Welcome To The NAIOP NM ChapterAugust Breakfast

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Agenda

GRT savings on Government and Not for Profit Construction

Construction Regulations and GRT Expiring Federal Tax Incentives Bonus Depreciation Rules Obamacare and small business Carried Interest Update

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New Mexico Gross Receipts Tax Opportunities and Planning

Presented by:Duwayne Sibley, Senior ManagerJohn C. Tysseling, Director

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The material appearing in this presentation is for informational purposes

only and is not legal or accounting advice. Communication of this

information is not intended to create, and receipt does not constitute, a

legal relationship, including, but not limited to, an accountant-client

relationship. Although these materials may have been prepared by

professionals, they should not be used as a substitute for professional

services. If legal, accounting, or other professional advice is required, the

services of a professional should be sought.

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• A New Mexico State cost segregation study examines qualifying construction projects by not-for-profit, governmental, and industrial revenue bond entities. It then provides the general contractor with a New Mexico Gross Receipts Tax (NM GRT) savings or a refund on tangible personal property, in accordance with New Mexico Statute § 7-9-54.

• Historically NM has not allowed governments or non profits to buy construction tangibles separately without tax. Regulation 3.2.1.11.K (the Building Reg.) changed that. 3.2.1.11.K.(2) A "building" includes the structural components integral to the building and

necessary to the operation or maintenance of the building but does not include equipment, systems or components installed to perform, support or serve the activities and processes conducted in the building and which are classified for depreciation purposes as 3-year, 5-year, 7-year, 10-year or 15-year property by Section 168 of the Internal Revenue Code…

• New Construction Projects Study should be initiated as soon as possible in construction process Allows for monthly savings to be applied on a go forward basis as project is being

constructed.

• Past Construction Statute of limitation is 3 years Must file a refund with New Mexico Tax & Revenue Department with Amended CRS-1s.

• Example Project: $12 Million Building, 7% NMGRT Rate 15% Qualifying Property $126,000 NMGRT Savings

Opportunities for Savings on Government and Not-for-Profit Construction

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CONSTRUCTION-RELATED ANTI-PYRAMIDING NM GROSS RECEIPTS TAX PROVISIONS

• Construction –Related Services: directly contracted or billed design, architecture, drafting, surveying, engineering, environmental and structural testing, security, sanitation and services required to comply with governmental construction related regulations; ‐• but excludes general business services

(e.g., legal or accounting), equipment maintenance and real estate sales commissions.

• If a manufacturer of equipment installs the equipment on a construction project such that the equipment becomes “an ingredient or component part“ of the project, then the manufacturer (or its contracted installer) is selling a construction service that may be deducted from gross receipts.

• HB-184 (2012 Legislature) enacts §9-2-52 et seq. (NMSA 1978), and TRD Regs. 3.2.210 NMCA implements provisions to avoid pyramiding of GRT.

• NTTC Type-6 may be executed by a construction contractor:• 1) For the purchase of construction

materials that will become ingredients or components of a construction project that is either subject to GRT upon completion; or

• 2) the purchase of construction or construction-related services that are directly contracted for or billed to a construction project

which are either subject to GRT upon completion or upon the sale of the real property upon which the project is constructed.

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CONTACT US

Duwayne Sibley505-878-7294Duwayne.Sibley@mossadams.com

John C. Tysseling505-837-7665John.Tysseling@mossadams.com

Tax planning offered by Moss Adams LLP. Investment advisory and personal financial planning offered by Moss Adams Wealth Advisors LLC. Insurance management and consulting offered by Moss Adams Securities & Insurance LLC.

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Expiring tax incentives and bonus depreciationAugust 8, 2013Presented By David Leith, Partner

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Expiring federal tax incentives in 2013 that may impact your business decisions• Business Property Incentives

– Section 179 increased limit– 50% Bonus depreciation– Qualified LHI 15 year life

• S corporation BIG period• Energy efficient property incentives

– Section 179D (likely to be extended)– Section 45L

• Individual Expiring provisions of note

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Taking full advantage of the bonus depreciation rules• 50% Bonus depreciation set to expire, generally,

12/31/13• Qualified LHI application• Utilize 179 deduction first, then bonus• Interplay with Repair regulations• Cost segregation as a means to maximize bonus

– Bldg/improvements must be placed in service by 12/31/13– 5,7,15 yr property generally eligible for bonus

• Watch State conformity to bonus

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twitter.com/CLA_CPAs

facebook.com/cliftonlarsonallen

linkedin.com/company/cliftonlarsonallen

Dave Leith, CPAPartner, Construction and Real EstateDavid.leith@cliftonlarsonallen.com505-222-3506

Marcus Mims, CPAPartner, State and Local TaxMarcus.mims@cliftonlarsonallen.com505-222-3508

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Carried interest update and Obamacare

REDW, LLCCPAs | Business & Financial Advisors

Affordable Care Act (“ACA”)• Where to get information:

– IRS.gov (new home page)– Business.usa.gov/healthcare (interactive Q&A)– HealthCare.gov (US Department of Health & Human Services website)

• Key Tax Points– Medical Loss Ratio (“MLR”) - 2012

• Insurance company rebate– W-2 Reporting – 2012, but transitional relief available

• Box 12, Code DD– Net Investment Income Tax – 3.8% - 2013– Additional Medicare Tax - 2013

• 0.9%; $250,000 MFJ; $125,000 MFS; $200,000 all others– Small Business Health Care Tax Credit - 2012

• Not refundable for businesses; Subject to AMT– Medical Devise Excise Tax - 2013

• 2.3% on manufacturers for certain pieces of equipment– Health Insurance Premium Tax Credit – 2014

• Refundable credit for individuals/families when health insurance is purchased through an exchange.– Individual and Employer Shared Responsibility Payment – 2014 and 2015, respectively

• Penalty if no health insurance or no exemption.– Patient-Centered Outcomes Research Institute Fee (“PCORI”) – July 31, 2013

• Trust Fund funded by fees from certain health policies and sponsors of certain self-funded plans.– Workplace Wellness Programs (reward system) – 2014

“Obamacare”

• Advice from this panel:

Carried Interest Update• What is carried interest, also referred to as “a promote”? http

://www.youtube.com/watch?v=P2n_zpoM1GE#“Usually my video clips are just adding color, but I really recommend that you check this

one out to get the industry perspective. Overall I think the response is a little disingenuous. It is true that there are a lot of people who build businesses with sweat equity and cash out with capital gains treatment after some liquidity event. For a lot of those people, it is a once in a lifetime event. People who do it year in and year out are in a somewhat different economic situation even if the same tax principles are at work.” Forbes.Com; Peter J. Reilly

• Why is it important to NAIOP members?“…the proposed partnership tax law change would disproportionately impact

the real estate industry since real estate partnerships comprise over 46 percent of all partnerships and many use a carried interest component in structuring development ventures.” NAIOP website

• Prospect of future legislation– How to plan for possible changes to the tax code

CONTACT INFORMATION

Bobbi Kay NelsonSenior Manager, State and Local Tax REDW, LLCbnelson@REDW.com505-998-3414