Financial Advisory Services

Our expertise is in utilizing integrated tax & investment strategy to spot strategic opportunities for both your business and for you as an individual.

 

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Investment Planning
Every client has a written, personal plan

If you’re like many people, you may have left your investments on autopilot. You recognize the value in investment planning, but may find it too intimidating to tackle on your own.

Chances are you have had changes in your life since you last reviewed your investment portfolio, and the investment strategy that once was adequate for the future you had in mind may no longer be appropriate. As your financial goals and needs change, your investment strategy may need to change to meet those goals and needs.

Remember that your investments affect other elements of your financial plan such as estate planning, education planning, and retirement planning.

 

Income Protection & Asset Preservation
Independent Advice

​For most people, the possibility of an illness or injury severe enough to disrupt their income flow doesn’t even occur to them. If they do think about it, people often consider the chances slim. Many go through life with the “it will never happen to me” mentality.

The truth is that illness or injury can happen to anyone. In fact, a person has a one in four chance of becoming severely ill or disabled. Perhaps you’ve considered this possibility and put some plans in place. If you have already taken steps to protect your income, when is the last time you reviewed your plan? Chances are you have experienced changes in your life since you last reviewed your finances. You may have gotten married or divorced, welcomed a child or grandchild, acquired or sold a business, received a new job or earned a promotion, or taken on new future financial obligations.

As your financial goals and needs change, your strategies to protect them may need to change. Remember that income protection affects other aspects of your planning process, including investment planning and insurance planning. Because your lifestyle and that of your family depend on your income, it is important to regularly review your specific goals, and actively plan for the possibility of severe illness or injury.

 

Retirement Planning
No “cookie cutter” approach

​You may look forward to retirement as a time to savor the finer things in life, and as a reward for many years of hard work.

Retirement dreams can inspire you, but you need to set goals if your retirement is to live up to your aspirations.

We can help you start addressing the challenges planning for your retirement holds. We can analyze your current retirement plan and help make sure you are working steadily towards your goals.

 

Securities offered through 1st Global Capital Corp., Member FINRA, SIPC. Investment Advisory services offered through 1st Global Advisors, Inc. Jones & Roth has representatives licensed in AZ, CA, CO, FL, GA, HI, IL, IN, MA, MT, NC, NV, OH, OR, TX, UT, WA & WY. This is not an offer to sell securities in any other state or jurisdiction.

Financial Advisory Services Team


Matt Adams, CFP®, CLU, ChFC

Matt Adams, CFP®, CLU, ChFC

CERTIFIED FINANCIAL PLANNER™

Bio

Mark Coombe, CFP®

Mark Coombe, CFP®

CERTIFIED FINANCIAL PLANNER™

Bio

Bryan Decker, CFP®

Bryan Decker, CFP®

CERTIFIED FINANCIAL PLANNER™

Bio


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Recent News

3 Midyear Tax Planning Strategies for Business

3 Midyear Tax Planning Strategies for Business

Tax reform has been a major topic of discussion in Washington, but it’s still unclear exactly what such legislation will include and whether it will be signed into law this year. However, the last major tax legislation that was signed into law — back in December of 2015 — still has a significant impact on tax planning for businesses. Let’s look at three midyear tax strategies inspired by the Protecting Americans from Tax Hikes (PATH) Act:

1. Buy equipment. The PATH Act preserved both the generous limits for the Section 179 expensing election and the availability of bonus depreciation. These breaks generally apply to qualified fixed assets, including equipment or machinery, placed in service during the year. For 2017, the maximum Sec. 179 deduction is $510,000, subject to a $2,030,000 phaseout threshold. Without the PATH Act, the 2017 limits would have been $25,000 and $200,000, respectively. Higher limits are now permanent and subject to inflation indexing.
Additionally, for 2017, your business may be able to claim 50% bonus depreciation for qualified costs in excess of what you expense under Sec. 179. Bonus depreciation is scheduled to be reduced to 40% in 2018 and 30% in 2019 before it’s set to expire on December 31, 2019.

2. Ramp up research. After years of uncertainty, the PATH Act made the research credit permanent. For qualified research expenses, the credit is generally equal to 20% of expenses over a base amount that’s essentially determined using a historical average of research expenses as a percentage of revenues. There’s also an alternative computation for companies that haven’t increased their research expenses substantially over their historical base amounts.
In addition, a small business with $50 million or less in gross receipts may claim the credit against its alternative minimum tax (AMT) liability. And, a start-up company with less than $5 million in gross receipts may claim the credit against up to $250,000 in employer Federal Insurance Contributions Act (FICA) taxes.

3. Hire workers from “target groups.” Your business may claim the Work Opportunity credit for hiring a worker from one of several “target groups,” such as food stamp recipients and certain veterans. The PATH Act extended the credit through 2019. It also added a new target group: long-term unemployment recipients.
Generally, the maximum Work Opportunity credit is $2,400 per worker. But it’s higher for workers from certain target groups, such as disabled veterans.
One last thing to keep in mind is that, in terms of tax breaks, “permanent” only means that there’s no scheduled expiration date. Congress could still pass legislation that changes or eliminates “permanent” breaks. But it’s unlikely any of the breaks discussed here would be eliminated or reduced for 2017. To keep up to date on tax law changes and get a jump start on your 2017 tax planning, contact us.

© 2017

Own a Vacation Home? Adjusting Rental vs. Personal Use Might Save Taxes

Own a Vacation Home? Adjusting Rental vs. Personal Use Might Save Taxes

Now that we’ve hit midsummer, if you own a vacation home that you both rent out and use personally, it’s a good time to review the potential tax consequences:

If you rent it out for less than 15 days: You don’t have to report the income. But expenses associated with the rental (such as advertising and cleaning) won’t be deductible.

If you rent it out for 15 days or more: You must report the income. But what expenses you can deduct depends on how the home is classified for tax purposes, based on the amount of personal vs. rental use:

Rental property. If you (or your immediate family) use the home for 14 days or less, or under 10% of the days you rent out the property, whichever is greater, the IRS will classify the home as a rental property. You can deduct rental expenses, including losses, subject to the real estate activity rules. You can’t deduct any interest that’s attributable to your personal use of the home, but you can take the personal portion of property tax as an itemized deduction.

Nonrental property. If you (or your immediate family) use the home for more than 14 days or 10% of the days you rent out the property, whichever is greater, the IRS will classify the home as a personal residence, but you will still have to report the rental income. You can deduct rental expenses only to the extent of your rental income. Any excess can be carried forward to offset rental income in future years. You also can take an itemized deduction for the personal portion of both mortgage interest and property tax.

Look at the use of your vacation home year-to-date to project how it will be classified for tax purposes. Adjusting the number of days you rent it out and/or use it personally between now and year end might allow the home to be classified in a more beneficial way.

For assistance, please contact us. We’d be pleased to help.

© 2017

Business Valuation Part 1: Levels of Value

Business Valuation Part 1: Levels of Value

Introduction

This is Part 1 of a four part series that will serve as a valuation primer. The purpose of Part 1 is to give an overview of common terms and methods used to value an equity interest in a company.

The issue we are trying to resolve when valuing a business is the price that two independent parties would pay for or be willing to receive for the interest they hold. The value of a business interest depends on the future benefits that will accrue to it.  The financial benefits from ownership must come from one of the following sources: distribution of earnings, from the sale of the interest, or distribution from the liquidation of assets.  In determining the value of a business interest, one should focus on the benefits the shareholder(s)/member(s) may receive from long-term ownership in the securities. In appraisal terminology, these three sources of return correspond to the income, market, and adjusted net asset value approaches, respectively.

When using each of the three approaches, the valuation analyst must also keep in mind the size of the interest being valued and the underlying financial information used to determine the value. This series of four valuation primers will cover the levels of valuation and the approaches to value.

Minority Interests and Controlling Interests

The value of a shareholder’s interest in the stock of a company is influenced by the shareholder’s access to and ability to distribute cash. In general, an ownership interest greater than 50% is considered a controlling interest and an ownership interest less than 50% is considered a minority interest.  The type of interest being appraised (control or minority) will influence the underlying choice fundamentals on which the valuation is based and the approaches used in the valuation.

If the assignment is to value a minority interest, the underlying financial information used should reflect those to which a minority interest holder generally has access. On the other hand, when valuing a controlling interest, the financial information used should reflect those to which a controlling interest holder has access. , or those available only to a controlling interest holder.  For example, if we are valuing a minority interest in a company that holds assets worth $1 million, the minority interest holder most likely cannot force the company to sell those assets or distribute those assets. A controlling interest holder can adjust financial structure, control dividends/distributions with regards to timing and amount, alter operating efficiencies, set compensation amounts, hire and fire employees, etc.  A minority interest holder has no ability to control any of these issues, and they have influence on these issues only at the discretion of the controlling interest holder(s).

A minority interest fair market valuation based on a control basis will need to be adjusted for the loss of value represented by the lack of control associated with a minority interest holder.  This adjustment in value is called the minority interest discount or the discount for lack of control.  It is applied only to arrive at a minority interest fair market value when the base value was derived from controlling interest assumptions and analyses.

Equity, Invested Capital and Enterprise Value

The level of control in a company will also impact the methodology we use to determine the value of an interest. If we are valuing a minority interest, we may choose methodologies that directly value the equity that is the subject of the valuation. But, if we are valuing a controlling interest, we may use calculations that produce the value of the company as a whole. Ultimately, we are looking to arrive at an equity value and there are typically three ways to do so.

The first way to determine the equity value is to use approaches and methods that produce an equity value directly. These approaches and methods are discussed in Part 2, Part 3 and Part 4 of this series.

Another way to determine the equity value is to value what is referred to as total invested capital (TIC). Total invested capital is also sometimes referred to as market value of invested capital (MVIC). TIC or MVIC is defined as equity plus debt. Therefore, to determine the equity value from an invested capital value, we simply subtract debt. This method is typically used when we are valuing a company with debt.

Finally, a third method to calculate the equity value is to determine total enterprise value (TEV). Total enterprise value is defined as equity plus debt, minus cash. Therefore, to determine the equity value from a total enterprise value, we subtract debt from the total enterprise value and add cash. Depending on the facts and circumstances of the valuation, total enterprise value is sometimes modified to include net working capital (current assets less current liabilities) instead of cash.

Conclusion

The interest being valued will determine the overall methodology selected by the valuation analyst. Whether the interest has control or is a minority interest will impact the initial choices made by the valuation analyst and is the foundation of the rest of the analysis. In Part 2, we will discuss the Asset Approach, one of the three approaches to determine the value of an equity interest.

Business Appraiser Jason Bolt  leads the Business Valuation Team at Jones & Roth. He is an active writer and speaker on specialized business valuation topics.