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October 2017
In This Issue
Your BRC Team
Bernard Robinson & Company ranks number one on the list of the Best Employers in North Carolina (small and medium sized companies) by Business North Carolina!

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Click here to learn more about why Bernard Robinson & Company is such a great place to work!

Noteworthy Links
IRS Announces 2018 Pension Plan Limitations; 401(k) Contribution Limit Increases to $18,500 for 2018
IRS: Tax Relief in Disaster Situations
IRS: Tax Calendar for Businesses & Self-Employed
United States Economy - CNBC Updates
IRS: Tax Scams / Consumer Alerts
2018 Health Savings Account Limits Increase Slightly
FASB simplifies accounting for certain financial instruments - Journal of Accountancy
Why lease accounting laggards face serious risks I Journal of Accountancy
Equifax Breach Aftermath: 10 Steps to Take to Protect Yourself Today, by Netgain
Celebrating 70 Years: Erica's Stroll Down Memory Lane
By Erica Vernon, CPA

As I reflect on my career at BRC, I never thought when I met Dan and Heather Hayes (through my now husband Tim Vernon) back in 2000, my life would be forever changed. When I walked into the office for my interview, Marie Yates greeted me with her southern charm. I was a wreck when I walked into the conference room with Pat Price, Rhonda Skiles and a few others. During the interview, when Pat asked me what my long-term goals were, I quickly said that I wanted to own my own CPA firm. She informed me that I could be an owner of BRC. I started as employee #24 and within 12 years fulfilled my dreams.

I started working will Bill Ellis in IT support and prepped tax returns as I finished my degree at Guilford College. By the time I graduated, I had worked in every department, including answering the phones.  However, the day I went out to perform my first non-profit audit, I knew that was going to be my career path. I loved every minute of it. 

After graduating college, I will never forget Tim Smith coming into my office to ask me if I wanted to join him, Wade and Rhonda on the affordable housing ("AH") team.  At the time, I wasn't sure if specializing early would benefit my career path, but the opportunity seemed exciting. This industry has a similar mission as in the non-profit world, so I thought I'd try it.  The leadership of the AH team started with approximately 100 properties, and now BRC serves over 1,000 communities. Attending industry conferences and visiting with residents during fieldwork and grand openings proves that our work is more than debit or credits, and the communities we serve are essential to Americans.

This firm has been with me  through graduating college, passing the CPA exam, marrying my wonderful husband Tim and having two beautiful children Zachary, now 12 years old and Paisley, now 6 years old.  All of the opportunities, constructive feedback, and encouragement has helped shape me into the wife, mother, friend, co-worker and CPA I am today. As the first generation college graduate in my family, I knew I wasn't going to settle, and the opportunities that BRC has provided me over the years have far exceeded my expectations.  I have been fortunate enough to grow professionally and personally with this firm.  Looking back, I wouldn't change a thing, and I credit my successful career to these key moments at BRC.  The foundation that BRC was built on and the culture and values that I was raised with are what make BRC the best place to work.  As one of the next generation of partners, I promise to make sure the next 70 years are just as great, and that those same values are carried forward to future generations.  

Hurricane Disaster Relief for Low Income Housing Tax Credit Properties

By Kristen Hand, CPA

The 2017 Hurricane Season has been destructive and devastating to many communities. According to Moody's Analytics, Hurricanes Harvey, Irma, Jose and Maria caused approximately $200 billion in damages. For Low Income Housing Tax Credit ("LIHTC") Projects that are in presidentially declared disaster areas, the IRS has granted temporary relief from several compliance requirements as outlined in Revenue Procedures 2014-49 and 2014-50.

Relief for Carryover Allocations:
For owners with carryover allocations in major disaster areas, the State Allocating Agency ("Agency") may grant the owner an extension for the 10-percent basis requirements for up to six months, if the disaster occurred prior to the deadline.

Recapture Relief:
Property owners will not be subject to recapture due to casualty losses from a major disaster, if the loss is restored within a reasonable time, as determined by the Agency. Additionally, credits may be taken during the restoration period, using the building's qualified basis at the end of taxable year immediately preceding the first day of the incident period for the major disaster.

Compliance Monitoring Relief:
An Agency may extend the due date for scheduled compliance reviews for up to one calendar year from the date of the building's restoration.

Buildings in the First Year of the Credit Period:
For buildings that are severely damaged, destroyed or determined uninhabitable, the Agency may elect to treat the allocation as a returned credit, or they may toll (delay) the beginning of the first year of the credit period. However, owners may not claim any credits during the restoration period.

Additional Credits for Rehabilitation Expenditures:
An owner may not receive additional credits to restore a building's qualified basis. However, additional credits may be allowed for rehabilitation expenditures - any expenditure that exceeds the amount expended for restoration. Details on how to compute amounts in excess of restoration expenditures may be found here.

Housing Displaced Individuals:
The Agency may allow a Project to house displaced individuals. If the Project is in the first year of the credit period, the unit is treated as low-income when determining the Project's qualified basis or meeting the Project's 20-50, 40-60 or 25-60 test. For Projects outside of the first year, the unit will retain the status prior to housing the displaced individual.

To determine if your Project may qualify for these reliefs, please consult your State Housing Finance Agency or accounting professional. 
Restrictions for Gifts Used to Acquire or Build Long-lived Assets Under the New Not-For-Profit Standards
By Ben Ripple, CPA  
We have included several articles in our newsletters this summer and fall updating you on the effects of ASU 2016-14 for not-for-profit entities.  We will continue our deep dive into ASU 2016-14 by looking at one of the lesser talked about, but equally important, parts of the new standard: how to report restrictions on gifts to be used for acquisition or construction of long-lived assets.
Historically, a not-for-profit entity had the option of using two different methods to account for the restrictions for assets received to purchase or build a long-lived asset.  The first was a placed-in-service approach that reported the gifts received as restricted until the long-lived asset being built or purchased was placed in service.  Once the asset was placed into service, the organization would then release from restriction all donations that had been received to acquire the long-lived asset.  The second option available under existing standards involved releasing donor restrictions over the estimated useful life of the long-lived asset.  For example, if an organization received $100,000 to buy a piece of equipment with an estimated useful life of 10 years.  Then, the organization would release from restriction $10,000 a year starting from the point in time that the equipment was placed in service.
Since there were two options, this led to inconsistencies in practice, which made comparing the financial statements of different not-for-profit entities difficult.  The new standard now requires, assuming the absence of explicit donor stipulations, that organizations use the placed-in-service approach to release donations from restrictions.  This change simplifies the accounting by removing the need to track releases year after year, and it also makes financial statements more comparable by having everyone use the same method of accounting for these gifts. 
As part of adopting the new standard, any gifts for in service long-lived assets that were being released from restriction under the amortized method will be shown as released from restriction at the beginning of the period when the new standard is adopted.  This will save organizations from having to restate any prior year financial statements, but it may lead to difficulty when comparing an individual organization's financial statements year to year.  So, if your not-for-profit organization is going to be affected by this change, it would be a good idea to start discussing it with your board and major donors now.  That will hopefully eliminate some confusion when the organization suddenly shows a huge increase in net assets without donor restriction as compared to unrestricted net assets under the current standard.
If you have any questions with this change or any other changes that will occur when adopting the new standard, please reach out to your accounting service providers.  For full detail of the changes coming with ASU 2016-14, please refer to the standard on the FASB website: 

Gift Tax 101
By Greta Meads, CPA

Most people would agree on the best type of gift to receive: MONEY! In general, monetary gifts under a certain threshold can be made tax free. However, the IRS has specific guidelines when it comes to gifting.  In 2017, any person may make a tax free gift to another person if the amount is $14,000 or less.  In 2018, this limit is projected to rise to $15,000. You are allowed to gift up to the $14,000 (or $15,000 in 2018) limit to as many people as you wish without triggering the need for a gift tax return to be filed. 

If you gift in excess of the limit, you must file a gift tax return for that year. However, this does not mean that you will owe taxes. In order to be imposed a gift tax, you must have gifted, in total over your lifetime, an amount in excess of the estate tax exemption. In 2017, the estate tax exemption is $5.49 million. In 2018, it is projected to increase to $5.6 million. Only amounts above and beyond the annual gift tax limits will be counted toward your estate tax exemption. In other words, if you gift $16,000 to your child in 2017, only $2,000 of the gift will reduce your lifetime estate tax exemption.

There are some types of gifts that are exempt from the gift tax rules. These gifts can be made in unlimited dollar amounts without triggering a gift tax return:
  • Gifts to qualifying charities
  • Gifts to your spouse
  • Gifts for someone else's medical expenses if paid directly to the medical provider
  • Gifts for someone else's educational expenses if paid directly to the institution (not including room & board or books)
Making annual gifts up to the $14,000 (or $15,000 in 2018) limit is a great way to reduce your taxable estate without tax implications.

Please consult a tax advisor if you believe you have made any gifts that exceed the annual limit, or if you have any questions regarding gift or estate taxes.

Bernard Robinson & Company, LLP | (336) 294-4494 | |
1501 Highwoods Blvd, Ste 300
Greensboro, NC 27410
BRC Strategy is designed to provide information of a general nature and is not intended as a substitute for professional consultation and advice.  The opinions and interpretations expressed should not be construed or used as legal or tax advice, written or otherwise, and cannot be used for the purpose of avoiding any penalties that may be imposed under federal, state or local law.