More than Just Accountants

The team at Beasley, Mitchell & Co. is dedicated to serving its clients as well as the Las Cruces community.

Beasley, Mitchell & Co. goes above and beyond

By Samantha Roberts

As Beasley, Mitchell & Co. heads into its 25th year of business, few things have changed with the company that started in 1987.

The CPA firm was started by Don and Patsy Beasley and Paul Mitchell in Las Cruces. Now, the company has more than 35 employees and follows many of the same principles it was founded upon.

“We take an interest in our clients,” said Brad Beasley, son of Don Beasley and a partner with the company. “We spend time with them and talk to many of them on a weekly or monthly basis. We generate a vested interest in their lives and follow their problems and successes.”

Brad Beasley said the company’s goal of always providing quick response times helps them establish relationships. “Our rule is to return emails and phone calls, even if it is just to say ‘I am working on it’ or ‘I will have to get back to you,’” he said. “We don’t let anything sit.”

Beasley, Mitchell & Co. also values honesty and hard work.

“We don’t really do much marketing,” he said. “Instead, we rely on word-of-mouth referrals from our clients. We believe that if we do good work, our customers will be happy and give good references.”

The firm’s size is also an important component of the company’s success, he said. The company is large enough to offer a full array of accounting, taxation and consulting services its clients on a more personal level.

“We keep that personal touch, and grow with our clients,” said Beasley, adding that he started at the company as a “certified paper shredder.”

After his paper shredding days, Beasley played baseball at the University of Nevada at Las Vegas where he also received a bachelor’s degree in accounting.

“I have always liked math, and I saw that my father was able to provide well for our family,” Beasley said about his career choice.

After spending a few years in the corporate world at Harrah’s in Las Vegas, Nev., Beasley said he realized what an opportunity he had working at Beasley, Mitchell & Co.

“To be a CPA in the corporate world, you have to have an MBA,” he said. “I got tired of Las Vegas; it was moving a little too fast for me. I saw opportunities to expand my horizons in Las Cruces.

“(Las Cruces) is a positive place, and my family really enjoys it.”

One of the best reasons to move back to the City of the Crosses was to work alongside his father, Beasley said.

“Most people grow up thinking their parents don’t know what they are talking about. It is nice to work with my father and see just how smart of a man is really is,” said Beasley, adding that he considers his father, who is still active in the company, to be a mentor.

“Another one of the best parts about my job is to see all the ways people are making money. It is amazing to work with so many types of entrepreneurs, from farmers to construction workers. There are so many ways to earn money. It’s inspiring to see someone succeed and watch their dreams come true.”

As 2011 comes to a close, Beasley said the company has so much to be thankful for, and the community is to thank.

To give back, employees at Beasley, Mitchell & Co. are encouraged to be involved in the community, and many of them sit on nonprofit boards, such as La Casa, Mesilla Valley Hospice and the Greater Las Cruces Chamber of Commerce, to name a few.

“It is important for us to say ‘thank you,’” Beasley said. “Las Cruces has a lot of need for community involvement. Plus, it helps people grow on a personal and professional level.

“People always need help, and we are happy to offer what we can, if it’s a financial contribution or our services.”

Beasley said due to his employee’s nature of business, a lot of them are asked to serve in secretary and treasurer roles.

“We are more than happy to do it,” he added.

As the company prepares for its 25th year, Beasley, Mitchell & Co. has fully embraced 25.

“We are pledging to (help) 25 charities,” said Beasley, adding that assistance comes in many forms, including monetary and in-kind donations as well as volunteer work. “Through all of the work, we will be donating $25,000 to the Las Cruces community. This is a way for us to really say thanks.”

Recent projects include donating 25 Thanksgiving dinners and dressing 25 children as part of Dress the Child.

“We are excited and ready for this yearlong project, and already have all the charities picked out and ready to go,” he said.

In the future, Beasley said he would like to see the company continue to expand.

“It will be hard to grow at the rate we have, but I think that just shows we are doing a good job,” he said.

Brad Beasley, a partner with Beasley, Mitchell & Co., said he was glad he moved back to Las Cruces to follow in his father’s footsteps and work for a company that has nearly 25 years of experience.

YEAR END TAX PLANNING

Dear Clients and Friends,

As the end of 2011 approaches, now is a good time to start year-end tax planning to minimize your individual and business tax burden. Generally, year-end tax planning involves considering at least two years – in this instance, 2011 and 2012. With tax changes on the horizon, you should consider the likelihood of future changes. Tax planning is a dynamic process and is best accomplished with forethought and assistance from your tax adviser.

Before going into more specific, detailed planning tips, here are two basic principles that can help guide your overall thinking:

• If you expect your tax rate will be higher in 2012, you may benefit from accelerating income into 2011 and deferring deductions into 2012.
• If you think your tax rate might be lower next year or will be unchanged, consider deferring income to 2012 and accelerating deductions into 2011.

Remember, the focus is on your marginal tax rate. That is the highest rate at which your last, or marginal, dollar of income will be taxed. Even though overall tax rates may rise in the future, if your income will be substantially lower in 2012 than in 2011, your marginal tax rate may decrease because of our graduated tax bracket system.

In drafting this letter, we have focused on tax planning opportunities that involve actions you can take during the remainder of 2011. This letter does not include every tax planning opportunity that may be available to you, and it is advised that tax projections confirm planning strategies.

Sincerely,
Beasley, Mitchell and Co., LLP

Watch out for 2013!

Some future tax changes have already been enacted but have yet to take effect:

Effective Jan, 1, 2013, a new Medicare Hospital Insurance (HI) tax applies to high income individual taxpayers:

• The tax is 0.9 percent of earned income in excess of $200,000 for single filers ($250,000 for joint returns).
• A 3.8 percent tax applies to investment income (including dividends, annuities, royalties and rents, etc.) for the same individuals.

Consider talking with your tax adviser about strategies for minimizing this tax.

In 2013, the threshold for the itemized deduction for unreimbursed medical expenses is increased to 10 percent of adjusted gross income from the current 7.5 percent. You may want to plan for unreimbursed medical procedures in 2011 or 2012 to maximize your tax benefit.

Fastest Growing Firm

Personal Tax Strategies

Compensation and billing
If your employer is willing, compensation you earn in 2011 can sometimes be paid to you in early 2012. Your employer may be entitled to the tax deduction in 2011. If your business operates on the cash method, you can delay (within reason) sending out bills for 2011 work until late in the year, so payment comes in 2012. Alternatively, you can offer a discount to a client who prepays if you are trying to increase 2011 income.

Capital gains and losses

• Long-term capital gains from the sales of assets with a holding period greater than one year are taxed at 15 percent.
• Short-term capital gains are taxed as high as 35 percent.
• Sales at a loss can reduce other capital gains.
• Excess capital losses can be deducted to offset up to $3,000 of other income, with the balance carried forward. When selling to recognize a loss, be careful of the ash-sale rules.
• Consider any capital loss carryforward that may be available to you in 2011.

Installment sales

• Selling an asset at a gain and collecting the proceeds in future years may allow you to defer part of the income until the years in which you receive the payments. Consider the fact that you will be financing the sale yourself and may face the risk of collection problems.
• Consider the possibility that capital gains tax rates could be higher in future years when you collect the payments because those gains are taxed at the rates in effect the year the gains are recognized. You may wish to elect out of the installment sale method in the year of sale to lock in the 15 percent rate.

Credit card payments
Paying tax-deductible expenditures – including charitable contributions – with a credit card secures the deduction, even if you do not actually pay the credit card company until the following year.

Suspended passive activity losses
If you own a passive activity with a suspended loss, and you do not have sufficient passive income in 2011 to allow you to deduct the suspended loss, consider disposing of the activity before Dec. 31.

Zero percent tax rate on capital gains and dividends
This rate, if not applicable to you personally, may benefit your older children, aging parents or others. The maximum rate of tax on qualified dividends and most long-term capital gains is 15 percent. For those whose marginal income tax rate does not exceed 15 percent, the tax rate on these special types of income is reduced to zero. The zeropercent rate applies to a single person with less than $34,501 in taxable income for 2011 and married persons filing jointly with taxable income under $69,001.

The kiddie tax rules may prevent your children from qualifying because the rules require taxation at the parents’ tax rate. However, if you assist aging parents or others, you might consider gifting appreciated capital gain property to them if they are in the 10 or 15 percent tax brackets. They could then sell the investment and qualify for the zeropercent tax rate on the gain.

Income tax prepayments
If your estimated tax payments and withholding are not high enough to avoid penalties, increase payments. Even better, if you receive wages, IRA distributions, annuity payments or other payments have the additional taxes withheld because withholding is deemed to be ratable throughout the year.

If you have a fourth quarter state estimated tax payment due Jan. 15, 2012, consider making the payment late in December if you need additional itemized deductions in 2011.

The alternative minimum tax
An increasing number of middle-income earners, especially retirees, are subject to the AMT. High itemized deductions (other than charitable contributions), high personal exemptions and large capital gains, among other items, can trigger the AMT. New retirees are often subject to the AMT because they experience lower income while their itemized deductions remain high.

Charitable Contributions

Charitable contributions from IRAs
The provision for making charitable contributions from an IRA is set to expire on Dec. 31, 2011. If you are age 70½ or older, you can have charitable contributions made directly to a charity by your IRA custodian:

• There is no deduction for the contribution.
• The distribution is not included in your taxable income.
• The contribution is limited to $100,000.
• The contribution to the charity counts toward required minimum distributions.

Appreciated assets to charity??
Consider fulfilling your charitable goals by contributing appreciated assets instead of cash. You can deduct the fair market value of longterm capital gain property contributed to charity and you avoid paying taxes on the appreciation.

Tax Credits

Tax credits for home improvements
A tax credit for qualifying home improvements may be available for improvements placed in service during 2011 but not in 2012. The credit applies to energy-efficient improvements such as insulation, exterior windows, and heating and air conditioning systems. You will need to complete your purchase before Dec. 31 to qualify for the credit in 2011. The new energy efficiency tax credit is a 10 percent credit, up to a lifetime maximum of $500.

Tax credits for alternative vehicles
Several tax credits are available to purchasers of various types of motor vehicles that use fuel-saving or alternative-fuel technologies. Check with the manufacturer to see what tax credits may be available if you are considering the purchase of a new vehicle.

Business Tax Strategies

Section 179 Depreciation
A $500,000 expensing election limit applies to qualifying property purchased and placed in service during 2011. As a result, many businesses will receive an immediate tax write-off for the cost of most new and used tangible personal property. Unless Congress acts to further extend the higher limit, it will drop to about $134,000 in 2012.

Companies that purchase more than $2 million of qualifying property during 2011 have their deduction amount reduced, dollar-for-dollar, for purchases in excess of $2 million.

Bonus depreciation
Property that does not qualify for an immediate tax write-off under the expensing election may qualify for an increased first-year depreciation deduction under bonus depreciation rules. Unlike the Section 179 deduction, there are no restrictions on the amount of qualifying property and there is no taxable income limit. The deduction is 100 percent of the cost for property purchased and placed in service during 2011. Unless Congress acts to extend the bonus depreciation (now proposed by the President), it will not be available for 2012.

Research and development tax credit
Many business owners in nearly every industry are unaware that federal and state research and development (R&D) tax credit programs exist that may reward their day-to-day efforts aimed at producing an improved product. This credit is scheduled to expire Dec. 31, 2011.

Health insurance tax credit
To encourage smaller businesses to offer medical insurance coverage for their employees, the law offers a tax credit to offset all or part of the cost. If your business qualifies as a small employer, meaning fewer than 25 employees and average annual wages of less than $50,000, you are eligible for a credit of up to 35 percent of nonelective contributions you make on behalf of your employees for medical insurance premiums. The credit varies based on the numbers of employees and average compensation.

Credit for hiring new employees
Businesses that hire workers who are members of certain target groups, such as disabled veterans, food stamp recipients and ex-felons, can claim a credit up to 40 percent of the first $6,000 of wages paid to each such employee.

Owners of LLC’s

If you are an owner of a passthrough business entity operating as a partnership, LLC, S corporation or trust, and the business will incur a loss in 2011, you may need to plan ahead to be sure you can take advantage of that loss on your personal tax return. These rules can be complicated, and you should consult with your tax adviser – there are steps you can take to deduct passive losses or increase your basis.

Owners of C‐Corporations

Profits of traditional C corporations (those that have not elected S corporation pass-through status) are taxed twice: once when earned by the corporation and again when distributed as a dividend to the shareholders. Many have seen the current 15 percent tax rate on qualified dividends as an opportunity to pay out accumulated earnings at relatively low tax rates. It is likely that the tax rate on dividends will increase in the future, so you may wish to discuss with your tax adviser the possibility of distributing profits to lock in the current 15 percent rate.

Pension Plan Limits

By Christine Wight, CPA

Your retirement plans – To qualify for a deduction in 2011, your retirement plan generally must be in place before the end of the year. Exceptions are IRA and SEP (simplified employee pension) plans, which generally must be funded by the due date of the return plus extensions. The following contribution limits apply for 2011:

401(k)	IRA	SIMPLE IRA	Self-employed
$16,500 ($22,000 if age 50+)	$5,000 ($6,000 if age 50+)	$11,000 ($14,000 if age 50+)	20 percent of income up to $49,000

QuickBooks troubles?

If you are having issues with your QuickBooks, or are wanting to be more efficient in your use of Quick‐Books, contact Rebecca, Mesa, our QuickBooks Pro Advisor.

Estate and Gift Tax

Estate Tax
The estate and gift tax exemption amount for 2011 is $5 million – essentially $10 million for a married couple. Again, there is uncertainty in the future about where the estate tax exemption and tax rates will end up. And with the recent changes, it is a good idea to review your plan to ensure it is up to date. Because the estate and gift tax exemptions were recently reunified, now may be an appropriate time to make gifts to take advantage of the $5/$10 million lifetime exemption. Making large gifts under the exemption amount not only removes the value of these gifts from your estate but also future appreciation of the gifted assets.

Gift tax
The annual gift tax exclusion for 2011 remains at $13,000 per person. If you are married, you can gift up to $26,000 per donee, per year by using the gift-splitting rules, without any federal gift tax ramifications. Gifting reduces your taxable estate and may be important in an effective estate plan.

Conclusion

When Congress dealt with the Bush tax cuts at the end of 2010, the effect was to delay a “permanent” decision for another two years. These provisions, originally enacted in 2001, reduced marginal tax rates for all taxpayers, provided relief from the marriage penalty, increased child tax credits, expanded education-related tax benefits and phased out the estate tax.

The current laws, including the recently enacted estate tax changes, are now set to expire, or sunset, on Dec. 31, 2012. If Congress does not act, most of these tax benefits will disappear, and taxes will automatically increase to pre-2001 levels on Jan. 1, 2013. Although we have covered a number of topics in this letter, we undoubtedly did not address every issue relating to your specific situation. Tax projections are recommended to determine your greatest tax savings. We would be pleased to meet with you to discuss these topics and help you plan.

Volunteering for your favorite charities can net you some Good Tax Breaks

If you are a volunteer worker for a charity, you should be aware that your generosity may entitle you to some tax breaks. Although no tax deduction is allowed for the value of services you perform for a charitable organization, some deductions are permitted for out-ofpocket costs you incur while performing the services. This includes items such as:

• Away-from-home travel expenses while performing services for a charity (out-of-pocket round-trip travel cost, taxi fares and other costs of transportation between the airport or station and hotel, plus lodging and meals).
• If you use your car while performing services for a charitable organization you may deduct a flat 14¢ per mile for charitable use of your car.

If you are charitably inclined to donate money, there are taxadvantaged ways to make a gift to a favorite charity while enjoying the income from that gift for your lifetime. Here is a brief overview of the major types of deferred charitable gifts.

(1) In a charitable remainder unitrust (CRUT), a separate fund is set up to hold your gift until your death, at which time it will become the charity's property. You decide at the outset on the annual percentage of the fair market value of the assets that you are to receive as income for life. For example, you may make a $50,000 gift to a CRUT and specify an 8% return. Your annual income will be $4,000. If the value of the CRUT assets drops in the next year to only $40,000, your income that year will be $3,200. If the value goes up to $60,000 in the following year, your income that year will be $4,800.

(2) A charitable remainder annuity trust (CRAT) provides an annual payment of a fixed dollar amount for your lifetime. This differs from a CRUT, which provides a fixed percentage of the asset value.

For example, say that you make a $50,000 gift to a CRAT that will pay you $4,000 a year for life, after which the trust principal passes to the charity. If the CRAT earns less than $4,000 a year, it will sell assets to make up the difference. If it earns more than $4,000, it will pay you $4,000 and add the excess to the trust principal. Your income tax deduction from a gift to a CRAT is based on your age and the amount of your annual payment.

As a rule of thumb, the older you are, the larger the deduction, and the greater the annual payment, the smaller the deduction.

(3) In a charitable gift annuity, you make a gift to charity in exchange for a guaranteed income for life. This is very much like buying an annuity in the commercial marketplace, except that you get an immediate charitable deduction equal to the excess of what you paid over what the annuity is worth, based on IRS tables.

A portion of each year's payment is tax-free, because the tax law allows you to recover your original payment over your life expectancy. In the year when you buy the annuity, you get a charitable deduction for a portion of the purchase price, determined from an IRS table geared to your age.

Beasley, Mitchell, & Co Employees deliver 25 Thanksgiving Baskets to Families around Dona Ana County