Doeren Mayhew: 75th Anniversary

Retirement Planning: A Primary Source of Money

Retirement Planning- Doeren Mayhew

Four New Directors Named at Doeren Mayhew

TROY MICHIGAN – Troy-based public accounting and consulting firm, Doeren Mayhew has named four new directors in the firm: Claudio Calado, Aaron Caya, Timothy Gunn, and Christopher Masters. All four have been promoted from the positions of managers.

Claudio S. Calado –Director of Mergers and Acquisitions
Mr. Calado has been with Doeren Mayhew since 2005. He is a graduate of the University of Dortmund (Germany) with a master’s degree in economics. Claudio’s areas of expertise include all stages of the merger and acquisition process and strategic and operational business finance planning and analysis.

Aaron T. Caya, CPA, ABV, CVA, CFF, ABAR – Director, Litigation Support and Forensic Services
Mr. Caya started his career with Doeren Mayhew in 2000. He is a graduate of Michigan State University with a bachelor’s degree in accounting, and earned his MBA from the University of Michigan. Aaron’s areas of expertise include technical and practical knowledge in all stages of the valuation and litigation process, fraud and forensic accounting services, and financial support in commercial litigation and employment law matters.

Timothy D. Gunn, CPA, CFE – Audit Director
Mr. Gunn has been with Doeren Mayhew since 1998. He is a graduate of Walsh College with a bachelor’s degree in accounting. Tim’s areas of expertise include audits, reviews, compilations, fraud and forensic accounting services, and consulting.

Christopher T. Masters, CPA – Audit Director
Mr. Masters joined Doeren Mayhew 1998. He is a graduate of Michigan State University with a bachelor’s degree in accounting. Chris’s areas of expertise include audits, reviews, compilations, and consulting.

Founded in 1932, Doeren Mayhew recently celebrated its 77th anniversary and has grown to become nationally and internationally recognized as trusted business advisors to thousands of individuals and businesses throughout North America and around the world. Doeren Mayhew represents manufacturers, contractors and builders, retailers, wholesalers, distributors, auto dealers, financial institutions, municipalities, school districts, and non-profit organizations, with a full range of accounting, audit, tax, merger and acquisition, and consulting services.

Tax Planning Tip #6 - Save Tax-Deferred First

Because of the tax advantages, contributing to an employer-sponsored retirement plan, such as a 401(k), 403(b), 457, SIMPLE or SARSEP, is usually the best first step in retirement planning:

* Contributions are generally pretax, so they reduce your taxable income.
* Plan assets can grow tax-deferred— meaning that you pay no income tax until you take distributions.
* Your employer may match some or all of your contributions—also on a pretax basis. At minimum, contribute the amount necessary to get the maximum employer match.

Note that, if you’re age 50 or older, you’re eligible to make a “catch-up” contribution.

In certain situations, other tax-deferred savings options may be available:

If you’re a business owner or selfemployed. You may be eligible for a plan that would allow you to make much larger contributions. Depending on the plan, you might not have to make 2008 contributions, or even set up the plan, until after year end. If your employer doesn’t offer a retirement plan. Consider contributing to a traditional IRA:
* You can generally deduct your contributions, though your deduction may be limited based on your adjusted gross income (AGI) if your spouse participates in an employer-sponsored plan.
* Contribution limits, including for catchup contributions, are lower than those for employee contributions to employer sponsored plans.

You can make 2008 IRA contributions as late as April 15, 2009.

Tax Planning Tip #5 - Time Investing Gains and Losses

While time, not timing, is generally the key to long-terminvestment success, timing can have a dramatic impact on the tax consequences of your investment activities. The 15% long-term capital gains rate is 20 percentage points lower than the highest regular income tax rate of 35%—and it generally applies to investments held for more than 12months.

Holding on to an investment until you’ve owned it for more than a year may help you substantially cut your tax on the gain. Keep in mind, though: You have only until 2010 to take advantage of the 15% rate (which also applies to qualified dividends), unless Congress extends it. Of course, be sure to consider overall performance and risk, not just taxes, when making investment decisions. Here are some other tax-saving strategies related to timing:

Use unrealized losses to absorb gains - If you’ve cashed in some big gains during the year, before year end look for unrealized losses in your portfolio and sell them off, thus offsetting the gains.

Don’t let tax reasons hold you back from selling at a loss. If you’re ready to divest your portfolio of a poorly performing security but don’t have enough gains to absorb the loss you’ll realize, remember that capital gains distributions from mutual funds can also be offset with losses. If you end up with a net capital loss, you can claim up to $3,000 of the loss against ordinary income this year and carry forward any excess to future years.

Doeren Mayhew: August/September Recap

We've been up to a lot these past months and wanted to share some of our recent posts with you. Follow the links below to read financial newsletters, blogs, and guides that Doeren Mayhew has been on:

• Doeren Mayhew: Pursuing Your Financial Dreams (Scribd)
• Doeren Mayhew: Doeren Mayhew on Docstoc
• Doeren Mayhew: Doeren Mayhew on Squidoo
• Doeren Mayhew: Doeren Mayhew on YouTube
• Doeren Mayhew: Doeren Mayhew on Facebook
• Doeren Mayhew: Doeren Mayhew named to Top 100 Accounting Firms list for 14th consecutive year
• Doeren Mayhew: Doeren Mayhew Retirement Financial Planning
• Doeren Mayhew: Doeren Mayhew New Splash Site
• Doeren Mayhew: Doeren Mayhew Free Child ID Kits
• Doeren Mayhew: Doeren Mayhew on CNN
• Doeren Mayhew: Doeren Mayhew on BusinessWeek
• Doeren Mayhew: Doeren Mayhew on DBusiness
• Doeren Mayhew: Blogpost

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Doeren Mayhew Gives Back With Child ID Kits

TROY, MICHIGAN – Doeren Mayhew, a Troy-based certified public accounting and management consulting firm, announced today that it has launched a new Website where visitors can sign up to receive free child ID kits.

Doeren Mayhew has found a creative approach to helping its local community by providing free child ID kits to clients, prospects, employees, or anyone that asks for one. People requesting the kits from Doeren Mayhew are assured that they are not going to be solicited in any way; the program is simply for goodwill. To date, Doeren Mayhew has given away over 1,000 kits, originally offering them at seminars and conferences, and eventually through the firm’s corporate Website. The positive response received on the corporate Website lead Doeren Mayhew to create a dedicated Website just for child ID kits.

The kits keep a child’s vital identification information close at hand in case of an emergency. If the unthinkable ever happens, this kit can be easily stored and is readily accessible to authorities. Each kit records vital medical, identification, and contact information, including fingerprint and DNA samples that can be instantly provided to emergency personnel.

According to Larry Simon, one of the Firm’s directors, “Doeren Mayhew is a very family-focused firm and extremely committed to our community. We place the utmost importance on the safety and well being of our children and just wanted to do something to underscore this sentiment. Offering free child ID kits to clients and friends of the firm just felt like a natural fit. We started offering the kits four years ago and continue to receive great response today. When people call or e-mail us requesting the kits, they are always appreciative and supportive. It’s just a small way we can give back to our clients and the community.”

To receive a free child ID kit, please visit the Doeren Mayhew Website.

About Doeren Mayhew

Founded in 1932, Doeren Mayhew recently celebrated its 75th anniversary and has grown to become nationally and internationally recognized as trusted business advisors to thousands of individuals and businesses throughout North America and around the world. Doeren Mayhew represents manufacturers, contractors and builders, retailers, wholesalers, distributors, auto dealers, financial institutions, municipalities, school districts, and non-profit organizations, with a full range of accounting, audit, tax, merger and acquisition, and consulting services.

Doeren Mayhew: Tax Steps For Independent Employees

The IRS recently reminded individual taxpayers what important steps may be necessary to take upon being informed that their employment status is considered to be that of an employee, rather than an independent contractor.

Notice 989 is entitled Commonly Asked Questions When IRS Determines Your Work Status as “Employee.” What action a taxpayer may need to take depends on whether an income tax return was already filed reporting the income at issue, and if so, how the income was reported.

Common Scenarios

Some of the instructions set forth in the Notice include the following scenarios:

If a federal income tax return has not yet been filed for the year(s) relating to income now

categorized as employee wages, file Form 1040, U.S. Individual Income Tax Return, reporting the Form 1099-MISC income reported by the employer as wages on line 7. Social Security and

Medicare tax (i.e., FICA) must also be computed and paid on this amount. File Form 1040X, Amended U.S. Individual Income Tax Return, for any affected years for which a federal income tax return was filed but the Form 1099-MISC income was not reported, and report that income as employee wages. FICA tax must also be computed and paid on the income.

In situations where a federal income tax return has already been filed, and Form 1099-MISC

income was reported as employee wages, but no FICA tax was computed on that income, taxpayers are advised that they must file Form 1040X to compute the FICA tax due for the affected years.

For taxpayers who have already filed a federal income tax return for the affected years, but

reported their 1099-MISC income as self-employment income, and not employee wages

Form 1040X must be filed. No self-employment tax is due; however, the taxpayer’s portion of

FICA tax must be calculated and paid.

2007 Dividing Line for FICA

Note that for tax years prior to 2007, Form 4137, Social Security and Medicare Tax on Unreported Tip Income, should be used so that a taxpayer can properly compute FICA tax and receive the appropriate credit associated with the income from the Social Security Administration. For tax years 2007 and later, Form 8919 should be used for computation of FICA tax.

Payment of FICA Taxes Income

In the Notice, the IRS also reminds taxpayers that there may be situations where their employer provides a corrected Form W-2, reflecting payment of the employee’s FICA tax. In that situation, the additional amount reflecting the employer’s payment of the employee’s FICA tax is income to the employee in the year it was paid. The change in a worker’s status from independent contractor to employee may affect not only payment of FICA taxes, but also the amount of federal income tax, due to the tax treatment of certain expenses.

For instance, self-employed individuals are allowed to take a deduction on Form 1040 in an amount equal to one half of self-employment tax paid. However, as an employee, this deduction is lost. A recharacterized employee must compute and pay FICA tax based on gross wages, as opposed to self-employment tax being computed on net self-employment income. Other deductions related to one’s self-employed status may also be lost. Since wages earned by an employee are properly reported on line 7 of Form 1040, Schedule C cannot be used to report the income at issue. As a result, certain deductions, such as those for self-employed health insurance, may no longer be fully deductible, as they were when the individual was considered self employed. Instead, an employee may only be allowed to claim a miscellaneous itemized deduction on Schedule A, subject to the 2% floor.

Doeren Mayhew Can Help

If you have questions about the reclassification of a worker to an employee from being considered an independent contractor, please call the professionals at Doeren Mayhew today at (248) 244-3000, or at the following sites:

Twitter: twitter.com/doerenmayhew

Facebook: facebook.com/doerenmayhew

LLC and LLP Losses Held Deductible Against Salary

The U.S. Tax Court has recently ruled in a case that could

have a significant impact on the federal income-tax

treatment of business interests that are held in a limited

liability company (LLC) or limited liability partnership

(LLP).

Attractive LLP and LLC Features

LLCs and LLPs have enjoyed popularity as the business-

entity choice (for new businesses and conversions alike)

over the past decade or two. The combination of the limited

liability protection of a corporation with pass-through

taxation of income for owners, as is the case with a

partnership, represents the “best of both worlds” for many

entrepreneurs. An added wrinkle from a tax perspective

now makes LLCs and LLPs only look more attractive.

Generally, there has been a long-standing federal tax

law principle (and IRS position) that investment losses

generated by businesses held within an LLC or LLP

cannot by used to directly offset an owner’s salary from a

job and/or regular investment income. However, if not

overturned, this case stands to mark a significant

departure from that rule.

Losses Were Not Passive Losses

Prior to the Tax Court’s decision, investor-owners in small

businesses could generally deduct business losses only

against future profits from that business, potentially

postponing for years (or eliminating) the ability to realize

LLP and LLC loss deductions.

The facts of the case involve entrepreneurs – in this

case a husband and wife – who actively work in several

LLCs and/or LLPs that they have established. Historically,

the IRS considered losses relating to a taxpayer who plays

an active role in an LLC or LLP to be passive in nature.

The tax code also presumes that losses from an “interest

in a limited partnership as a limited partner” are passive

losses. And, in general, net passive losses cannot be used

to offset other income, such as salaries, capital gains, or

dividends. Rather, a taxpayer would have to wait until the

particular business entity that generated the passive losses

actually realized a profit (if at all) or was ultimately sold

in order for the losses to be deductible.

The ruling in this case is significant in that the Tax

Court held that since the LLP and LLC interests were not

held by the taxpayers as limited partners, the tax code’s

presumptive passive loss treatment was inapplicable.

Rather, the Tax Court essentially allowed the married

taxpayers to offset the losses of the businesses against the

current salaries or outside investment income earned by

the spouses when computing the couple’s income taxes.

Future of Holding Uncertain

The IRS may appeal the Tax Court’s decision to a federal

appeals court. Alternatively, the IRS may seek a

legislative solution and try to get Congress to enact a new

law to restore the tax treatment of LLC and LLP losses as

it was before the decision in this case.

Doeren Mayhew Can Help

In the meantime, if you have an ownership interest in an

LLC or LLP business that has sustained losses and actually

work in that business, please call Doeren Mayhew today at

(248) 244-3000. Our professionals can analyze your

situation to help you determine whether any losses that

your business has incurred may be used to offset your

other income, such as salary, capital gains, or dividends.

Doeren Mayhew Announces New Affiliate Company: Doeren Mayhew Financial Advisors, LLC

TROY MICHIGAN – Doeren Mayhew, Troy-based public accounting and management consulting firm, announces the formation of a new venture, Doeren Mayhew Financial Advisors LLC (DMFA).

DMFA combines the resources and experience of Doeren Mayhew’s accounting and consulting professionals with the financial advisory and brokerage expertise of The Southwick Group, formerly of Morgan Stanley Smith Barney.

Donald P. Southwick, President and CEO of DMFA, is a former national bank President and CEO, founder of a nationally chartered trust bank, and is currently one of 20 members of FINRA’s CE Council. FINRA’s CE Council is comprised of industry members from broker-dealers, representing a broad cross section of industry firms and representatives from Self-Regulatory Organizations.

DMFA is uniquely structured with access to the inventory and platforms of a wide array of independent investment providers. “The competitive sale or purchase of securities is preferable to a single firm’s inventory and proprietary product approach,” says Southwick. “High net worth individuals and families, institutions, municipalities/governments, and employee benefit plans are DMFA’s focused areas of interest,” he stated.

“The key for our clients is our ability to access multiple investment channels through Doeren Mayhew Financial Advisors. Our wealth advisors will never be required to push proprietary products,” said Mark Crawford, Managing Director of Doeren Mayhew. “The creation of DMFA, LLC substantially increases our depth of experience and expertise in the financial planning and advisory arena, and improves our ability to offer clients a full breadth of professional services all from one source.”

Doeren Mayhew, known internationally as Moore Stephens Doeren Mayhew, is the ninth largest firm in southeastern Michigan, with a staff of 220 including 33 directors. Doeren Mayhew is an independent firm associated with Moore Stephens International Limited, one of the world's major accounting and consulting associations consisting of 366 independent firms with 647 representative offices and some 21,244 people across 98 countries. Doeren Mayhew is the only Michigan-based certified public accounting and consulting firm to have ever attained Inside Public Accounting’s“Best of the Best” rating, signifying our status as one of the nation’s 50 best firms. This is an honor we are proud to have received for the past 14 years, including 12 years in the top 25.

Founded in 1932, Doeren Mayhew recently celebrated its 77th anniversary and has grown to become nationally and internationally recognized as trusted business advisors to thousands of individuals and businesses throughout North America and around the world. Doeren Mayhew represents manufacturers, contractors and builders, retailers, wholesalers, distributors, auto dealers, financial institutions, municipalities, school districts, and non-profit organizations, with a full range of accounting, audit, tax, merger and acquisition, financial, and consulting services.

DMFA offers securities through NRP Financial, Inc. Member FINRA/SIPC. Advisory services provided by NRP Advisors, Inc.

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