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GRT savings on Government and Not for Profit
Construction
Construction Regulations and GRT
Expiring Federal Tax Incentives
Bonus Depreciation Rules
Obamacare and small business
Carried Interest Update
New Mexico Gross Receipts
Tax Opportunities and
Planning
Presented by:
Duwayne Sibley, Senior Manager
John C. Tysseling, Director
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The material appearing in this presentation is for informational purposes
only and is not legal or accounting advice. Communication of this
information is not intended to create, and receipt does not constitute, a
legal relationship, including, but not limited to, an accountant-client
relationship. Although these materials may have been prepared by
professionals, they should not be used as a substitute for professional
services. If legal, accounting, or other professional advice is required, the
services of a professional should be sought.
7
Opportunities for Savings on Government and Not-for-Profit Construction
•
A New Mexico State cost segregation study examines qualifying construction projects by notfor-profit, governmental, and industrial revenue bond entities. It then provides the general
contractor with a New Mexico Gross Receipts Tax (NM GRT) savings or a refund on tangible
personal property, in accordance with New Mexico Statute § 7-9-54.
•
Historically NM has not allowed governments or non profits to buy construction tangibles
separately without tax.
 Regulation 3.2.1.11.K (the Building Reg.) changed that.
 3.2.1.11.K.(2) A "building" includes the structural components integral to the building and
necessary to the operation or maintenance of the building but does not include
equipment, systems or components installed to perform, support or serve the activities
and processes conducted in the building and which are classified for depreciation
purposes as 3-year, 5-year, 7-year, 10-year or 15-year property by Section 168 of the
Internal Revenue Code…
•
New Construction Projects
 Study should be initiated as soon as possible in construction process
 Allows for monthly savings to be applied on a go forward basis as project is being
constructed.
•
Past Construction
 Statute of limitation is 3 years
 Must file a refund with New Mexico Tax & Revenue Department with Amended CRS-1s.
•
Example Project:
 $12 Million Building, 7% NMGRT Rate
 15% Qualifying Property
 $126,000 NMGRT Savings
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CONSTRUCTION-RELATED ANTI-PYRAMIDING NM GROSS
RECEIPTS TAX PROVISIONS
• HB-184 (2012 Legislature) enacts §9-2-52
et seq. (NMSA 1978), and TRD Regs.
3.2.210 NMCA implements provisions to
avoid pyramiding of GRT.
• NTTC Type-6 may be executed by a
construction contractor:
• 1) For the purchase of construction
materials that will become ingredients
or components of a construction
project that is either subject to GRT
upon completion; or
• 2) the purchase of construction or
construction-related services that are
directly contracted for or billed to a
construction project
which are either subject to GRT upon
completion or upon the sale of the real
property upon which the project is
constructed.
• Construction –Related Services: directly
contracted or billed design, architecture,
drafting, surveying, engineering,
environmental and structural testing,
security, sanitation and services required
to comply with governmental
construction‐related regulations;
• but excludes general business services
(e.g., legal or accounting), equipment
maintenance and real estate sales
commissions.
• If a manufacturer of equipment installs
the equipment on a construction project
such that the equipment becomes “an
ingredient or component part“ of the
project, then the manufacturer (or its
contracted installer) is selling a
construction service that may be
deducted from gross receipts.
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CONTACT US
Duwayne Sibley
505-878-7294
Duwayne.Sibley@mossadams.com
John C. Tysseling
505-837-7665
John.Tysseling@mossadams.com
Tax planning offered by Moss Adams LLP. Investment advisory and personal financial planning offered by Moss Adams Wealth Advisors LLC.
Insurance management and consulting offered by Moss Adams Securities & Insurance LLC.
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August 8, 2013
Presented By David Leith, Partner
CLAconnect.com
©2013 CliftonLarsonAllen LLP
©2013 CliftonLarsonAllen LLP
Expiring tax incentives and
bonus depreciation
• Business Property Incentives
©2013 CliftonLarsonAllen LLP
Expiring federal tax incentives in 2013 that
may impact your business decisions
– Section 179 increased limit
– 50% Bonus depreciation
– Qualified LHI 15 year life
• S corporation BIG period
• Energy efficient property incentives
– Section 179D (likely to be extended)
– Section 45L
• Individual Expiring provisions of note
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• 50% Bonus depreciation set to expire, generally,
12/31/13
• Qualified LHI application
• Utilize 179 deduction first, then bonus
• Interplay with Repair regulations
• Cost segregation as a means to maximize bonus
©2013 CliftonLarsonAllen LLP
Taking full advantage of the bonus
depreciation rules
– Bldg/improvements must be placed in service by 12/31/13
– 5,7,15 yr property generally eligible for bonus
• Watch State conformity to bonus
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©2013 CliftonLarsonAllen LLP
©2013 CliftonLarsonAllen LLP
Dave Leith, CPA
Partner, Construction and Real Estate
David.leith@cliftonlarsonallen.com
505-222-3506
Marcus Mims, CPA
Partner, State and Local Tax
Marcus.mims@cliftonlarsonallen.com
505-222-3508
twitter.com/
CLA_CPAs
facebook.com/
cliftonlarsonallen
linkedin.com/company/
cliftonlarsonallen
CLAconnect.com
14
Carried interest update
and Obamacare
REDW, LLC
CPAs | Business & Financial Advisors
Affordable Care Act (“ACA”)
•
•
Where to get information:
– IRS.gov (new home page)
– Business.usa.gov/healthcare (interactive Q&A)
– HealthCare.gov (US Department of Health & Human Services website)
Key Tax Points
– Medical Loss Ratio (“MLR”) - 2012
• Insurance company rebate
– W-2 Reporting – 2012, but transitional relief available
• Box 12, Code DD
– Net Investment Income Tax – 3.8% - 2013
– Additional Medicare Tax - 2013
• 0.9%; $250,000 MFJ; $125,000 MFS; $200,000 all others
– Small Business Health Care Tax Credit - 2012
• Not refundable for businesses; Subject to AMT
– Medical Devise Excise Tax - 2013
• 2.3% on manufacturers for certain pieces of equipment
– Health Insurance Premium Tax Credit – 2014
• Refundable credit for individuals/families when health insurance is purchased through an
exchange.
– Individual and Employer Shared Responsibility Payment – 2014 and 2015, respectively
• Penalty if no health insurance or no exemption.
– Patient-Centered Outcomes Research Institute Fee (“PCORI”) – July 31, 2013
• Trust Fund funded by fees from certain health policies and sponsors of certain self-funded
plans.
– Workplace Wellness Programs (reward system) – 2014
“Obamacare”
• Advice from this panel:
Carried Interest Update
• What is carried interest, also referred to as “a promote”?
http://www.youtube.com/watch?v=P2n_zpoM1GE#
“Usually my video clips are just adding color, but I really recommend that you check
this one out to get the industry perspective. Overall I think the response is a little
disingenuous. It is true that there are a lot of people who build businesses with sweat
equity and cash out with capital gains treatment after some liquidity event. For a lot of
those people, it is a once in a lifetime event. People who do it year in and year out are
in a somewhat different economic situation even if the same tax principles are at
work.” Forbes.Com; Peter J. Reilly
• Why is it important to NAIOP members?
“…the proposed partnership tax law change would disproportionately impact
the real estate industry since real estate partnerships comprise over 46
percent of all partnerships and many use a carried interest component in
structuring development ventures.” NAIOP website
• Prospect of future legislation
– How to plan for possible changes to the tax code
Bobbi Kay Nelson
Senior Manager, State and Local Tax
REDW, LLC
bnelson@REDW.com
505-998-3414