restricted stock units (RSUs), with the same rights and privileges to receive qualified stock.

    Detailed employer notice, withholding, and reporting requirements also apply with regard to the election.  As noted above, the income deferral election generally applies with respect to stock attributable to options exercised or RSUs settled after Dec. 31, 2017. However, under a transition rule, until IRS issues regs or other guidance implementing the 80% and employer notice requirements under the provision, a corporation will be treated as complying with those requirements if it complies with a reasonable good faith interpretation of them. The penalty for a failure to provide the notice required under the provision applies to failures after Dec. 31, 2017.


    Repeal of the Rule Allowing Recharacterization of IRA Contributions

    Current law provides that if an individual makes a contribution to an IRA, then that person is allowed to recharacterize the contribution as a contribution to the other type of IRA (traditional or Roth) by making a trustee-to-trustee transfer to the other type of IRA before the individual’s files the return for that year. In the case of a recharacterization, the contribution is treated as having been made to the transferee IRA (and not the original, transferor IRA) as of the date of the original contribution. Both regular contributions and conversion contributions to a Roth IRA can be recharacterized as having been made to a traditional IRA.

    For tax years beginning 1/1/2018 and subsequent, the rule that allows a contribution to one type of IRA to be recharacterized as a contribution to the other type of IRA does not apply to a conversion contribution to a Roth IRA. Thus, recharacterization cannot be used to unwind a Roth conversion.

    Length of Service Award Programs for Public Safety Volunteers

    Under pre-Act law, any plan that solely provides length of service awards to bona fide volunteers or their beneficiaries, on account of qualified services performed by the volunteers, is not treated as a plan of deferred compensation for purposes of the Code Sec. 457 rules. Qualified services are fire-fighting and prevention services, emergency medical services, and ambulance services, including services performed by dispatchers, mechanics, ambulance drivers, and certified instructors. The exception applies only if the aggregate amount of length of service awards accruing for a bona fide volunteer with respect to any year of service does not exceed $3,000.

    Code Sec 457(e), as amended in the New Law states that for tax years beginning 1/1/2018, the aggregate amount of length of service awards that may accrue for a bona fide volunteer with respect to any year of service, increases from $3,000 to $6,000 subject to changes in cost-of-living for years after the first year the proposal is effective. Additionally, if the plan is a defined benefit plan, the limit applies to the actuarial present value of the aggregate amount of length of service awards accruing with respect to any year of service. Actuarial present value is calculated using reasonable actuarial assumptions and methods, assuming payment will be made under the most valuable form of payment under the plan, with payment commencing at the later of the earliest age at which unreduced benefits are payable under the plan or the participant’s age at the time of the calculation.

    Extended Rollover Period for Rollover of Plan Loan Offset Amounts

    If an employee stops making payments on a retirement plan loan before the loan is repaid, a deemed distribution of the outstanding loan balance generally occurs. Such a distribution is generally taxed as though an actual distribution occurred, including being subject to a 10% early distribution tax, if applicable. A deemed distribution isn’t eligible for rollover to another eligible retirement plan.

    Under current law, a plan also provided that, in certain circumstances such as employee termination, an employee’s obligation to repay a loan is accelerated and, if the loan is not repaid, the loan is cancelled and the amount in employee’s account balance is offset by the amount of the unpaid loan balance, referred to as a loan offset. A loan offset is treated as an actual distribution from the plan equal to the unpaid loan balance (rather than a deemed distribution), and (unlike a deemed distribution) the amount of the distribution is eligible for tax free rollover to another eligible retirement plan within 60 days. However, the plan is not required to offer a direct rollover with respect to a plan loan offset amount that is an eligible rollover distribution, and the plan loan offset amount is generally not subject to 20% income tax withholding.

    The new Tax Act states that plan loan offset amounts which are treated as distributed in tax years beginning  in 2018, the period during which a qualified plan loan offset amount may be contributed to an eligible retirement plan as a rollover contribution would be extended from 60 days after the date of the offset to the due date (including extensions) for filing the Federal income tax return for the tax year in which the plan loan offset occurs — that is, the tax year in which the amount is treated as distributed from the plan. A qualified plan loan offset amount is a plan loan offset amount that is treated as distributed from a qualified retirement plan solely by reason of the termination of the plan or the failure to meet the repayment terms of the loan because of the employee’s separation from service, whether due to layoff, cessation of business, termination of employment, or otherwise. A loan offset amount under the Act (as before) is the amount by which an employee’s account balance under the plan is reduced to repay a loan from the plan.


    2016 “Net Disaster Loss” Relief Available to Non-Itemizers & Taxpayers Subject to AMT

    Code Sec. 165(h) generally states that personal casualty losses cannot be claimed by a taxpayer who claims the standard deduction. Personal casualty losses may only be claimed as itemized deductions. The alternative minimum tax (AMT) does not permit use of the standard deduction either. Thus, a taxpayer who has taken the standard deduction for regular tax purposes must add back the amount of the deduction in computing alternative minimum taxable income (AMTI) and may not claim itemized deductions for AMT purposes.

    The Tax Act provides that for tax years 2018 through 2025,  if an individual has a net disaster loss for any tax year beginning from 2018 through 2025, the standard deduction is increased by the net disaster loss. A net disaster loss is the excess of qualified disaster-related personal casualty losses over personal casualty gains.

    The Act also states that, if any individual has a net disaster loss for any tax year during that time, the AMT adjustment for the standard deduction does not apply to the increase in the standard deduction that is attributable to the net disaster loss.

    The application of this provision might be limited as it applies to losses potentially deductible in the 2018 through 2025 tax years, but is limited to losses incurred in the 2016 disaster areas.

    Relief from Early Withdrawal Tax for “Qualified 2016 Disaster Distributions”

    A distribution from a qualified retirement plan, a tax-sheltered annuity plan, an eligible deferred compensation plan of a State or local government employer, or an individual retirement arrangement (IRA) generally is included in income for the year distributed. In addition, unless an exception applies, distribution from a qualified retirement plan, a section 403(b) plan, or an IRA received before age 59½ is subject to a 10% additional tax under on the amount includible in income. In general, a distribution from an eligible retirement plan may be rolled over to another eligible retirement plan within 60 days and is not includible in income if 60 day window is met.

    The Tax Act under Act Sec. 11028(b) provides an exception to the retirement plan 10% early withdrawal tax for up to $100,000 of “qualified 2016 disaster distributions and include those made on or after Jan. 1, 2016, and before Jan. 1, 2018, to an individual whose principal place of residence at any time during calendar year 2016 was located in a 2016 disaster area and who has sustained an economic loss by reason of the events that gave rise to the Presidential disaster declaration.

    Income attributable to a qualified 2016 disaster distribution can, under the Act, can be allocated ratably over a three year period and the amount of a qualified 2016 disaster distribution can be recontributed to an eligible retirement plan within three years. The Act also provides that a plan amendment made pursuant to the above disaster relief provisions may be retroactively effective if certain requirements are met, including that it be made on or before the last day of the first plan year beginning after Dec. 31, 2018 (Dec. 31, 2020 for a governmental plan), or a later date prescribed by IRS.


    Certain Self-Created Property Not Treated as Capital Asset

    Under current law, property held by a taxpayer (whether or not connected with the taxpayer’s trade or business) is generally considered a capital asset under Code Sec. 1221(a). However, certain assets are specifically excluded from the definition of a capital asset, including inventory property, depreciable property, and certain self-created intangibles (e.g., copyrights, musical compositions).

    The Tax Act states that for dispositions made beginning 1/1/2018, Code Sec. 1221(a)(3) is amended, resulting in the exclusion of patents, inventions, patented or non-patented models or designs, and secret formulas or processes, which are held either by the taxpayer who created the property or by a taxpayer with a substituted or transferred basis from the taxpayer who created the property, from the definition of a “capital asset.”


    Estate and Gift Tax Retained with Increase in Basic Exclusion Amount

    Current law dictates that a gift tax is imposed on certain lifetime transfers and an estate tax is imposed on certain transfers at death. In 2018,  current law would have provided for the first $5.6 million of transferred property exempt from estate and gift tax for a single person (indexed for inflation). $11.2 million applied for a married couple.

    The New Law begins in 2018 and sunsets 12/31/2025. The Act doubles the base estate and gift tax exemption amount from $5.6 million to $11.2 million in 2018 and doubles it to $22.4 million for a married couple. These amounts will also be indexed for inflation.


    Time To Contest IRS Levy Extended

    The IRS is authorized to return property that has been wrongfully levied upon. Under pre-Act law, monetary proceeds from the sale of levied property could generally be returned within nine months of the date of the levy.

    Code Sec. 6343(b), as amended by Act Sec. 11071 makes the following changes. For levies made after the date of enactment; and for levies made on or before the date of enactment if the 9-month period has not expired as of the date of enactment, the 9-month period during which IRS may return the monetary proceeds from the sale of property that has been wrongfully levied upon is extended to two years. The period for bringing a civil action for wrongful levy is similarly extended from nine months to two years.

    Due Diligence Requirements for Claiming Head of Household

    Any person who is a tax return preparer for any return or claim for refund, who fails to comply with certain regulatory due diligence requirements imposed by regulations with regard to determining the eligibility for, or the amount of, an earned income credit, a child tax credits or an American opportunity tax credit, must pay a penalty. The base amount of the penalty is $500; for 2018, as adjusted for inflation under Code Sec. 6695(h), the penalty is $520.

    The New Law states that effective for tax years beginning 1/1/2018, the Act expands the due diligence requirements for paid preparers to cover determining eligibility for a taxpayer to file as head of household. A penalty of $500 (adjusted for inflation) is imposed for each failure to meet these requirements.

    Questions? Contact Grennan Fender Hess & Poparad for Answers!

    If you have any question regarding the New Tax Reform Act and how the 2017 Tax Cuts and Jobs Act affects you or your business, contact us online now or call us at (407) 896-4931 to discuss how we can help you. Grennan Fender Hess & Poparad, LLP is a full service CPA, plus an accounting and assurance firm that provides a wide array of services to our clients, including tax, audit, consulting, and tax planning for both individuals and businesses. We know that the needs and demands of our clients are ever-changing and we pride ourselves on our ability to meet their needs by our continual educational training and technological development.

  6. 2017 GOP Tax Reform


    November 2nd finally brought the Republican Party’s long-awaited Tax Cuts and Jobs Act (HR 1). The 429-page bill is the first shot at significant tax reform in this country in the past 30 years. President Trump has requested an approved bill for his signing by Thanksgiving. House Ways and Means Committee Chair Kevin Brady, the author of the tax bill, said the bill could add $1.51 trillion to the federal deficit over the next 10 years. The Senate may utilize the budget reconciliation process to move the bill more quickly and avoid a Democratic filibuster. Brady, House Speaker Paul Ryan, and other House GOP leaders endorsed the bill in a press conference last week, arguing it would save the average family of four $1,182 a year on their taxes.


    For Individuals, the Bill proposes to:

    Maintain the highest tax bracket at 39.6% –  A fourth marginal tax bracket would apply to married couples making more than $1 million a year and single filers earning more than $500,000.


    Lower the individual tax rates for low-to-middle income taxpayers to 12%, 25%, and 35%.

    • For joint filers, the 25 percent would start at $90,000
    • $260,000 for the 35 percent bracket (half for single, individual filers).


    Increase the Standard Deduction from $6,350 to $12,200 for individuals and $12,700 to $24,400 for married couples


    Eliminate “special-interest deductions” , thereby simplifying the filing process. Eliminations include:

    • Student-loan-interest deduction – The amount paid toward student loan interest can currently be deducted.
    • Medical-expense deduction –  Under current law, individuals who spend over 10% of their income on medical expenses are allowed to deduct part of those costs from their taxes. The proposed new bill would remove that deduction.
    • Moving deduction – This allows anyone who moved to a new home in the past year to deduct moving expenses.
    • Alimony– Payment deduction.


    • Maintain the Charitable Contribution deduction


    • Home Mortgages:

    • Grandfather home mortgage interest deduction for existing mortgages up to the current $1 million debt limit
    •  Lower home mortgage interest deduction on newly purchased homes up to $500,000


    Establish a new Family Credit, which includes expanding the Child Tax Credit from $1,000 to $1,600, and providing a credit of $300 for each parent and non-child dependent to help all families.


    Eliminate personal exemptions


    Preserve the Earned Income Tax Credit


    Cap itemized state and local property taxes deduction up to $10,000 – Republicans and democrats in states like New York, New Jersey, and California have struggled with the proposed elimination of the state and local tax (SALT) deduction. The benefit allows people to deduct those taxes from their federal bill. This compromise could help.


    Retain 401(k)s and Individual Retirement Accounts advantages as they are currently structured


    Repeal the Alternative Minimum Tax (AMT) – This tax, which forces people who qualify because of an outsized number of deductions, is welcome news to many. Event President Trump will benefit as his own tax bill has been shown to be millions of dollars more because of the tax.


    • Double the estate tax exclusion to $12 million per individual, with full repeal after six year.


    For Businesses, the Bill proposes to:


    Cut the corporate tax rate to 20% immediately and permanently


    Create a top pass-through rate of 25% on small business income with safeguards against abuse. Instead of getting taxed at an individual rate for business profits, people who own their own business would pay at the so-called pass-through rate.


    Create a temporary 100% expensing write-off for qualified business property immediately. Companies will be able to deduct the cost of business investments from their tax bill in the year that they make them instead of spreading it out over multiple years.


    Make numerous changes to the taxation of foreign income and foreign persons/businesses


    • Cap the deduction for net interest expenses at 30% of adjusted taxable income, except for small businesses.


    Modify the net operating loss deduction


    Allow for the temporary repatriation of foreign earnings (liquid assets) at a 12% rate. The repatriation rate will be a mandatory one-time tax on overseas assets for US companies. illiquid assets would be taxed at a 5% rate and spread out over a longer period than liquid assets like cash.


    Not repeal Obama care’s individual mandate – Despite the President’s advocacy to eliminate the penalty for not having insurance, no allowance was made for it.


    Others proposals:


    Large private university endowments tax   Private universities with assets of more than $100,000 per student will pay a 1.4% excise tax on their net investment income.


    • Johnson Amendment repeal –  The current rule prevents tax-exempt nonprofits from making explicit election endorsements.


    • Interest deduction on bonds for sports stadiums eliminated –  Currently, local governments issue bonds to pay for the construction of sports facilities and this proposal would prevent people from deducting interest income from these bonds on their federal taxes.


    Mixed Reaction

    House Republicans have not yet reached consensus on the proposals within the bill, and GOP House leaders can only afford to lose 22 votes on the measure if the bill receives no Democratic support. Much of the immediate backlash within the Party centers on the elimination of the State and Local Tax (SALT) deduction in its current form, while capping the current property tax deduction at $10,000. As details of the bill began to trickle out, reactions poured in. The changes to the mortgage-interest deduction and other provisions sent stocks of home-builders sliding. The SPDR S&P Home-builders ETF was down roughly 2.5% Thursday morning and shares of major builders D.R. Horton, Pulte Group, and Lennar all slipped. Alternatively, companies with a higher effective tax rate and those with a lot of money held overseas rallied strongly on the release of the bill in anticipation of possible higher profits. Regardless of the initial reactions, one thing is for sure – all groups agree on the need for reform and when everyone is squabbling a little, a solution may be close at hand.


    Grennan Fender Hess & Poparad, LLP is a full service accounting and assurance firm that provides a wide array of services to our clients, including tax, audit, consulting, and tax planning for both individuals and businesses. We know that the needs and demands of our clients are ever-changing and we pride ourselves on our ability to meet their needs by our continual educational training and technological development.


    CEO Leadership Forums: Workshop III – Becoming Your Best!

    The CEO Leadership Forums facilitates the growth of middle market companies. Join recognized Orlando business experts and distinguished guest speakers on November 16th, 2017. Business professionals that attend the event will discuss and explore strategies and tactics for growing their businesses profitably.


    David Poparad, CPA, Managing Partner of Grennan Fender, and Geoffrey Gallo, Senior Vice President – Marketing & Strategic Consulting, will both be attending the mid-November event.

  8. Affordable Education in Central Florida

    Affordable Bachelor Degrees are now available in Central Florida

    Nursing and Business minded students in Central Florida now have the option to earn an affordable Bachelor’s Degree. On July 17th, 2017 the State Board of Education approved the following two bachelor degree programs; BAS in Supervision and Management and a BS in Nursing to be offered across four Central Florida State colleges, allowing them to provide affordable degrees with great employment opportunities and expanding horizons.

    The four colleges; Valencia College, Seminole State College, Lake Sumter State College, and Eastern Florida State College worked collaboratively with Orlando Health, Florida Hospital, and the University of Central Florida (UCF) to develop a curriculum and a 4 year college experience that would have a total cost to the student of only $10,000 – This met Governor Rick Scott’s goal that Florida Colleges develop affordable 4 year curriculums. The introduction of the two degrees are targeted to begin in Spring 2018.

    Grennan Fender’s Sr. Vice President in Marketing and Strategic Consulting, Geoffrey Gallo, accompanied Valencia College leadership on the successful trip to the state capital. Gallo represented the Central Florida business community and advocated for the positive impact that the Supervision and Management program would have on privately owned businesses and their ever increasing need for qualified talent. Gallo is a leader of the CEO Leadership Forums, a group of 20 close-knit Professional Services firms, whose purpose is to deliver practical education to Florida Business Owners and deliver scholarships to deserving students of Valencia’s new 4 year business degree program. It is anticipated that 40 scholarships may be delivered to inaugural students of the new BAS Supervision and Management degree at Valencia. Some of these students may also qualify for part-time jobs made available through the interaction of business owners with students attending the college. According to Gallo “The new program not only opens a whole new window of affordability to potential students who could not otherwise afford a 4 year degree at other universities, but it also gives skilled technicians in the local workforce the ability to remain on the job while furthering an advanced education in business”.

    Currently there is a major shortage of qualified managers and supervisors with the necessary credentials to lead businesses through complex tasks, so this state approval should result in seeing some significant effects on the Central Florida community. It is a wonderful opportunity for bot the “up and coming” students and the area’s businesses alike.


    Inside the court room during the hearing.

    Grennan Fender Hess & Poparad, LLP is a full service accounting and assurance firm that provides a wide array of services to our clients, including tax, audit, consulting, and tax planning for both individuals and businesses. We know that the needs and demands of our clients are ever-changing and we pride ourselves on our ability to meet their needs by our continual educational training and technological development.


  9. Exit Planning Strategies


    Exit Planning for Business Owners: 3 Important Things to Consider.

    The time has come; baby boomers are reaching the finish line of their professional careers and conversations are starting about their exit plans and assurance of financial security in their post-exit lives. The mass departure of these business owners could trigger the largest transfer of wealth seen in history and according to the Business Enterprise Institute approximately fifteen percent of business owners have actually talked to an advisor about their exit plans.

    Here are 3 important things to consider when planning your exit:

    1. Goals: When you can establish why you want to exit the business, whether it is retirement, time with family, to travel, or to start a new business, you will uncover how you can get to that point. Setting goals provides owners with a reason to pursue their exit planning path, and it takes a way the anxiety of that path by approaching each step of the plan systematically. With the ability to track where in the exit planning process they are, they’re able to refocus on approaching step, address any conflicts, and improve the probability of a successful exit.

    2. Determine the asset gap: It is so important for business owners to determine the difference between the resources they have today and the resources they will need to achieve their financial-security goal. Analyzing this gap and having an accurate assessment of how close they are to achieving their exit goals, gives owners the framework to execute strategies to close this gap. A survey report conducted by BEI in 2016, stated that “Owners often need to dedicate 5-10 years to exit planning if they want to exit their businesses with financial security.” To get a free copy of the report, simply fill out our white paper request form now.

    3. Get an advisor(s): All business owners will one day exit their business, and who they call upon for help will determine the success of that transition. Seeking advice from somebody that they consider to have training or expertise in exit planning is so important. They can help them to set goals, determine the asset gap, and increase the business value and cash flow. Among the various professionals providing advisory services which support the exit planning process include:

    o Business Attorneys who can design and execute buy-sell agreements, key-employee incentive agreements, and renegotiation of long-term contracts and leases for the company.
    o CPAs who provide income tax planning, cash flow forecasting, budgeting, financing, business valuations, and consulting.
    o Estate Planners who calculate and project the value of a company at the owner’s exit date and help develop ways to mitigate exposure to estate taxes and accomplish the owner’s legacy objectives.
    o Financial & Insurance Planners who create financial plans for owners as well as deliver advice on investing non-business assets to support an owner’s income and departure date goals.

    If you’re interested in consulting with an expert in business exit strategies, contact us online now or call us at (407) 896-4931 to discuss how we can help you. Grennan Fender Hess & Poparad, LLP is a full service accounting and assurance firm that provides a wide array of services to our clients, including tax, audit, consulting, and tax planning for both individuals and businesses. We know that the needs and demands of our clients are ever-changing and we pride ourselves on our ability to meet their needs by our continual educational training and technological development.

  10. $12,000 Valencia College Scholarship