2016 Deductible Vehicle Mileage Rate Decrease

January 08, 2016

The IRS has announced the official mileage rates for 2016.   The IRS mileage rates for 2016 for the use of a vehicle are:

  • 54 Cents per mile for business use down from 5 cents in 2015.
  • 19 cents per mile for medical reasons or moving purposes down from 23 cents in 2015.
  • 14 cents per mile for charitable purposes which is the same rate as in 2015.

We hope this information is helpful. If you would like more details about these changes or any other aspect of the new law, please do not hesitate to call Greg Gandy or Michael McDevitt at our office at 719-579-9090.


BiggsKofford Alliance with ADP

October 15, 2015

BiggsKofford is extremely selective when reviewing possible partnerships with other businesses. Because of this, when we find a fit, we know the quality of service and care for clients will closely match our firm values.

ADP seeks and negotiates partnerships with best-of-breed organizations to bring added value to our joint clients and to increase operating efficiencies. ADP’s Channel Alliance program partners with various types of companies to best address the needs of specific industries. Each partnership is created for synergy, value and new levels of success.

Although ADP offers much more than Affordable Care Act reporting help, if you are seeking assistance navigating ACA reporting, view their ACA Reporting Requirements Infographic to learn more about how they can help your business thrive. Click here to view your responsibilities as an employer before and after with ADP.

For questions about the BiggsKofford/ADP partnership, call us at 719-579-9090.



Doing the Deal on Your Terms

August 22, 2014

(AICPA, By Kenneth Marks; Published August 2014)

For many Baby Boomers who are considering selling their companies in the coming years, a disappointing reality awaits: Their business is not  worth what they thought. Even in today’s hot merger and acquisition market, a  significant valuation gap exists between what many owners believe their  business is worth and what potential buyers are likely to pay.

This  gap has widened in recent years for a number of reasons.

  • First, low interest rates and moderate expected returns from  stocks and bonds have led owners to need greater proceeds from a sale, driving  their value ambitions higher.
  • Second, at a time when smart companies are investing in  growth and renewal, many owners have tightened their operational belts and  extracted cash. While this business strategy has short-term benefits, owners who  restrict their growth and pay themselves at the expense of losing competitive  ground can diminish the future value and opportunity of the enterprise.
  • Third, some businesses fail to generate economic returns in  excess of their true cost of capital. While this concept can seem academic, it  is the basic concept of value creation. While gaps have always existed between  what sellers want and what buyers are willing to pay, the current gap for  middle-market companies is wider than ever. Let’s focus on how to bridge it.

Back to basics

No  matter how strategic the buyer, all valuations eventually boil down to expected  future cash flow. The value of that cash flow is determined by its absolute  level, the risk of achieving the projected amount, and its growth rate coupled  with the future investment required to sustain it. In the traditional sales  process, buyers start by analyzing historical EBITDA as a proxy for cash  flow.

Bridging the gap

To  bridge the valuation gap, a company must shift the conversation from historical  financials to strategic value. It must demonstrate that it is acting on a  credible, forward-looking growth plan that can be leveraged by the buyer. A  company that can articulate and defend its potential, forecast its performance  into the future, and support that forecast with facts, trends, and action steps  can create a strong position from which to lead negotiations.

To establish a sound, strategic  approach for a sale, consider these two principles:

  • Know  thyself. Analyzing  and executing a successful exit strategy requires a hard look in the mirror. A company  must examine its business model and its relevance to the future. A deep understanding of a company’s value to the  market—including both customers and investors—allows the business owner to put  into place value-creating strategies that offer potential buyers a vision and a  plan for their investment. Remember, a buyer is an investor. Being able to  articulate and defend a growth strategy to a buyer means you must do your  homework and create well defined initiatives that serve as a road map for  continued growth in cash flow and relevance in the marketplace. Demonstrate  your company’s ability to forecast and manage its growth with empirical data  from existing customers and projects. Buyers often interpret predictability as less  risk and, therefore, higher value. The more accurately you can forecast your  business in revenues, margins, and EBITDA and the more clearly you can understand  and control the earnings drivers, the more successfully you can position your  business for a sale on your terms.
  • Know  thy place. Business owners who want to get more for their company  spend time developing solutions that add value to the market segment in which  they operate. They establish a deep sense of the market space and understand who  their competitors are, how their business models work, where they make money,  and where they don’t. They scrutinize data from market research and understand  the competitive landscape and trends. A clear read on how your business fits into the marketplace and how  your growth and strategy will transpire can also widen the pool of  possible “right” buyers. As opposed to a shotgun approach in a broad auction, studying  the defined industry segments that surround your business helps to identify outlying  candidates who may, in the end, see the most value.
    In one example, a niche grading and landscaping firm  took time to understand how each of its competitors engaged with the market and  to explore companies in tangential market segments. By doing so, it found a  strategic buyer that wanted to enter its market segment; a direct competitor  would not have perceived near the value or paid as much. In today’s  environment, a company is wise to optimize its strategic position by exploring partnerships  and alliances that validate its significance to the market, increase its growth  prospects, block competitors, or secure access to certain customers, supply, or  geographies.

Historical  financials validate a business’s ability to be profitable and management’s  ability to operate. By making a strong case for the company’s strategic value,  you give a potential buyer the basis to formulate and pay additional consideration.  By shifting the perspective and discussion from historical numbers to future cash  flow and growth opportunities, you create a productive way to structure a  transaction and monetize the intrinsic value of your business. More important,  you build potential value that a buyer can leverage to realize gains beyond the  near-term numbers.


Entrepreneurial Corner|Increasing Business Value

May 13, 2014

Increasing Value in Your Company:

For Continued Ownership or Eventual Sale


Our Speaker:

Chris Blees, CPA, CM&AA

President, Chief Executive Officer

BiggsKofford, P.C.

What will be discussed?

  • Learn market valuation approaches
  • Understand what drives value
  • Hear how to improve value in your company

Thursday, May 22, 2014

7:30 – 9:00 a.m.

BiggsKofford’s Office,

630 Southpointe Court, Suite 200




Entrepreneurial Corner|Sustainable Growth Strategies

March 28, 2014

Sustainable Growth Strategies:

Understanding your Business Model

Our Guest Speaker:

Chuck Kocher

Certified Master & Executive Business Coach


What will be discussed?

  • Learn about the nine core areas of your business model
  • See concrete examples of popular business models
  • Use tools to develop your current and future growth strategies
  • Understand how to leverage this tool against competition


Thursday, April 17, 2014

7:30 – 9:00 a.m.

BiggsKofford’s Office,

630 Southpointe Court, Suite 200




IRS Audits Target Income of $1 Million or More

February 04, 2014

The number of audits performed this year by the Internal Revenue Service continued to decline in 2013 as it did in the previous year. Although revenue for the IRS has increased by a reported 6.3 percent, annual funding and staffing have decreased tremendously. According to data released in January, the agency, which has lost $1 billion in annual funding and 8,000 employees, over the last three years, collected $53 billion in revenue last year. The reduced audits resulted in $9.83 billion in revenue generated, which is the lowest figure since 2003.

In 2013, most income groups declined in the number of audits.  Less than one percent of taxpayers with incomes up to $1 million were audited last year; however, nearly 11 percent of taxpayers with incomes exceeding $1 million were reviewed, which is more than double the rate of audits done in 2006. This trend is proving to be very consistent for taxpayers who have surpassed the $1 million threshold.

Even though taxpayers are having difficulty reaching an IRS employee –only about 60 percent of toll-free callers were able to speak with a representative—the IRS is facing more potential budget cuts. With a proposed $1.8 billion cut by House Republicans, the agency may have additional internal losses. The 2014 financial budget is due to be set over the next two weeks.

If you have questions about how this may affect your business, call BiggsKofford at (719) 579-9090.


Special Invitation | Gazelle Workshop, led by Chuck Kocher

October 07, 2013


Executive Sustainable Growth Workshop 




Join us for the workshop that more than 20,000 executives and their leadership team members have successfully used for strategic planning and growth. 


Last year we helped more than 1,500 businesses on six continents…and have been doing it for more than 15 years. Invest a day to:


  • LEARN the Four Decisions™ that you must get right to grow your business.
  • GAIN practical, easy-to-use tools to improve your business results right away.
  • IDENTIFYyour A, B and C performers with a Team Talent Review and generate the “next steps.”
  • BUILD or refine an executable One-Page Strategic Plan™ with your team, that gives you thefocus you need to succeed.

Tuesday, November 5, 2013

7:30 a.m. – 4 p.m.

BiggsKofford’s Office,

630 Southpointe Court, Suite 200

Breakfast and lunch served.

Presented by: Chuck Kocher
Chuck brings 32 years of diverse business experience including 12 years as one of the top-performing coaches in the world. Chuck coaches high-growth companies to meet their maximum potential as businesses, leaders and teams. As a certified Gazelles International Coach, Chuck teaches companies how to utilize the Gazelles strategic planning tools and best practices to achieve sustainable long-term results. 




401(k) Plan Mistakes: Things You’re [Probably] Doing Wrong

September 17, 2013
Deborah Helton

Deborah Helton


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Kris Ponnequin

Kris Ponnequin


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Are you a 401(k) plan fiduciary?  If you are, you have specific responsibilities and are subject to standards of conduct, because you act on behalf of the participants in the plan.   This position of trust has many embedded legal and ethical responsibilities you should be aware of to ensure you are meeting your obligations.

Some of these responsibilities include:

  • Acting solely in the interest of plan participants and their beneficiaries, with the exclusive purpose of providing benefits to them
  • Carrying out their duties with skill, prudence, and diligence
  • Following the plan documents (unless inconsistent with ERISA)
  • Diversifying plan investments
  • Paying only reasonable expenses of administering the plan and investing its assets
  • Avoiding conflicts of interest
  • Selecting the investment providers and the investment options, and monitoring their performance

As the fiduciary, your responsibility decreases and you’re not liable for losses because of the participant’s investment decisions if the plan is properly set up to give participants control over their investments. Should your participants have control over their investments, the Department of Labor (DOL) gives guidance so that participants can make informed decisions.  This guidance information can be found here: www.dol.gov/ebsa/publications/401kplans.html.

What if a plan fiduciary fails to carry out its responsibilities?

Fiduciaries that do not follow the required standards of conduct may be personally liable. If the plan lost money because of a breach of their duties, fiduciaries would have to restore those losses, or any profits received through their improper actions. For example, if an employer did not forward participants’ 401(k) contributions to the plan, they would have to pay back the contributions to the plan as well as any lost earnings, and return any profits they improperly received. Fiduciaries also can be removed from their positions as fiduciaries if they fail to follow the standards of conduct.

Not having a plan investment committee and regular meetings – ERISA requires that the named fiduciary make decisions regarding the plan that are in the best interests of plan participants and beneficiaries.   The regulations also state that if you lack the required expertise to make these decisions, that you enlist the support of those who have it.  Meeting regularly with your expert to oversee things are in order is part of this responsibility.

Not paying deposits on time employees and owners – The IRS and DOL have strict rules regarding the timing of deposits.  According to the IRS 20 – 25 percent of plans examined are not in compliance with these rules.  Since you are often in the trusted position of depositing money that doesn’t belong to you, penalties are steep for failing to comply with these simple fiduciary responsibilities.  If you don’t already have an automated process for making these deposits, consider talking to your professional advisors to ensure this process is automated and accurate.

Not following your plan document Recent and frequent law changes can leave your plan document out of date, make sure your plan document is updated regularly to remain in compliance with the IRS and other governing bodies.  Once you ensure it is up-to-date, follow the plan document.  If your document doesn’t allow for loans or self-directed accounts, and in reality the participants engage in this activity, you should update your document or change company practice to ensure actions match what is codified.  Don’t forget to notify employees, vendors and tax professionals of these changes.  Change is acceptable, but institutional practices without documenting and informing participants isn’t.

Not keeping good recordsIt is safe to say that you probably do not understand or want to understand the complexities associated with record keeping the assets that you have accumulated in your 401(k) plan. Ironically, even in today’s age of technology, record keeping is still a labor intensive endeavor, particularly if your records have to be generated for many years. Given these very extensive and complicated regulations, virtually none of the retirement plan providers will provide investor-friendly statements. Instead, they tend to generate what the law requires. Unfortunately, what is required by the law is not necessarily what you need in order to make a financial assessment of your investment strategy.

In order to evaluate performance, you need to know on a monthly basis:

  • What your beginning account balance is,
  • How much you and your employer contributed to your retirement plan account,
  • The amount of any transfers or withdrawals that you made during the period,
  • The amount of any gains or losses that you experienced and your endings balance.

Since your record keeper probably does not provide this information to you in a user-friendly way, you will most likely have to take the information from your monthly or quarterly statements, and build a spreadsheet that you can use to track your information. Once you have properly compiled the information, you will then need to manually calculate your annualized rate of return in order to conduct a thorough analysis and review. This process should also produce easy to read participant statements for your employees.

Not getting the most out of your 401(k) – Unfortunately, the cost structure of various investments can be confusing. According to the GAO, the company that administers the 401(k) “may also be receiving compensation from mutual fund companies for recommending their funds. … As a result, participants may have more limited investment options and pay higher fees for these options than they otherwise would.” The bottom line: Funds could get into 401(k) s because they provide the most advisor compensation, not because they are the best option for your plan.  The good news is that 2012 changes require plan fiduciaries to provide information to participants and beneficiaries about the existence of self-directed brokerage accounts if offered by the plan, fees related to accessing that account and at least quarterly, the amount of fees charged against participant’s account.

Not Appraising Alternative Investment Valuations – With a self-directed account it is important for the fiduciary to understand and trust the valuations received for alternative investments.  The valuations are pertinent when disclosing the overall plan assets.  A valuation of a small business or real estate holding is not always exact and can vary significantly depending on who conducts the valuations as there are several approaches that look at cost, comparables and income to determine the value of a business.  In addition there are discounts for marketability and non-controlling interest that can alter the value of a business.  The fiduciary, when possible, should vet the appraiser to make sure the appraiser has the appropriate qualifications and skills to accurately value the alternative investments.

Not researching advisors – Not all advisors are created equal.  It is necessary to evaluate and review the advisors before selection and once annually thereafter.  There are several questions that need to be addressed before making a decision:

    1. Does the advisor have the experience and credentials necessary?
    2. Is this in their area of expertise or is this a small side service the advisor provides?
    3. Is there a dedicated team of experts?
    4. How does one advisor compare to another?
    5. Are there any conflicts of interest?
    6. Can the advisor help educate the fiduciary and the plan participants?
    7. What are the fees and agreement terms?

Not following the terms of the plan document – Retirement plans develop certain patterns or routines that may not, over time, remain consistent with the terms of the plan.  This is true especially if you are using a plan document prepared by a provider that may accommodate that provider’s approach, but not how you administer the plan now.  It’s a good idea to do a document and process audit every few years to make sure the document reflects how you are actually operating and administering the plan.

Thinking your plan qualifies for 404(c) protection – Many plan sponsors think their plan meets the standards of ERISA 404(c) and therefore believe they are shielded them from being sued for participant investment decisions, so long as certain conditions are met.  However, industry experts are nearly uniform in their assessment that very few, perhaps no plans meet those standards.  Even if you think your plan does comply, double check, and remember that the DOL thinks you’re responsible for every participant investment decision, except those behind the 404(c) wall.  

If you have questions about how BiggsKofford can help you be a successful plan fiduciary, contact Deborah Helton, CPA, at dhelton@biggskofford.com or Kris Ponnequin, CPA, at kponnequin@biggskofford.com.



Will Your Beneficiaries Beat the Odds?

July 22, 2013

(Physicians Money Digest) Two-thirds of baby boomers will inherit a total $7.6 trillion in their lifetimes, according to the Boston College Center for Retirement Research — that’s $1.7 trillion more than China’s 2012 GDP.

But they’ll lose 70% of that legacy, and not because of taxes. By the end of their children’s lives — the third generation — nine of 10 family fortunes will be gone.

“The third-generation rule is so true it’s enshrined in Chinese proverb: ‘Wealth never survives three generations,’” says John Hartog of Hartog & Baer Trust and Estate Law. “The American version of that is ‘shirtsleeves to shirtsleeves in three generations.’”

There are a number of reasons that happens, and most of them are preventable say Hartog; Jim Kohles, CPA, chairman of RINA accountancy corporation; and wealth management expert Haitham “Hutch” Ashoo, chief executive office of Pillar Wealth Management.

How can the current generation of matriarchs, patriarchs and their beneficiaries beat the odds? All three financial experts say the solutions involve honest conversations — the ones families often avoid because they can be painful — along with passing along family values and teaching children from a young age how to manage money.

Give them some money now and see how they handle it.
Many of the “wealth builders,” the first generation that worked so hard to build the family fortune, teach their children social responsibility — to take care of their health; to drive safely.

“But they don’t teach [children] financial responsibility; [parents] think [children will] get it by osmosis,” says estate lawyer Hartog.

If those children are now middle-aged, it’s probably too late for that. But the first generation can see what their offspring will do with a sudden windfall of millions by giving them a substantial sum now — without telling them why.

“I had a client who gave both children $500,000,” Hartog says. “After 18 months, one child had blown through the money and the other had turned it into $750,000.”

Child A will get his inheritance in a restricted-access trust.

Be willing to relinquish some control
Whether it’s preparing one or more of their children to take over the family business, or diverting some pre-inheritance wealth to them, the first generation often errs by retaining too much control, says CPA Kohles.

“We don’t give our successor the freedom to fail,” Kohles says. “If they don’t fail, they don’t learn, so they’re not prepared to step up when the time comes.”

In the family business, future successors need to be able to make some decisions that don’t require the approval of the first generation, Kohles says. With money, especially for first-generation couples with more than $10 million (the first $5 million of inheritance from each parent is not subject to the estate tax), parents need to plan for giving away some of their wealth before they die. That not only allows the beneficiaries to avoid a 40% estate tax, it helps them learn to manage the money.

Give your beneficiaries the opportunity to build wealth and hold family wealth meetings.
The first generation works and sacrifices to make the family fortune, so often the second generation doesn’t have to and the third generation is even further removed from that experience, says wealth manager Ashoo.

“The best way they’re going to be able to help preserve the wealth is if they understand what goes into creating it and managing it — not only the work, but the values and the risks,” Ashoo says.

The first generation should allocate seed money to the second generation for business, real estate or some other potentially profitable venture, he says.

Holding ongoing family wealth meetings with your advisors is critical to educating beneficiaries, as well as passing along family and wealth values, Ashoo says. It also builds trust between the family and the primary advisors.

Ashoo tells of a recent experience chatting with two deca-millionaires aboard a yacht in the Bahamas.

“They both built major businesses and sold them,” Ashoo says. “At this point, it’s no longer about what their money will do for them — it’s about what the next generations will do with their money.”

John Hartog is a partner at Hartog & Baer Trust and Estate Law. He is a certified specialist in estate planning, trust and probate law, and taxation law.

Jim Kohles is chairman of the board of RINA accountancy corporation. He is a certified public accountant specializing in business consulting, succession and retirement planning, and insurance.

Haitham “Hutch” Ashoo is the CEO of Pillar Wealth Management, LLC, specializing in client-centered wealth management.

For questions, call or e-mail Deborah Helton, CPA, at (719) 579-9090 or dhelton@biggskofford.com.


Effective Estate Planning for your Family

July 22, 2013
Greg Gandy

Greg Gandy


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What does an effective estate planning and what can it mean for you and your family? Effective estate planning should address wealth transfer from a practical and cost-effective approach. One estate planning strategy that families with significant wealth should consider is the Family Limited Partnership (“FLP”).

A FLP is a partnership agreement that exists between family members that divides rights to income, appreciation, and control of the FLP among the family members according to the family’s overall objectives. Under family partnership rules, family assets placed into an FLP can include real estate, investments (stocks and bonds), alternative assets (partnerships or LLC interests) or a closely held family business.

Under the most common form of the FLP, general and limited partnership interests are created. Once the partnership is established, you then gift the limited partnership interests to your children. By holding the general partnership interest, you are considered the “general partner” and maintain control of all decision making aspects of the FLP. Your children are the “limited partners,” and the limited partnership interest lets them share in the ownership of the FLP which includes rights to income, distributions and asset appreciation.

The FLP enables you to provide your children with an interest in family assets while achieving many goals. First, it removes assets from the parents’ estate, thus helping lower potential estate tax liability of the parents, if properly executed. In addition, you can transfer the limited partnership interests in increments over time, resulting in a gradual and systematic transfer of ownership. Finally, and perhaps most importantly, there may be immediate income tax benefits.

The limited partnership interests transferred to your children, including all appreciation since the transfer, escape inclusion in the parents’ estate when they die. Only the value of the taxable gifts of the limited partnership interests would be included in the parents’ estate. This results potentially large estate tax savings to the parents’ down the road.

By gifting the limited partnership interests in increments over time, you can take maximum advantage of the $14,000 annual gift tax exclusion. The exclusion increases to $28,000 if married and if each spouse elects to give the maximum amount. The annual gift tax exclusion is indexed for inflation over time.

The use of discounting, the allowable reduction of value of the gift because it is a minority interest, can lead to greater leverage of the annual gift tax exclusion and the unified credit. For instance, you may be able to discount the value of the gift by thirty percent (30%) or more. However, in order for the discount to be valid, there must be a legitimate business reason for the partnership. Generally, the consolidation of family assets for ease of investment management is a valid business purpose for the existence of the partnership.

Aside from the estate planning advantages, the FLP can result in substantial income tax saving. By including your children as partners and sharing partnership income with them, total family income tax burden may be reduced. You should be aware, however, that if the income in unearned (interest, dividends, capital gains) and the recipient is under age, kiddie tax rules could apply.

Another incentive for formation of an FLP is that it may protect assets in the event of future problems with creditors. Provided that the transfer of assets to a FLP is not a fraudulent transfer the creditors of the partner who made the asset transfer should not be able to attach the FLP’s underlying assets. Instead, such creditors limited to seeking a “charging order,” which is the equivalent of a garnishment on any distributions made by the partnership interest of the debtor partner. However, if the General Partners of the FLP elect not to make any distributions, the charging order has little or no value because the creditors have no ability to compel the General Partners to distribute FLP profits.

The benefits of the FLP can be significant. But they can only be realized if the arrangement is valid under the requirements of the Internal Revenue Code and regulations thereunder. Consult a qualified legal or tax advisor if you think your family could benefit from an FLP.

If you have questions, please contact Greg Gandy, CPA.

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