March 30, 2017

Sales Tax Free on Appliances During Show-Me Green Holiday April 19-25

If you’re in need of a new furnace, refrigerator, or other major appliance, the week of April 19-25 is the time to buy sales tax-free in Missouri. Since 2009, the Show-Me Green Sales Tax Holiday has exempted state sales tax on retail sales up to $1,500 on qualifying Energy Star certified new appliances.

Qualifying Appliances

The following Energy Star certified appliances qualify for the Show-Me Green Sales Tax Holiday:

  • Clothes washers
  • Clothes dryers
  • Water heaters
  • Dishwashers
  • Air conditioners
  • Furnaces
  • Refrigerators
  • Freezers
  • Heat pumps

Along with Missouri sales tax, cities, counties and districts may also exempt local sales tax. Find out if your city or county is participating.

Learn more about the Show-Me Green Sales Tax Holiday, or contact an Anders advisor to discuss.

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March 28, 2017

Renovating St. Louis City with SLU Redevelopment, Retail in the Loop and South Grand Office Space

While there are a lot of exciting new Downtown St. Louis construction projects, our city continues to expand further out into the city locations with several new apartments, retail and office spaces under construction.

SLU Redevelopment Plan

Saint Louis University has a 395-acre redevelopment plan that will span the central corridor with four different focuses. First will be medical and educational, including offices, training facilities, classrooms, labs, research and pharmacy facilities. The next focus will be office facilities, retail locations, hotels, recreational area and parking. New residential housing is in the works for families or other low-density dwelling units. The plan also features the connection of Chouteau Greenway which would flow through the entire 395-acre redevelopment area.

Within the SLU redevelopment plan, there is an $82.2M redevelopment plan to renovate the long-vacant 90,000 square foot Armory into a mixed-use space for offices, restaurants and a health spa. During the second phase of the renovation, a new building will be constructed next to the Armory to house a 135-room, 7-story hotel with a parking garage for 300. The basement of the Armory, previously used for tank and military truck storage, will also be a parking garage. The project is currently seeking $8M in tax increment financing (TIFs), a 15 year graduated tax abatement, $7M in Missouri historic tax credits, $5M in Federal historic tax credits and $1.1M in other state tax credits. The project will create about 700 jobs with payroll averaging $33M a year.

The Pelican Building

The Pelican Building on South Grand, just north of Tower Grove Park, has plans to be renovated, while the neighboring vacant YWCA will be replaced with 116 apartments as well as some retail and office space. The site was purchased for $1.8M and the plan will cost another $18M. The project is requesting a 10-year tax abatement.

CWE Condo

Construction has started and apartments can now be reserved at the newest condo building in the heart of Central West End at 4101 Laclede. This is the newest apartment/condo building in CWE since 2009 and will offer an array of condo options (including 1-3 bedrooms) in the 54 units. There will also be 6,000 square ft of retail space in the 5 story building. The $16M project has a 10-year tax abatement.

Retail and Office Space in the Loop

A new retail and office building in The Delmar Loop is being planned for the Circle K location at Skinker & Delmar. Developers are hoping with the elimination of the Circle K Gas Station, crime will decrease in the area. The building will be a 3-story, $26M mixed-use project that will house over 280 full-time jobs targeted for technology and other creative firms. $4.4M in TIFs are being requested for the project.

Renovation of Suburban Industrial Packaging

The 250,000 square foot Suburban Industrial Packaging property at Tower Grove Ave & Vandeventer in Forest Park Southeast is planned to be renovated into 160 lofts with ground-floor retail space. They would convert the loading docks to about 200 parking spaces. Developers are looking to reserve $10M in Missouri and Federal historic tax credits with a 10-year abatement for the $30M project. The building will be a draw for all those with the love of trains, as it curves to face the busy railroad, with proper soundproofing. An interior open air courtyard is also part of the plan.

As our community evolves, there are new commercial construction projects happening all over the city of St. Louis, with many more in the works. Check out the expansion projects happening in downtown St. Louis.

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March 24, 2017

30th Annual Hoops for Hope Tournament

Busy season is in full swing, and so is our annual Hoops for Hope NCAA basketball pool! This year is a special milestone for our annual fundraiser as it marks the 30th year of bringing clients, colleagues and friends of the firm together to raise money for our Charity of Choice, voted on and selected annually by firm staff.

In the past 30 years, Hoops for Hope has grown from a small office pool to a tournament that includes over 500 of the firm’s closest friends! This year, our goal is to hit 600 participants to support our 2017 Charity of Choice, Shriners Hospitals for Children – St. Louis, a facility that provides treatment to children who suffer from many orthopedic conditions including scoliosis, club feet, spina bifida and limb and joint abnormalities.

Top bracket winners will receive a prize donated by our wonderful sponsors. Last place will receive a year supply of What-A-Ya NUTS?!

Hoops for Hope has become one of the year’s largest fundraisers, with 100% of the proceeds going to the charity. We suggest a $10 donation per entry (or more if you are charitably inclined). Click here to pay via PayPal, or checks can be made payable toShriners Hospitals for Children – St. Louis” and mailed to:
Craig Campbell
Anders CPAs + Advisors
800 Market Street, Suite 500
St. Louis, MO 63101

Sponsorship Opportunity

To have a little more fun and get local businesses involved, we created a Triple-Diamond MEGA Platinum sponsorship, the sponsorship to end all sponsorships! For just $100 or a prize, a company or individual can get their logo displayed on our Hoops for Hope web page.  If you are interested in becoming a “sponsor” by donating a prize or $100, please email Craig Campbell at ccampbell@anderscpa.com

We hope you’ll join in the fun and help us support a great cause in our 30th annual Hoops for Hope tournament!

Thank you to our 2017 Triple-Diamond MEGA Platinum Sponsors!

 

 

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March 21, 2017

Tips for Helping an Elderly Relative Pay Bills

Many people worry about the ability of aging parents or relatives to handle money and financial affairs. With the aging population growing so quickly, it’s a situation that will only become more common. When elderly people cannot handle their daily finances, the consequences can be damaging to their current and future financial state. Here are a few options to consider if you find yourself observing your relative and believe they need help paying bills.

Look for signs your parent or elderly relative needs help

For people whose parents seem more unsure than they used to be, gently ask questions, like, “The economy is rough on everyone these days – are you able to pay all of your bills?” or “Do you have enough to live on?” Be sensitive when you ask questions, as many older people are embarrassed by their inability to handle their financial affairs. They may be afraid of losing control of their money along with their independence.

Set up automatic bill paying

Take a look around their home.  Do you see lots of unopened mail, bills scattered around, or piles of papers? You can ease the bill paying burden by helping them set up electronic automatic payments for monthly bills. However, you should review the bills to ensure they are accurate. There are also third-party bill paying services and elder care advisors that specialize in paying bills for the elderly.

Limit potential trouble with a financial power of attorney

Discuss the idea of seeing a lawyer and setting up a power of attorney. Elderly relatives might naturally resist the idea, but it doesn’t have to be set up so that you make all financial decisions. For example, they can add you as an authorized signer to a checking or savings account, without making you a joint owner.

A power of attorney can limit the agent’s authority to only certain actions, such as paying monthly bills. Or you could set it up so that you receive power of attorney only if a doctor agrees it’s time for you to make the financial decisions.

They may be mentally sharp, but still need assistance

Although your relative’s mental capacity may still be sharp, there may be some physical impairments that prohibit them from handling their finances. For example, if you have a parent that can no longer drive, has difficulty writing, or has visual impairments. In some cases, the relative has lost a spouse who handled all of the finances and needs assistance taking over the daunting task.

Keep them involved in the bill paying process for as long as possible

It may be easier and faster for you to handle everything, but it will help your relative’s morale if he or she still has a hand in making some decisions, assuming you can do it in a way that promotes bonding time and alleviates stress.

Talking to an elderly relative about handling their finances can be a sensitive subject. Contact an Anders advisor to find out how we can help.

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March 16, 2017

How Blockchain Could Impact the Market

Contracts, transactions, and the records of them are among the defining structures of our economic, legal, and political systems. They establish and verify identities and chronicle events. Yet the bureaucracies formed to manage these have not kept up with the economy’s digital transformation.  Blockchain is a proposed solution to this problem.

The Blockchain is a revolution that builds on another technical revolution that was created by IBM in 1970: the database. Nearly every aspect of our civilization is now dependent upon databases for storing and retrieving data. The Blockchain revolutionized databases about 10 years ago by positing a simple question: what if a database worked like a network – a network that is shared by everyone in the world such that anyone and anything can connect to it? Blockchain experts call this “decentralization”, which offers the promise of nearly frictionless cooperation between members of complex networks that can add value to each other by enabling collaboration without the need for central authorities or middlemen.

Blockchain is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. With Blockchain, we can imagine a world in which contracts are embedded in digital code and stored in transparent, shared databases, where they are protected from deletion, tampering, and revision. In this world, every agreement, every process, every task, and every payment would have a digital record and signature that could be identified, validated, stored, and shared. Intermediaries like lawyers, brokers, and bankers might no longer be necessary for transactions. Individuals and organizations would freely transact and interact with one another with little friction.  While this all sounds interesting on the surface, it would be foolhardy to believe that a Blockchain-led transformation of business and government will occur in the near term. There are many barriers to be overcome: technological, governance, organizational and societal before Blockchain could make its intended impact. Hence it is likely years away.

Let’s examine an industry that Blockchain could revolutionize: banking. The banking industry is replete with shared resources. Consider the ATM machine: each machine is owned by one institution but accepts cards from a huge network. This sharing requires a complicated management apparatus, primarily provided by VISA, which acts as a middleman. VISA owns the database and transaction processing layer, which makes everything possible. If the ATM process were invented today with Blockchain’s database technology as an option, there would likely not be the need for a VISA-type entity to manage the process. Rather, the technology itself would unite the interests and the business processes of the member banks, and significantly lower costs in the process.

Consider also the start-up market. New business ventures access growth capital by targeting angel investors in the early stages, later they seek venture capitalists, and finally culminate in an initial public offering (IPO) on a stock exchange. The start-up industry supports a number of intermediaries (middlemen) such as investment bankers, exchange operators, auditors, lawyers, and sometimes crowd-funding platforms. Blockchain revolutionizes this industry by making it possible for start-up companies of virtually any size to raise capital in a peer-to-peer way, through global distributed share offerings. Existing players in the start-up market have taken notice and are adjusting for this new normal.

The benefits of Blockchain are cataclysmic to music industry where currently, intermediaries capture nearly all the value and the artist gets paid last. Companies like Mycelia, found by Grammy-winning artist Imogen Heap have developed intelligent songs with smart contracts built in. This enables the artist to sell directly to customers without going through a record label, financial intermediary, or technology company. Royalty and licensing agreements execute automatically and instantly such that the artist gets paid first and digital piracy is significantly reduced.

The applications of Blockchain are virtually endless. Blockchain will be of significant benefit to the healthcare industry, where electronic health records regarding medications, allergies, health history, etc. could be detailed on an open-source, community-wide trusted ledger with guaranteed integrity to all providers and yet preserving the confidentiality for the patient.

Consider also travel loyalty programs (flight, car rental, hotel, dining, etc.), where Blockchain could totally disrupt an industry where billions of dollars of commissions are paid to intermediaries such as Priceline, Expedia, etc. A robust, frictionless partner network would create less hassle, greater options for redemption and increased customer satisfaction.

While Blockchain’s asserted benefits certainly appear promising, societal changes are necessary before this type of system can become a reality. Today, the only impediment appears to be the passage of time.

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March 16, 2017

Blockchain…What is It?

If you have attended a financial or business seminar in the past six months, I’ll bet you heard about the concept of Blockchain, as it is a hot topic nowadays. If you’re like me, you left the venue scratching your head, not quite sure exactly what Blockchain is. On the other hand, your single takeaway was this: you knew you had been introduced to one of the most transformational and misunderstood technologies of our times. Its admirers include Bill Gates and Richard Branson. Banks, insurance companies, and even IBM, Microsoft, UBS and PwC are racing to adapt Blockchain for use.

So what is Blockchain and why are the financial and technology industries so revved up about it?

To understand Blockchain, one must first have a grasp of the fundamentals of money transactions. When transacting money or anything of value, people and businesses have historically relied upon intermediaries like banks, financial institutions (e.g. brokers), and governments to ensure trust and certainty.

For example, consider the role of a title company, a bank, and a local governmental unit in facilitating a residential real estate transaction. The title company serves as the middleman for both buyer and seller, assuring that title is clear for transfer, new title is properly recorded, mortgage loans are paid, all liens against the property are released, real estate agents are paid their commissions, and net funds are transferred to the seller. Banks serve as financing vehicles to facilitate the funding of a portion of the sales proceeds to the seller. Governmental units (the local county) serve as the recording office to assure an authentic title and deed of trust are recorded. These intermediaries (or middlemen) perform critical tasks such as authentication and record-keeping, that build trust in the transactional process.

The need for intermediaries becomes especially acute when a digital transaction is conducted, because digital assets like money, stocks, and intellectual property are essentially files that are easy to reproduce. Hence authentication and the problem of double spending (the act of spending the same unit of value more than once) are serious flaws of the digital process.

But what if there existed a technology that provided a secure way to conduct digital transactions without the need for a third party intermediary? Enter Blockchain. In 2008, the innovative concept of a peer to peer electronic cash system called Bitcoin was introduced that enabled online payments to be transferred directly and without an intermediary. While Bitcoin was exciting and innovative, it was the mechanics of how it worked that was truly revolutionary.

Blockchain is a type of distributed ledger or decentralized database that keeps records of digital transactions. Rather than having a central administrator like a traditional database (e.g. banks, financial institutions, governments) a distributed ledger has a network of replicated databases, synchronized via the Internet and visible to anyone within the network. Blockchain networks can be private similar to an Intranet or public like the Internet, accessible to anyone in the world.

Let’s use a very simple transaction as an example of how a distributed ledger like Blockchain works. If Christina (in Italy) wishes to send money to her grandson Anthony (in the US) she initiates a transaction in the Blockchain. Christina’s transaction is grouped together in a cryptographically protected “block” with other transactions that have occurred in the last ten minutes and sent out to the entire network. Miners (members in the network with high levels of computing power) then compete to validate the transactions by solving complex coded problems. The first miner to solve the problems and validate the block receives a reward as compensation. For example, in a Bitcoin Blockchain network the miner would receive Bitcoins. The validated block is then timestamped and added to the chain in a linear, chronological order which provides an indelible and transparent record of transactions. New blocks of validated transactions are linked to older blocks making a chain of blocks that show every transaction made in the history of that Blockchain. The entire chain is continually updated so that every ledger in the network is the same, giving each member the ability to prove who owns what at any given time. The transaction is completed within 30 minutes rather than 3-5 days through the use of traditional financial intermediaries under our current system.

Blockchain technology is so revolutionary because it can work for almost every type of transaction involving value, including money, goods and property. In theory, if Blockchain goes mainstream, anyone with access to the Internet would be able to use it to conduct transactions.

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March 16, 2017

Blockchain: A Quiet Revolution? A Disruptor? Both?

Think about many of the technologies we now take for granted, like the smartphone. Think about how significantly the smartphone has changed the way we live and work. Think about how your business life was a mere 10-12 years ago. When you were out of your office, you were gone, because a telephone was tied to a place and not to a person. Contrast that to today, where we have global nomads building new businesses directly from their smartphones. Was the smartphone a quiet revolution? Indeed it was. Was the smartphone a disruptor of the status quo? You bet it was. Are there any quiet revolutions taking place today that will disrupt our world in a manner similar to the smartphone? Yep…….welcome to Blockchain. When one considers the fact that the country of Dubai has a strategy to issue all government documents on Blockchain by 2020….that’s right……2020…..the fact that many people have not even heard the term “Blockchain” is clear evidence that it is indeed both a quiet revolution and a disruptor.

Blockchain owes its genesis to the cryptocurrency Bitcoin. Blockchain, a peer-to-peer network that sits on top of the Internet, was introduced in October 2008 as part of a proposal for Bitcoin, a virtual currency system that eschewed a central authority (Federal Reserve, etc.) for issuing currency, transferring ownership, and confirming transactions. Although Blockchain technology was developed to implement Bitcoin, it’s entirely separable from Bitcoin. The realization that the underlying technology that operated Bitcoin could be separated from the currency and used for all kinds of interorganizational cooperation was an innovation in its own right. Almost every financial institution around the globe is doing Blockchain research at the moment, and 15% of banks are expected to be using Blockchain in 2017. As a result, Blockchain has the potential to dramatically shift the way we define, track, share, own and manage transactions because Blockchain is a distributed ledger.

Here’s an example of how Blockchain may disrupt the current business structure: the introduction of the shared ledger. If you run a business, you understand the concept of managing private ledgers in the financial side of your business. Your company has ledgers (usually software such as Quickbooks for example), that records your company’s many transactions, leading to a balance sheet and income statement for your business. Your private ledger is accessed and managed only by authorized employees or agents. At the end of the year, the auditors come out to conduct an audit of your company’s financial statements. Let’s say as part of that examination, the auditors confirm a $500,000 account receivable from Alpha Company by examining the invoice and by sending a formal confirmation. This receivable is only valid if Alpha Company’s private ledgers show that they owe your company $500,000. As it stands today, it takes significant time and cost to verify this transaction and others like it in a financial statement audit. Blockchain eliminates that because it is a distributed ledger.

By contrast to the private ledger concept, Blockchain comprises both the transaction itself and a shared (distributed) ledger for that transaction. Using Blockchain in the example above, your company and Alpha Company share the same data. There is one ledger for this transaction that is shared between the two companies. Therefore, confirmation is no longer necessary as one can conclusively say that Alpha Company owes your company $500,000 because both companies are looking at exactly the same ledger, the same data. Disruption? A resounding yes, as moving from a private ledger to a shared ledger is currently difficult for us to grasp. Predicting what direction Blockchain will take going forward is difficult at best. For example, did anyone see social media coming? The sense of scale by informed minds inside the Blockchain industry are that the changes coming will be “as large as the original invention of the Internet”. Perhaps disruption is in essence, the consequence of a quiet revolution.

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March 14, 2017

Tax Effects of Converting Your Primary Residence to a Rental Property

As the real estate markets around the country keep improving and interest rates remain at historic lows, this could create a great opportunity to convert your primary residence to a cash-producing rental property.  Are you looking to downsize, move, or simply looking for a long-term investment?  Whatever the reason, converting your primary residence to a rental property can be beneficial.  However, there are significant tax implications to consider.

Before you decide to convert your primary residence to a rental property you need to ask yourself a few questions:

  • What is the current fair market value of your property?
  • What did you purchase the property for, or what is your basis in the property?
  • How long do you plan to rent your property?
  • Will you be renting your property now and ultimately selling it in a few years?

It is important to answer each of these questions in determining whether converting makes sense.

Determining Fair Market Value of the Property

If you have decided to move forward with converting your primary residence into a rental property, the next step is to determine the fair market value of the primary residence.  The best way to obtain this number is to get the property appraised.  This appraisal allows you to calculate an accurate depreciation deduction.  You are allowed to depreciate the lesser of the fair market value at the date of conversion or your original purchase price (basis) in the primary residence over 27.5 years, and can also depreciate any improvements made. Keep in mind that you cannot depreciate land.  Depreciation reduces your taxable rental income received, thereby reducing your tax.  If the taxable rental income is reduced to a rental loss, the rental loss may reduce other taxable income on your individual income tax return.

Selling the Rental Property

If after a few years of renting, you decide to sell your rental property, this is when the answers to the questions above and tax planning become very important.   A taxpayer can exclude gain from income under Section 121 up to $250,000, or$500,000 for married couples filing a joint return, if:

A) Either or both spouses owned the residence for at least two out of the five years prior to the sale,

B) Both spouses have used the residence as their principal residence at least two out of the five years prior to the sale, and

C) During the two-year period ending on the date of the sale, neither spouse excluded gain from the sale of another home.

Calculating Gain or Loss on the Property

With proper tax planning, gain could be excluded from income under Section 121 on the disposition of the property (see example 1 below).  If the property is sold at a loss, the loss may or may not be deductible (see examples 2-3 below).  Depreciation recapture is another element that will impact the gain or loss and should be considered.  For simplifying purposes, the scenarios below have not taken into account depreciation recapture.

Example 1
Original Cost : $300,000
Fair Market Value: $400,000
Selling Price 4 years after purchase: $500,000
Result: $200,000 gain

This would result in a NON-TAXABLE $200,000 Capital Gain ($500,000 less original cost of $300,000 = $200,000 excludable Capital Gain on the sale of personal residence) as long as the property was your personal residence for two of the last five years and you have met the other criteria mentioned above to exclude the sale.

Example 2
Original Cost : $300,000
Fair Market Value: $275,000
Selling Price 4 years after purchase: $250,000
Result: $25,000 loss

This would result in a $25,000 Loss ($275,000 basis for determining loss less $250,000 selling price = $25,000 Loss.  The original cost of $300,000 less the $275,000 basis for determining loss of $25,000 is a non-deductible personal loss).

Example 3
Original Cost : $300,000
Fair Market Value: $250,000
Selling Price 4 years after purchase: $275,000
Result: No gain or loss

This would result in no Gain or Loss (selling price is between original cost and FMV at conversion basis).

Converting your primary residence to a rental property can be a great cash flow investment. However, it’s important to have a plan in place and to understand the tax implications of conversion.  It’s also important to remember the rules to be able to exclude the gain under Section 121. Your tax advisor can help you determine what rules and exceptions apply to you. For more information about converting your primary residence to a rental property, contact an Anders tax advisor today.

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March 14, 2017

Anders Employees De-Stress During Busy Season with Mission Possible

With nearly 200 Anders employees this Busy Season, we wanted a fun, collaborative way for everyone from partners to interns to relieve some stress while getting to know each other better. Tax Partner, Craig Campbell, and Tax Senior Manager, Adam Prest, invited everyone at the firm to play Anders Mission Possible, a set of challenges that must be accomplished by collaborating with other participants.

Each week, employees receive a new challenge randomly assigned to them, from dressing up as a twin with someone a level above or below you, to finding five people with more than four siblings. Once a challenge is completed, it’s submitted and graded for points based on completion and creativity.

The game has been a huge hit at the firm, and was even featured in Accounting Today! Learn more about Anders Mission Possible and see some of the completed challenges in our Mission Possible video.

Want to join in on the fun? Check out our Careers page for more information and current openings at Anders.

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March 10, 2017

Anders Mission Possible Game Featured in Accounting Today

With nearly 200 Anders employees this Busy Season, we wanted a fun, collaborative way for everyone from partners to interns to relieve some stress while getting to know each other better. Tax Partner, Craig Campbell, and Tax Senior Manager, Adam Prest, invited everyone at the firm to play Anders Mission Possible, a set of challenges that must be accomplished by collaborating with other participants.

Each week, employees receive a new challenge randomly assigned to them, from dressing up as a twin with someone a level above or below you, to finding five people with more than four siblings. Once a challenge is completed, it’s submitted and graded for points based on completion and creativity.

Check out our video on slide 8 in Accounting Today on how Anders Mission Possible is bringing everyone together!

Watch our Mission Possible video to learn more.

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