On Balance November | December 2014

November|December 2014 | Vol. 10 No. 6 A publication of the Wisconsin Institute of CPAs | www.wicpa.org

Accounting for change Stacy A. Stinson, MBA, CPA Manager, Corporate Accounting Harley-Davidson Motor Co.

PLUS:

Choosing accounting as a second career Estate planning tips for nontraditional families AICPA highlights diversity in the accounting profession

A publication of Wisconsin Institute of CPAs | www.wicpa.org

November/December 2014 Vol. 10 No. 6

6 Features

Columns

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26 TAX Giving gifts to employees: Taxable or not Beware of the potential tax implications of giving gifts.

By Melissa C. Selinger, J.D. and Daniel B. Geraghty, J.D., CPA

Accounting for change Stacy A. Stinson, MBA, CPA promotes diversity in accounting.

By Cynthia M. Hodnett

10 Update on diversity and inclusion in the accounting profession The AICPA highlights successes and challenges regarding diversity in the CPA profession.

By the AICPA Communications Team 14 Choosing accounting as a second career Read how two young professionals bring unique experiences to their second careers in accounting.

By Melodi L. Bunting, CPA, CMA, CGMA and Amie Dragoo, CPA

28 TECHNOLOGY Think before you sync: Five key strategies to maintain centralized control of your files Develop new policies to safeguard sensitive and confidential financial information.

By Eric Pulaski 30 FINANCIAL PLANNING Estate planning for the modern family Get insight into financial planning tips for nontraditional families.

By Bradley J. Kalscheur, CPA, J.D.

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13 Departments 2

Odds & Ends | news briefs

3

Outlook | chair’s letter

5

Membership Matters | member benefits

13 In Touch | president & ceo’s message 22 Kudos | members in the news 23 Memorials | departed members

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Odd & Ends Schenck M&A Solutions named Exit Planning Team of the Year

2013 Apex Award for Publication Excellence

2014–2015 WICPA OFFICERS/BOARD MEMBERS Chair Jean M. Hansen, CPA, MBA, CGMA Chair-elect Katherine L. Hauser, CPA, CGMA Past-chair Robert A. Gruber, Ph.D., CPA, CGMA Secretary-treasurer Joy L. Hertlein, CPA, CGMA Directors Lucien A. Beaudry, CPA, J.D. Kyle J. Beld, CPA Greta C. Diercks, CPA Katherine L. Hauser, CPA, CGMA Matthew A. Los, CPA Kelly K. Miller, CPA Scott D. Miller, CPA, ABV, PFS, CVA Gregory L. Ryan, CPA Wendi M. Unger, CPA

Acquisition International, a global publisher of corporate finance news, has named Schenck M&A Solutions the Exit Planning Team of the Year in Wisconsin on its list of 2014 M&A Awards. The winners were selected by a global network of expert M&A professionals, advisors, clients, peers and industry insiders. The awards celebrate excellence in all areas of M&A, recognizing firms whose tireless efforts and unrivalled expertise have contributed to the dramatic increase in global M&A activity over the past year.

SVA celebrates its 40th anniversary This year marks the 40th anniversary of SVA, a professional services firm headquartered in Wisconsin. Founded in 1974, SVA opened in Madison as an accounting firm. It expanded its service offerings to better serve a diversified and growing list of clients in varied industries. In addition to Madison, SVA serves clients in Brookfield, Appleton and Rockford, Ill.

WICPA awarded Friends of Small Business Award

AICPA Council Karla E. Blair, CPA Nicholas S. Lascari, CPA, CEA, CGMA

The Wisconsin Institute of CPAs (WICPA) recently received the Friends of Small Business Award from the Wisconsin Business Development Finance Corporation (WBDFC). The award was presented at WBDFC’s 4th annual luncheon on Oct. 15 at the Sheraton Milwaukee Brookfield Hotel. The WICPA received the award on behalf of its members and the impacts they make on successful Wisconsin businesses.

President & CEO Dennis F. Tomorsky, CPA, J.D., CGMA

Top tips for forensic, valuation services accountants

Vice President of Communications Amy E. Gaeth Vice President of Membership & Marketing Barb Gamez Editor Cynthia M. Hodnett Copy Editor Joan Bahr

The article, “Three business development tips for forensic and valuation services accountants,” (http://tinyurl.com/aicpabizdevtips) focuses on three key tips to help practitioners attract more clients. According to the author’s article, Chris Baysden, senior manager of newsletters for the AICPA Magazines and Newsletters team, those tips are attending meet and greets, networking and displaying your skills.

Design & Layout Kathleen Hess Advertising Manager Ellen Engel Printing Marek Printing Join us online!

Want your business mentioned in On Balance is published six times a year by the (WICPA). Change of address should be sent to: Membership, W233N2080 Ridgeview Pkwy, Suite 201, Waukesha WI 53188; Phone: 262-785-0445 or 800-772-6939 (WI/MN); Fax: 262-785-0838; email: jessica@wicpa.org. Statements and opinions expressed are those of the authors and not necessarily those of the WICPA. Publication of an advertisement does not constitute an endorsement of the product or service by On Balance or the WICPA. Articles may be reproduced with permission. © Copyright 2014 On Balance.

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Odd & Ends?

Email your announcement to cynthia@wicpa.org

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{ Outlook | chair’s letter }

They understand that it all starts with them.”

Setting the tone at the top

E

thical leadership is leading by knowing and doing what is right. Which brings the interesting question: What is the definition of “right?” Ask yourself: Are you the same person at work? At home? In the community? Do you have the courage to stand up to pressure, to compromise or rationalize?

Living the ethical leadership lifestyle is understanding your core values and having the courage to live them in all parts of your life. With respect to leadership, ethics is about whom leaders are, their character, what they do and their actions and behavior.

Role model of integrity Integrity has been seen as the single most important leadership attribute across many cultures and countries.

This means being credible and doing what you say you will do. An effective leader honors commitments and expects others to do as well. Ethical leaders make the right choices for the long-term benefit. They understand that it all starts with them. If they don’t project the values they wish to promote in others, employees will see them as hypocrites and possibly ignore their ethical guidelines.

Fostering respectful atmosphere

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When people trust each other, they can focus on getting the work done, asking for help when they need it, and solving business problems. They do not need to spend energy manipulating others, worrying about being mistreated, dealing with harassing employees, etc. This trust starts at the top.

When an organization’s leader is reliable, is willing to admit mistakes and is trustworthy, subordinates have confidence in leadership. Ethical leaders recognize that leading by example creates an environment that fosters productivity.

Tone at the top Leaders are often presented with situations that require them to think through several ethical dimensions before making decisions. Setting ethical standards or tone is the first step in creating an ethical organization. These standards

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must be clear so that all employees understand what they mean.

Employees must know how they should behave toward one another, customers and business partners. They also need to know what is unacceptable in the workplace. Ethical leaders realize subordinates watch them closely to decide how to act.

Ethics is central to leadership because of the nature of the relationship between leaders and followers. As Warren Buffett once said, “In looking for people to hire, you look for three qualities: integrity, intelligence and energy. If they don’t have the first, the other two will kill you.”

Research shows that the ethics of a workplace can be directly linked to the bottom line-company performance. As a result, more and more people are doing what is right to ensure standards of moral and ethical conduct in their workplace, starting with themselves.

Jean M. Hansen, CPA, MBA, CGMA is CFO/ vice president-finance at Manitowoc Tool & On Balance November|December 2014 Machining LLC. Contact her at 920-682-8825 ext. 114 or jhansen@mantool.com.

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{ Membership Matters | member benefits } “Your involvement is essential to educating lawmakers about the key issues that are impacting the profession, issues that can cost your clients and your company time and money. ”

Make your voice heard:

Impact your profession and Wisconsin’s political process

O

ne of the core components of the WICPA’s mission includes representing members through involvement in the legislative process. We fulfill this by serving as an advocate to build relationships and promote the interests of CPAs with governments, regulatory agencies and other organizations. But we can’t do it alone.

Your involvement is essential to educating lawmakers about the key issues that are impacting the profession, issues that can cost your clients and your company time and money.

Issues such as a potential for sales tax on services, or proposed limitations on CPA services as the unauthorized practice of law threaten your ability to effectively serve clients.

As CPAs, you are highly regarded by lawmakers as trusted business advisors who are an important resource when they’re faced with legislation impacting Wisconsin’s businesses or the CPA profession. They rely on you for your information and expertise. That’s why we need as many members as possible to be involved in the political process to maintain a strong presence in Wisconsin’s legislative and regulatory activities.

Make your voice heard There are a number of ways you can advocate for the profession, your peers and clients.

1) Contribute to the WICPA Campaign for Political Awareness and Legislative Involvement Fund.

Download a brochure with a contribution form at www.wicpa.org/cpaclif.

2) Volunteer to be a legislative contact. A contact’s responsibilities include staying abreast of legislative issues, fostering and maintaining relationships with legislators in your area.

>> Save up to 30% <<

on all your shipping needs with UPS. The more you ship, the more you save. Learn more at www.savewithups.com/wicpa.

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3) Serve on the WICPA Public Policy Committee. You’ll be a part of developing strategy and stances on legislative policy matters and major governmental affairs activities.

4) Contact your legislators. Consider writing a brief letter to a legislator urging him or her to support a WICPA position.

As a constituent who took the time to write and is likely to vote, your message is sure to get noticed.

5) Join us for Advocacy Day on Jan. 23, 2015. WICPA members will meet with legislators and their staff on current issues impacting the profession and Wisconsin businesses.

Watch for details and registration, as well as updates on our day’s efforts.

However you choose to get involved, you benefit from participating in Wisconsin’s political process and advocating for your profession. For more information about the WICPA’s advocacy efforts and ways to participate, visit www.wicpa.org/government.

Barb Gamez is vice president of Membership & Marketing of the Wisconsin Institute of On Balance November|December 2014 CPAs. Contact her at 262-785-0445 ext. 4509 or barb@wicpa.org.

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Photography by John Nienhuis

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for change

By Cynthia M. Hodnett

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Cynthia M. Hodnett is editor of On Balance magazine.

Contact her at 262-785-0445 ext. 4516 or cynthia@wicpa.org.

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OH YES

UPDATE ON

WE CAN!

DIVERSITY AND INCLUSION IN THE ACCOUNTING PROFESSION By the AICPA Communications Team

T

he AICPAâ&#x20AC;&#x2122;s Diversity and Inclusion Team, along with the National Commission on Diversity and Inclusion, continue to lead and develop tools to attract, retain and advance top diverse talent needed to manage the challenging and complex issues CPAs face in the profession today.

Diversity is any trait used to differentiate people from each another â&#x20AC;&#x201D; for example, ethnicity, gender, age, national origin, disability, sexual orientation, educational level and religion. Inclusion puts diversity to work, creating opportunities for everyone to fully participate in creating success. In short, diversity is who we are and inclusion is what we do.

Diversity is important to the profession for two primary reasons: entrepreneurial capital and demographic shifts. Entrepreneurial diversity has been a catalyst in moving the U.S. economy forward; for example, people of color owned 22.1 percent of all U.S. businesses in 2012, while women owned 28.8 percent of all businesses, and lesbian, gay, bisexual and transgender individuals owned approximately 5 percent. The CPA profession provides services to

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Why does diversity and inclusion matter?

businesses of all kinds, owned by people of all kinds. Our clients are becoming more diverse, and we need to better understand the communities they come from in order to reach out in a relevant and genuine way.

Labor market trends are also compelling. According to U.S. Census Bureau projections, the U.S. population will grow older and more racially and ethnically diverse. By 2050, there will be no ethnic majority in the U.S. Furthermore, between 2000 and 2050, new immigrants and their children will account for 83 percent of the working-age population’s growth. It is imperative that the profession understands that diversity and inclusion are no longer about doing what is right, but also doing what is necessary to remain relevant and serve the public interest.

What are we doing?

The AICPA’s work on diversity and inclusion, with the guidance of the National Commission on Diversity and Inclusion, encompasses the recruitment, retention and advancement of diverse talent entering the profession. Major projects under development include the implementation of a profession-wide pipeline project, the development of a recruitment and retention toolkit and webcast series, and a maturity model assessment to assist organizations in understanding where they are in their diversity journey.

Recent accomplishments include the institute taking on the leadership role in the implementation of a profession-wide pipeline project. The project consists of three key areas of focus: Increasing communication and awareness, strengthening school-based programs for high school and college, and increasing the number of minorities getting their CPA. This initiative was created in response to a report authored by Frank Ross and other scholars from Howard University titled, “Attracting Underrepresented Minorities to the Accounting Profession: Insights Into Diversifying the Talent Pipeline.”

The second accomplishment was the recent launch of Inclusion Solutions (http://tinyurl.com/aicpadiversity-org), a free monthly e-newsletter that highlights the latest

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developments in diversity and inclusion within the business community and accounting profession. The purpose of the e-newsletter is to raise awareness and knowledge of best practices, increase worldviews and highlight successes of diversity in the profession. Knowledge empowers each of us

“Our clients are becoming more diverse, and we need to better understand the communities they come from in order to reach out in a relevant and genuine way.” to effectively recruit and retain talent, develop others and ourselves, and be role models both in our local communities and in the profession at large. Read the report by Howard University, and subscribe to Inclusions Solutions as a resource for your diversity and inclusion growth and education.

For more information about the AICPA’s efforts on diversity and inclusion, visit www.aicpa.org/careers/diversity or contact Kim Drumgo at 919-402-4912 or kdrumgo@aicpa.org.

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2014 Past Chairs Dinner

Past chairs of the WICPA Board of Directors and the WICPA Educational Foundation, Inc. Board gathered for an annual photo at the WICPA Past Chairs Dinner on Sept. 25 at the Blue Harbor Resort in Sheboygan.

WICPA Board of Directors Past Chairs

Front row L-R: Bart Adams (‘95-’96), Douglas Haag (‘00-’01), Lucretia Mattson (‘98-’99), Duane Kuehl (‘81-’82), Donald Wagner (‘92-’93), William Goodman (‘99-’00) and Bill Heinrich (‘10-’11). Back row, L-R: Thomas Mickelson (‘01-’02), Larry Rose (‘04-’05), Theodore Hart (‘08-’09), Robert Albrecht (‘80-’81), Linda Dicks (‘06-’07), John Hicks (‘88-’89), Joseph Stienessen (‘02-’03), Eugene Miller (‘90-’91), Nicholas Lascari (‘11-’12), Karin Gale (‘03-’04), LeRoy Schmidt (retired executive director), David Benner (‘83-’84) and David Christianson (‘05-’06).

WICPA Educational Foundation, Inc. Board Past Presidents L-R: James Miller (‘08-’10), Robert Albrecht (‘90-’91) and Duane Kuehl (‘87-’88).

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{ In Touch | president & CEO’s message } “While diversity initiatives around the country have had a positive impact during the past three decades in encouraging minority students to attend college and major in accounting, minorities remain underrepresented among CPAs when compared to the general population.”

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he U.S. Bureau of Labor statistics recently determined that the greatest growth in the formation of new businesses has been, and will increasingly be, from minority-owned businesses.

Professionals seeking to increase clients and revenue will need greater diversity on their professional staffs to attract and retain these newly forming and growing businesses as clients.

In addition to helping address the obvious economic imperative to grow clients and revenue, the benefits of diversity extend to leveraging a broader range of perspectives that can identify and implement solutions and exploit opportunities. Businesses that lack diverse perspectives will find themselves without a wide variety of thought and problem solving approaches that will be critical to the development of innovative multidimensional analysis and solutions to increasingly complex issues.

It’s important to recognize that reaping the benefits of diversity requires more than just hiring individuals from different backgrounds. Maximizing the benefits from diversity can only be realized with intentional efforts to be inclusive and encourage individuals who bring these new valuable perspectives into our workplaces. Taking the time to coach and mentor individuals from diverse backgrounds will reduce the attrition rate among those individuals in accounting and other professions. Developing and maintaining workplace cultures of support and inclusion requires planning, effort and long-term commitment.

You might be familiar with the Young Entrepreneurial Scholars (YES) Program that, with WICPA Educational Foundation support and collaboration with the National Association of Black Accountants (NABA), has encouraged minority students from Milwaukee Public Schools to pursue accounting careers for the past 16 years.

The YES Program involves high school accounting clubs as well as summer college residency programs where high school students spend two weeks at the University of Wisconsin-Oshkosh or UW-Milwaukee taking challenging accounting and other business

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courses. The YES Program also provides six-week summer internships at several Milwaukee organizations where students develop critical thinking and employment skills.

While diversity initiatives around the country have had a positive impact during the past three decades in encouraging minority students to attend college and major in accounting, minorities remain underrepresented among CPAs when compared to the general population.

This disparity is even more pronounced among executive and partnership ranks in the accounting profession. I encourage you to consider how you might encourage greater diversity in the CPA profession, including making your annual contribution to the WICPA Educational Foundation (http://www.wicpa.org/ Content/EducationFoundation.aspx) to support diversity initiatives like the YES Program.

Dennis F. Tomorsky, CPA, J.D., CGMA is president & CEO of the Wisconsin Institute On Balance of CPAs. Contact himNovember|December at 262-785-0445 2014 ext. 4519 or dennis@wicpa.org.

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Melodi L. Bunting CPA, CMA, CGMA is a senior lecturer and director of online programs at Edgewood College in Madison.

Contact her at 608-695-2807 or mbunting@edgewood.edu.

Amie Dragoo, CPA is an assistant professor and chair of the accounting department at Edgewood College in Madison.

Contact her at 608-663-2323 or adragoo@edgewood.edu.

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Send us your nominations!

The WICPA and Educational Foundation Nominations Committees are seeking candidates to serve three-year terms on the WICPA Board of Directors and the WICPA Educational Foundation Board of Directors.

WICPA board members’ responsibilities include: • Keeping up-to-date on professional issues.

• Providing strategic governance in accordance with the WICPA Strategic Plan, mission and vision, including: o Policy relating to legislative, regulatory or ethical matters affecting WICPA members. o Approval of budgets.

• Meeting four times a year.

• To apply: Visit www.wicpa.org/2014 BoardApplication.

Foundation board members’ responsibilities include: • Assisting in efforts to attract students to the profession.

• Providing scholarships for college students.

• Co-sponsoring a two-week, on-campus business experience for minority high school students.

• Offering the only accounting-related CPE for high school accounting teachers in the state.

• Awarding grants to high school teachers who develop educational programs to promote accounting career awareness.

• Serving on subcommittees of the board.

• Meeting two times a year.

• To apply: Visit www.wicpa.org/2014EFBoard Application.

All applicants must be WICPA Fellow* Members in good standing.

Submit the completed application and your resume to, WICPA Executive Relations Manager, Jessica Murphy by Nov. 14, 2014. * A person who has obtained a valid certificate as a CPA from the Accounting Examining Board of the State of Wisconsin, or from a similar legally constituted authority in any other state, possession or territory of the United States or the District of Columbia.

You have the opportunity to impact Students today. CPAs tomorrow.

thousands of accounting students and educators in Wisconsin.

Through your contribution to the WICPA Educational Foundation, Inc., you can help us reach students and teachers in high school and college to create awareness about the accounting profession. You’ll also make an important difference by supporting students on their way to becoming CPAs. As the end of 2014 draws near and you may be doing some tax planning, consider contributing to the WICPA Educational Foundation. Visit www.wicpa.org/educationalfoundation to contribute online.

Contact Tammy Hofstede at 800-772-6939 ext. 4518 or tammy@wicpa.org with questions.

Join us in thanking our Foundation contributors!

View a PDF at: www.wicpa.org/Content/ EducationFoundation.aspx.

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TOGETHER,

WE HAVE THE POWER TO MAKE A DIFFERENCE.

to the tribution aign Your con LIF camp

PAC/ WICPA C ness al Aware ic t li o P r o f to: e WICPA allows th

1. Strengthen the voice and visibility of the WICPA and CPAs in Wisconsin 2. Educate lawmakers about the issues impacting Wisconsin CPAs 3. Support the election campaigns of candidates who support our issues 4. Ensure a healthy business climate for CPAs and the clients you serve

Visit www.wic

to learn more

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pa.org/Conte nt/Members/A dvocacy.aspx and make a co ntribution toda y.

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kudos Michele Eberle, CPA was recently hired as director of access and primary care support for Mayo Clinic Health System throughout northwest Wisconsin, according to the Leader-Telegram.

Clenton T. Hall

Maria Frigo was recently hired as staff accountant on the government team at Schenck SC in Green Bay.

James R. Michels, CPA, shareholder at Schenck SC in Green Bay, recently celebrated his 10th year at the firm.

Randall K. Olm, CPA, shareholder at Schenck SC in Sheboygan, recently celebrated his 40th anniversary at the firm.

James R. Michels, CPA

James A. Olson, CPA, shareholder at Schenck SC in Green Bay, recently celebrated his 15th anniversary at the firm.

Andrew M. Gigure, CPA, health services accountant at Schenck SC in Appleton, recently celebrated his 15th anniversary at the firm.

Justin J. Schneider, CPA, manager at Schenck SC in Port Washington, recently celebrated his 10th anniversary at the firm.

Clenton T. Hall was recently hired as staff accountant and member of the RitzHolman CPAs tax team in Milwaukee.

Rebecca S. Lund, CPA

Randall K. Olm, CPA

Jacob Harmsen, CPA was recently hired as registered associate at DFB Wealth Planning in Oshkosh, according to the Oshkosh Northwestern.

Gina C. Skibo, CPA was recently named partner at Wipfli LLP in Milwaukee, according to The Waukesha Freeman.

Thomas P. Jostad, CPA, CGMA was recently named CFO of the Harry & Rose Samson Family Jewish Community Center in Milwaukee.

LeRoy W. Matuszak, CPA, CVA

John J. Kuehn, CPA was recently promoted to accounting supervisor at Komisar Brady & Co., LLP in Milwaukee.

Adam J. Schuett, CPA was recently hired as senior accountant at Standard Process Inc. in Palmyra, according to the Daily Jefferson County Union.

Mark J. Spaeth, CPA, MST, shareholder at Schenck SC in Milwaukee, recently celebrated his 30th anniversary at the firm.

Justin J. Schneider, CPA

Justin M. Vrakas was promoted to tax senior at Komisar Brady & Co., LLP in Milwaukee.

Rebecca S. Lund, CPA, tax manager at Schenck SC in Appleton, recently celebrated her 10th anniversary at the firm.

Patrick Malloy was recently hired as staff accountant in the tax department at Schenck SC in Milwaukee.

LeRoy W. Matuszak, CPA, CVA, shareholder and managing director of Schenck M&A Solutions in Green Bay, recently celebrated his 30th anniversary at the firm.

Want your

promotion or

award mentioned in Kudos?

Email your announcement and photo in JPG format to cynthia@wicpa.org.

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With Sincere

Condolences

memorials Kevin M. Crowley, CPA (1985–2014) Kevin M. Crowley, CPA died Sept. 11. He was 28. Crowley studied accounting and finance at the University of Wisconsin-Milwaukee, graduating in 2008. He earned his master’s degree from UW-Milwaukee in 2011 and his certified public accounting license in 2012. He worked as a senior tax accountant at Schenck SC in Milwaukee. The Wauwatosa resident joined the WICPA in 2012.

Lori M. LaCroix, CPA (1959–2014) Lori M. LaCroix, CPA died May 13, according to the Journal Times. She was 54. LaCroix graduated from the University of Wisconsin-Whitewater. She earned her certified public accounting license in 1995. Her accounting career included positions at the National Corporation for Housing Partnerships (NCHP) in Washington, D.C. and The Stough Group in Hinsdale, Ill. The Cambridge resident joined the WICPA in 1996.

Robert C. O’Malley Jr., CPA (1925–2014) Robert C. O’Malley Jr., CPA died May 30, according to the Wisconsin State Journal. He was 89. O’Malley served in the U.S. Navy during World War II. He graduated from the University of Wisconsin-Madison.

He also received an honorary degree from Edgewood College for serving 35 years as its trustee. He earned his certified public accounting license in 1951. His accounting career included positions at the former Madison Bank & Trust Co., a director of Valley Bancorporation and vice chair of the southern district of the former M&I Bank. The Madison resident joined the WICPA in 1953.

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2014

holiday hours Thanksgiving, Thursday and Friday, Nov. 27 and Nov. 28 Christmas Eve, Wednesday, Dec. 24 beginning at 2 p.m.

Christmas, Thursday and Friday, Dec. 25 and Dec. 26 New Year’s Eve, Wednesday, Dec. 31, beginning at noon New Year’s Day, Thursday, Jan. 1, 2015

it’s time to

renew

your dues keep your vital member benefits coming If you have not yet renewed your 2014–2015 membership, visit www.wicpa.org/renew for quick and easy online payment to keep your On Balance magazine.

Pay your dues in the “Renew My Membership” section on the Members page. For information regarding your membership or username and password, contact Jessica Murphy at 800-772-6939 ext. 4502 or Jessica@wicpa.org.

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Whether you’re looking for a new career or a new employee, the WICPA’s enhanced Career Center can help you make the most of your search.

You’ll find: • • • •

Modern layout.

Better organized content.

Easy access to find or post jobs.

Optimal mobile viewing experience.

Sign in today to post your resume or job and find useful resources to help you with your search.

www.wicpa.org/careercenter

at the NEW WICPA CAREER CENTER

FIND A JOB POST A JOB

Taxable or not

By Melissa C. Selinger, J.D. and Daniel B. Geraghty, J.D., CPA

Successful business owners often foster a collaborative and rewarding work environment. These business owners are naturally inclined to reward their employees with gifts, whether large or small. An important consideration is how these transfers are treated for tax purposes. Not employees something that is not considered compensation.

Gifts in general

The most important consideration in determining whether there has been a gift versus compensation is â&#x20AC;&#x153;the intention with which payment, however voluntary, has been made.â&#x20AC;? Commissioner v.

Duberstein, 363 U.S. 278, 284 (1960). Even if there is no legal (or moral) duty to make a transfer to a person, if the dominant motivation is consideration of past or future services, the transfer is compensation.

The U.S. Supreme Court set forth that a court

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{ Tax | gifts }

“The most important consideration in determining whether there has been a gift versus compensation is ‘the intention with which payment, however voluntary, has been made.’”

Id. at 290).

In cases decided for the taxpayer the facts are well developed and suggest more of a relationship than merely employer and employee. See e.g., Lane v. Commissioner, 286 F.3d 723 (CA-4 2002), where gifts to a former secretary were not considered compensation (the taxpayer viewed the employee “almost as a daughter” (Id. at 725) and the court cast the facts as “a story of sentiment which [the IRS] would convert into a tale of greed.” (Id. at 724).

In another case the U.S. Tax Court found that payments from shareholders who had sold their company to persons who were current or former employees of the sold company were gifts. See Abella v. Commissioner, T.C. Memo. 1983-616 (1983) and Runyon v. Commissioner, T.C. Memo. 184-623 (1984). After consideration of all facts (including that the employees had previously been adequately compensated) the U.S. Tax Court found that the transfers had been motivated by “detached and disinterested generosity.” The two cases involved the same general facts and were decided by employees and a lack of any family connection the holdings Courts will “normally suppose that a payment [or stock transfer] from father to son was a gift.” (Duberstein at 296.)

Thus, absent unusual facts, property transfers such as stock to a son or daughter are typically viewed as gifts regardless of whether the person works with the company. While it is possible the IRS would challenge such transfers, there is a dearth of case law regarding such transfers.

De Minimis other gifts

While the name itself implies a small token, the “de minimis

De minimis where the value is so small in relation to frequency that Reg. section 1.132 6. Examples include: • A traditional birthday or holiday gift with low fair market

• Occasional meals provided to facilitate employees working overtime.

In addition to de minimis

“Employee of the Year.” To avoid taxation, the award must be given for length of service or safety in a meaningful

{ Tax | gifts }

should determine this based upon its “experience with the mainsprings of human conduct to the totality of the facts of each case.” (Id. at 289). Not a very objective standard and one

limitations apply and any award should be made annually with consistent criteria.

• Meals provided for the “employer’s convenience” that are served on the business premises are excludable under Section 119. This is an area that has gained considerable attention recently especially within the tech industry. (“Silicon Valley’s Mouthwatering Tax Breaks,” The Wall Street Journal, April 7, 2013).

• Charitable donations to a charity of the employee’s choice. This can result in a sizable gift when employees pool their donations together. The employee is not taxed on such contributions. Rev. Rul. 67-137, 1967-1 C.B. 63. a high-end ergonomic chair, espresso maker or the latest smartphone (personal use is excluded as a de minimis fringe

Conclusion

Transfers to persons who are providing services are

authorized as something else by the IRS. While Duberstein provides some opportunity to “gift” items to such persons, the “mainstream of human conduct” suggests that these transfers are typically not gifts but rather compensation. Taxpayers should be cautious in characterizing such transfers as gifts.

Melissa C. Selinger, J.D. is an estate planning attorney with Whyte Hirschboeck Dudek S.C. in Madison. Contact her at 608-234-6077 or mselinger@whdlaw.com.

Daniel B. Geraghty, J.D., CPA is a tax attorney at Whyte Hirschboeck Dudek S.C. in Milwaukee. Contact him at 414-978-5518 or dgeraghty@whdlaw.com.

be a cash equivalent subject to tax and withholding. (See

minimal in value can be excluded.

• Occasional tickets to events, such as concerts or sporting events (but not season tickets).

• Occasional cocktail parties, group meals or picnics.

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{ Technology | synching }

Think before you sync:

Five key strategies to maintain centralized control of your files Syncing files from a local computer or device to the cloud is a common business practice in today’s mobile-driven world — as common as the Internet, specialty coffee, the App Store, and all the other day-to-day “can’t-live-withouts.” In fact, it is probably the best example of the consumerization of IT for the small business owner. Apps like Dropbox have had a transformative impact on the expectation for accessing digital content. Simply put, the new norm is “full access to all my data from the device of my choosing.”

O

By Eric Pulaski

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ver the past few years, the practice of syncing business files to personal devices has evolved from a simple function to a missioncritical solution, required for working outside of a traditional office environment. This is not exactly a shocking transformation given that we live in an on-demand world where it is common for professionals to work remotely and from a variety of devices — laptops, tablets, and smartphones.

The transition from brick-and-mortar offices and employer-owned hardware to virtual locations and BYOD (Bring Your Own Device) policy has forever changed how firms operate — for better … and for worse.

File syncing is a here-to-stay solution. Today’s on-the-move professionals demand it because it allows them to work from anywhere on their own local device and access and share files that have been synced to the cloud even when the Internet is not available.

However, while file syncing offers immense value and many conveniences, it also creates its own set of issues — relative to security — that accountants need to consider in their business practice. It’s important to balance the value of syncing files with a firm’s business and compliance requirements. The core issue caused by syncing files to multiple devices is the loss of centralized control. The moment company files are synced to multiple devices, those files are subject to the personal security habits of that user

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or employee — regardless of whether an employee is working on their own device or one that was firm-issued.

What happens if the employee’s device is sold, lost, or stolen? The answer is that company documents go with it … falling into the hands of, well, who knows?

Real-life example To better understand the risks that come with syncing, it’s always best to provide a real-world peer example.

Recently, an accounting firm owner reached out to explain a problem she discovered regarding syncing of sensitive client files, and was seeking some advice on how to handle it. The owner had terminated an employee. The firm adhered to a BYOD work environment, meaning the employee had synced business files directly to her personal laptop and iPad … and once synced, always synced! The employer had not considered the possible issues of a BYOD policy and the impact of syncing client files on these devices. Once the employee was terminated, the firm owner realized that she had lost central control of her firm’s files. She also realized that she had no ability to wipe the files from the ex-staffer’s devices, and that meant office files could end up anywhere, in anyone’s hands.

Top 5 sync strategies This real-life example is not uncommon. If an employee in a firm has files synced to his or her devices, what is the process for protecting those files after an employee is terminated, quits, or leaves after seasonal work is complete?

As file syncing has gained in popularity, many businesses have felt the pain of losing control. Bottom line, as the guardian of clients’ financial documents, practitioners must establish policies for working with solutions that sync files automatically. The following are a few syncing strategies to help mitigate file security issues down the road.

1) Encrypt folders on local computers. If employees have the freedom to sync firm files to personal

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mobile devices, make sure all files are encrypted. This extends security to files sitting out on devices owned by staff.

This ensures that in the event an employee’s device is lost or stolen, access to sensitive files will not be granted to the individual who recovers the device.

Note: If a device is lost or stolen and you can demonstrate that no one can access the data, client notification is not required. Encrypting data (assuming the encryption key is not stored with the device) or a password change on the cloud device if lost, are two approaches that will protect you from a security breach.

2) Create strong passwords. For encrypted files, ensure that passwords are strong, i.e., do not make your password, “password.” This is an all-to-common issue in firms. With the variety of passwords that the typical individual has to track, it’s understandable to want to create simple, easy-toremember pass codes. However, don’t cut corners when it comes to the safety of your files. There are solutions, like LastPass and PassPack, developed to help manage multiple passwords with ease.

3) Sync only as needed. Don’t allow for a complete sync of your firm’s entire file directory. Instead, only allow staff to sync the files absolutely required.

Sync on an as-needed basis only. You could also set up defined “employee share” folders and restrict file syncing to these folders only.

4) Use “remote wipe” function. This is a key feature in syncing solutions for business users. This feature allows the removal of all synchronized files from a computer in the event of loss or theft.

Some offerings also include the ability to transfer ownership of a computer.

5) Go all-cloud. The final (and only foolproof) sync strategy is to not sync at all. Advanced cloud file management applications provide easy, fast access to files and data anytime, from anywhere, and from any device. Firms that move to an all-cloud system and away from syncing files to personal devices altogether, eliminate the risk of files being distributed on various

machines among multiple people.

Using the cloud exclusively for file management is the best policy to maintain full control of your files.

Take the time to think it through There is no question that file syncing can increase firm efficiency and staff productivity, but it’s important to understand the risks and potential compromises to data security. It’s time to think before you sync. For accountants, data security is a top priority, so if syncing files is part of the daily process, it may be time to develop new policies to safeguard sensitive and confidential financial information. Follow the five strategies offered in this article to protect yourself from losing control of your files.

{ Technology | syncing }

part of the daily process, it may be time to develop new policies to

Client notification requirements Forty-six states now have laws in place regarding security breach notification. If a computer, smartphone, or tablet is lost or stolen and the device contains clients’ Personal Identifiable Information (PII), you are required by law to notify all clients of the security breach. The definition of Personal Identifiable Information is an individual’s first name or first initial and last name and any one of the following: Social Security number, driver license number, government-issued ID number, account number, or credit card number in combination with a security code or password that would permit access to an individual’s financial account. It’s good practice to be familiar with your state’s notification requirements.

Erik Pulaski is CEO and founder of SmartVault Corporation in Houston, Texas, the leading Software-as-a-Service (SaaS) provider of document management solutions designed specifically for accounting professionals that use QuickBooks.

Contact him at eric@smartvault.com.

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{ Financial planning: | nontraditional families }

for the modern family

By Bradley J. Kalscheur, CPA, J.D.

Preparing an estate plan is a complicated and daunting task for most married couples.

Unmarried individuals face even more complex challenges in estate planning. Federal tax law and state intestacy laws provide married couples with the ability to avoid taxes and leave assets to the objects of their natural bounty without the need for extensive

rights and protections provided for being married. Obviously, unmarried couples cannot take advantage of these provisions.

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Estate planning

{ Financial planning: | nontraditional families }

Same-sex unmarried couples are at a distinct disadvantage regarding certain estate planning techniques and protections enjoyed by opposite-sex married couples, including, but not limited to: 1) The unlimited marital deduction for gift and estate tax.

2) Intestacy laws in the event there is no will.

3) Marital/community property rights.

the 7th Circuit Court of Appeals upheld that lower court decision on Sept. 4, 2014, Wisconsin appealed the 7th Circuit decision to SCOTUS, and on Oct. 6, 2014, SCOTUS decided not to hear that appeal. As a result, same-sex marriage is now legal in Wisconsin, and same-sex married couples will be treated identically as opposite-sex married for all purposes, including, but not limited to, estate planning, taxes, retirement plans and Social Security.

retirement plans, and spousal rollovers of retirement plan

Wisconsin tax treatment

Additionally, a contest by family members of unmarried couples are more likely, especially if they disapprove of the relationship, so the importance of proper planning and formalities are increased.

For 2014 federal and Wisconsin tax returns, same-sex married couples will be treated the same as any other married couple. Additionally, for both individual and corporate clients, advisors will want to review, and possibly amend, past income tax returns with open years for tax breaks that may now be available by the ability to treat same-sex couples

DOMA and Windsor The federal Defense of Marriage Act (DOMA) was enacted in 1996, and Section 3 of DOMA limited

â&#x20AC;&#x153;

... same-sex marriage is now legal in Wisconsin, and samesex married couples will be treated identically as opposite-sex married for all purposes ...

to one man and one woman. Most states followed with similar limitations at the state level. On June 26, 2013, the United States Supreme Court (SCOTUS) ruled in Windsor v. United States that Section Three of DOMA was unconstitutional.

After Windsor, any same-sex married couple that lives one of the 19 states (and Washington, D.C.) that recognizes samesex marriage will be treated the same for all purposes, including federal tax law, as any other married couple.

On Aug. 9, 2013, the U.S. Treasury Department and the Internal Revenue Service jointly issued Revenue Ruling 2013-17. Under the Revenue Ruling, same-sex couple legally married in jurisdictions that recognize their marriage will be treated as married for all federal tax purposes. The state of ceremony determines whether a couple is married for federal tax law purposes, not the state of residence of the couple. For example, if a Georgia same-sex couple gets married in Minnesota, but resides in Georgia, that couple is married for federal tax law purposes. However, that couple is not married for Georgia property law purposes because that is governed by state law, and, as of the date of the writing of this article, Georgia does not recognize same-sex marriage.

On June 6, 2014, Wisconsinâ&#x20AC;&#x2122;s ban on same-sex marriage was found unconstitutional in federal court,

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â&#x20AC;?

and gift tax returns with open years should be examined to see if they need to be amended for same-sex married couples to take advantage of the marital deduction on transfers to spouses.

Property rights and domestic partnerships Many property law issues are driven

a spouse under state law, including who inherits under intestacy and other survivorship rights, all of which can be controlled by a will or trust in non-recognition states.

Even when Wisconsin had banned same-sex marriage, Wisconsin same-sex couples may enter into a domestic partnership. A declaration of domestic partnership provides same-sex domestic partners in Wisconsin with opposite sex couples. If that couple is also married for has also widened.

Unmarried same-sex couples that enter into a domestic partnership, as well as parents of children who are or may become registered partners, should then be aware of certain estate planning considerations that result from the registration, including, the following: 1) Presumption that assets are owned jointly.

2) A surviving domestic partner is treated the same as a surviving spouse for purposes of intestate transfers.

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{ Financial planning: | nontraditional families }

3) If a domestic partner is unintentionally omitted from an estate plan, that partner is entitled to a share of the deceased partner’s estate.

4) The termination of a domestic partnership is viewed the same as a divorce, annulment or similar event.

2) Surviving partner’s rights over minor children of deceased partner.

3) Identity of remainder

Estate planning issues

ners’ death or termination of the relationship.

4) How the termination of the relationship is determined.

5) Use of bypass trust due to lack of portability and/or marital deduction.

6) Which partner survives in the event of simultaneous death.

Even though same-sex marriage is now legal in Wisconsin, care must be taken by advisors to determine the marital status of clients because some may still be governed by one of the dwindling number of states that still deny same-sex marriage to their citizens.

Most same-sex couples doing estate planning will want to avoid their state’s intestacy laws. They also want to avoid state default laws on priority as to whom would serve as personal representatives, trustees, agents under a health care power of attorney, as well as who has the power to dispose of their remains.

Therefore, same-sex couples should prepare: wills; will substitutes (joint ownership, transfer-on-death accounts); revocable living trusts; powcial and health care matters; advance directives and burial instructions to avoid state law.

1) Careful preparation and execution of documents to minimize contests from disapproving family members.

law marriage bans, so stayed tuned for future changes if they take up the issue.

Bradley J. Kalscheur, CPA, J.D., is a partner in the Wealth Planning Services Practice Group at Michael Best & Friedrich LLP in Milwaukee. Contact him at 414-225-2763 or bjkalscheur@michaelbest.com.

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