Frazier & Deeter, LLC

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Frazier & Deeter Rises to Accounting Today's Top 100 Firms List

Hot Tips for Financial Planner's Tax Season Prep
Planner- AICPA PFP Section
January/February 2008

Frazier & Deeter Rises to Accounting Today's Top 100 Firms List

(Atlanta, Georgia - March 18, 2008) Frazier & Deeter has risen to Accounting Today’s Top 100 Firms List for the first time in the firm’s short 26 year history. Accounting Today, a national trade journal focused on the CPA industry, annually ranks the Top 100 CPA firms in the country based on annual revenue, growth rates and other factors. Frazier & Deeter ranked 97th.

Accounting Today also reports on firms by region and ranked Frazier & Deeter 18th largest firm in the Southeast in the Top 100 Local Firms by Region report. Frazier & Deeter was only one of two Georgia firms to make the list.

The firm’s high rankings in 2008 are primarily due to its rapid growth and 17.12 percent increase in revenue from the past year. Only a small percentage of the firms who have received this honor have achieved such growth without merger activity.
Accounting Today's eagerly anticipated Top 100 Firms report ranks the largest U.S. Accounting firms by revenue, offering both a wealth of statistical data and insightful analysis of what makes the best firms tick, as well as their plans for the future.

Hot Tips for Financial Planner's Tax Season Prep
Planner - AICPA PFP Section
January/February 2008

By Roger W. Lusby III

Many of you serve your clients in tax matters as well as in financial planning. In addition, factoring the impact of tax laws – both present and future – into your financial planning is critical. Planner talked with three tax experts about their best ideas for 2007 tax season preparation. Here’s what they recommend.

Art Auerbach, CPA, is a tax director with McLean, VA-based Goodman and Company, LLP, where he specializes in tax consulting and financial planning for individuals and closely held businesses. He was recently a presenter at the AICPA Tax Division’s web-cast, 2007 Individual Income Tax Update, which reviewed individual taxation issues for year-end 2007 and beyond.

The central theme of Auerbach’s advice to Planner readers? Documentation. Not just the records you need to prepare a return, but those you will need to support the positions you take on the return. Watch out for the following issues as well, he says.

The reported basis for securities sold is a hot issue in the $350 billion tax gap discussion. The Treasury Department and IRS believe that tax-payers who report gains and losses don’t always produce an accurate basis for their transactions, so you’ll need sufficient documentation for the calculation of the basis taken. Tricky basis areas include a taxpayer who has inherited stock, sold it, and has no idea what the basis is.
On December 27, 2007, President Bush signed into law the Tax Increase Prevention Act of 2007, which increases the AMT exemption amounts through 2007. (The new amounts, before the phaseout, are $44, 350 for single filers and $66,250 for married couples filing jointly.) However, the future rules governing AMT – including whether it will be eliminated as part of a tax reform package – remain a mystery. In some instances you and your clients simply won’t know which way to go. In this climate, be sure to protect yourself by putting your client advice in writing and including a caveat that the advice is based on the statutes, rules, and regulations as of the day you give it.
Here’s an item that may hit close to home: Sole proprietorships are under great scrutiny by the IRS, which believes they generate one third of the tax gap. Of particular interest are Schedule C on Form 1040 and improper home office-based deductions.
Another issue to note is the deductibility of the interest on home equity loans. On Schedule A of Form 1040, interest on a home equity loan of up to $100,000 is automatically deductible, regardless of the use to which the funds are put. Not so with the AMT, where such interest is not automatically deductible.

Roger W. Lusby, III, CPA, CMA, AEP, is a partner in the accounting firm Frazier & Deeter, LLC in Atlanta, GA, where he works with business owners and high net worth and high-income individuals on tax and estate planning. He also works closely with the partners at Frazier & Deeter’s wealth management arm. Lusby points out the following tax law issues as particularly important this year.

2007 is the last year in which clients 70 ½ and older can make charitable donations directly out of their IRAs. These donations – which have an annual cap of $100,000 – qualify toward the required minimum distribution amount. However, they are not included in income, so clients making these donations cannot take a charitable tax deduction.

Beware, Lusby has found that some brokerage houses incorrectly reported such donations on 1099s in 2006, the first year that the rule was effective. Some brokerage houses reported the $100,000 distribution as taxable even when the taxpayer had given it directly to a qualifying charity. The charitable donations rule is effective only for 2006 and 2007. While charitable organizations are lobbying for the rule’s extension, Congress has not made a decision as of this writing.

Beginning in 2007, non-spouse beneficiaries can roll over distributions that they receive from a deceased person’s retirement plan. The previous rule extended only to surviving spouses. Remind your clients that beneficiaries should not comingle such a rollover IRA with one of their own because these IRAs have different distribution rules.
Cash charitable donations made in 2007 are not tax deductible unless the donor has a record of the donation in the form of a written letter from the donee.
2007 marks the beginning of a refundable AMT credit. Taxpayers who have an AMT credit equal to $5,000 or 20% of the unused credit. This new law won’t benefit your wealthier clients, however, because it phases out at $156,400 for single filers and $234, 600 for married couples filing jointly.
Finally, Lusby recommends that you encourage clients to consider making nondeductible IRA contributions with the aim of converting these traditional IRAs to Roths in 2010 when the income limitation on Roths ends. Keeps in mind that there may be valid reasons for not converting a client’s IRA, and the possibility of future tax law changes always makes “pre-paying” taxes risky business. Carefully review all relevant issues with the client before making a recommendation, and document your reasons for your decision.

John Battaglia, CPA, is a director in Deloitte’s Private Client Advisors practice in New York City. In this role he handles tax compliance and planning for high net worth individuals. As Deloitte’s national individual tax competency leader, he is in charge of communication technical and proves information to the firm’s national practice regarding individual tax. Battaglia talked with Planner about ways to strengthen client education and interaction as you head into tax season.

Turn 2007 record-keeping disasters into inspiration for superb organization in 2008. As your clients gather the information you will need to prepare their 2007 tax returns, invariably some will find themselves unable to locate pertinent records, forms, and so forth. You can use this frustrating situation to educate your clients about the importance of getting organized right out of the gate in 2008 – and staying current throughout the year.

Explain to your clients that the tax environment in becoming more complex, with constantly changing laws. Estimated tax payers should be particularly vigilant about keeping up with their financial situation throughout the year. Anyone with withholding can also benefit from good record keeping, which can prevent them from making an interest-free loan to the government. Also, a flurry of tax planning at year’s end has its downsides. Clients may not have time to accomplish tax-saving measures. And few of us are adept at remembering in March 2009 what we did in January 2008.

Develop third-party relationships to help you find necessary information. Preparing a return may be the easiest thing you do, Battaglia says. The hardest may be getting the information you need. Battaglia finds having good contacts with tax directors from relevant companies – those his clients have invested in or worked for – invaluable to his work. Often there is information vital to tax preparation and financial planning that your clients don’t have the knowledge, time, or interest to gather. Your third-party contacts can provide you what you need, such as the basis for securities that your client sold, and answer complex questions about stock options, retirement plans, etc.

It can be tough to get records from current and former employers, so form relationships with benefits administrators, payroll administrators, and tax directors. You’ll also save time by going directly to the source instead of playing ping-pong with your client. Obtaining permission to have third parties mail a client’s records, such as brokerage statements and 1099s, directly to you also saves time.

Battaglia echoes Auerbach’s advice about providing tax and financial planning services in an uncertain climate. He emphasized the importance of making your clients aware of potential tax law changes and ensuring that clients are part of decisions made in this unclear environment.