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RSS Don’t Mess With Taxes

  • Mnuchin money meme arises from currency photo shoot November 18, 2017
    As a wife of many years, I appreciate it when a couple likes to share big moments. But such spousal closeness backfired spectacularly when Treasury Secretary Steven Mnuchin brought his wife, Louise Linton, with him when he went to check out his signature that's now appearing on U.S. currency. But before we get to the drama, let's look at the change […]
    skbell1

RSS The Wandering Tax Pro

  • THE HOUSE DOES IT November 17, 2017
    Yesterday the House passed the “Tax Cuts and Jobs Act” (H.R. 1) by a vote of 227-205 along party lines.  Not a single Democrat voted for the Act, and 13 Republicans from states with high taxes voted against it – no surprise there.  While it very obviously is NOT a “massive tax cut for the middle class” as promised by arrogant arsehole Donald T Rump and the R […]
    Robert D Flach

Haskell & White LLP Named One of Orange County’s Best Places to Work

For the sixth year in a row, Haskell & White is included in the Orange County 

Business Journal’s list of “BEST PLACES TO WORK”.to be deleted 1img_header15

For those of us that work here, the designation comes as no surprise.

If you are interested in working for a “best place”, please contact us and find why we landed on this list.

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CPA Firms Haskell & White, Katherman Kitts & Co. Combine Practices to Enhance Client Services

Media Contacts
Andrew King / Jade Terry
HKA, Inc. Marketing Communications
(714) 426-0444
andrew@hkamarcom.com
jade@hkamarcom.com

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IRVINE, Calif. (Feb. 3, 2017) – Haskell & White LLP and Katherman Kitts & Co. LLP are proud to announce they have combined their practices, effective Feb. 1, 2017, and are now operating under the Haskell & White name. The expansion bolstered the combined international tax practice and increased the team of highly skilled CPAs. The entire team at Katherman Kitts & Co. moved to Haskell & White and James Katherman and Stacie Kitts joined the firm as partners.

The unification of these two experienced and well-respected organizations comes at a time when the nation’s tax laws are on the brink of a major overhaul, and clients will require more guidance than ever. By combining the staffs and resources of both teams under the prestigious Haskell & White brand, all clients will have access to an extremely deep bench of hard-working and talented CPAs, now totaling more than 75 professionals.

“With this combination, Haskell & White enhances its already robust standing in the market. We will add more capabilities, including Katherman Kitts & Co.’s deep experience with technology companies and international tax expertise, to bring an even greater level of service to the clients of both firms,” said Haskell & White’s Managing Partner Wayne Pinnell. “Having worked in the same building with Katherman Kitts & Co. for several years, we have gotten to know them personally as well as professionally, and we believe the cultures of our teams will blend seamlessly while producing excellent results.”

By joining Haskell & White, one of Southern California’s largest independently owned accounting, auditing and tax consulting films, the clients of Katherman Kitts & Co. will gain access to Haskell & White’s superb team of professionals and numerous resources and benefits that have been a hallmark of Haskell & White for decades. These capabilities include a team of audit professionals able to provide reviews, financial audits and retirement plan auditing, as well as access to a world-wide network of CPA firms in the Leading Edge Alliance.

In a joint statement, Katherman and Kitts said, “We are very much looking forward to this new relationship with Haskell & White as it is an excellent move for our team at Katherman Kitts & Co. and – more importantly – it will bring even greater value to our clients, give our employees considerable growth opportunities and allow for operating efficiencies.”

Katherman emphasized that since Haskell & White shares similar client service philosophies, the business combination will not change the clients’ fee structure and the hands-on attention they are accustomed to receiving.

About Haskell & White LLP
Haskexll & White LLP is one of the largest independently owned accounting, auditing and tax consulting firms in Southern California, servicing public and private middle-market companies. With locations in Irvine and San Diego, Haskell & White combines the expansive services, knowledge, experience and reach of national and international accounting firms with the personal attention, responsiveness and value of a local organization. Haskell & White works with companies in a broad range of industries including real estate, manufacturing, distribution, life science, technology and retail. The firm provides solid expertise and services to its clients in the tax and audit disciplines, including advising SEC registrants and consulting on mergers and acquisitions. Further information on Haskell & White can be found on the firm’s website, http://www.hwcpa.com. Connect with Haskell & White at http://www.facebook.com/haskellandwhite and http://www.twitter.com/haskellandwhite.

 

Trump Taxes and 2016 tax planning for higher income earners

By Stacie Clifford Kittscartoon-trump-300x316

The proposed tax plans offered up by President Elect Trump and the House Republican Tax Reform Plan are presenting some unique year-end tax planning challenges.

The most common question that taxpayers are asking is, will tax rates be lower in 2017?

To help answer this question, we should first review how our tax rates work now.

We currently pay federal income taxes at graduated rates ranging from 10% to 39.6%.  However, if you are a higher income earner making more than $125,000 (single) or $250,000 (married), you may pay an  additional 3.8% tax on your net investment income,  making  your top federal rate 43.4%.

An analysis of Trump’s current plan, indicates that if your income is over approximately $425,400 (single)  and $487,650 (married), you may (depending on your itemized deductions) see a significant reduction in income taxes under his plan.

However, middle class taxpayers may face an  increase in tax depending on the size of their family and filing status.  This is largely due to the Republican and Trump plans which seek to limit itemized and dependent deductions, expand income tax brackets, and  repeal the personal exemption and head of household status.

To help better understand  the possible impact on your taxes, here are some of the key proposals affecting higher income earners (AGI over $150K).  Because the Trump and Republican plans are not the same, we will most likely see some sort of mix of the two plans:

Individual income tax

  • Both Trump, and the House Republican Plan, will drop the number of income tax brackets to just three, at 12%, 25%, and 33%.
  • The plan will also eliminate the alternative minimum tax (yay),
  • it also eliminates all itemized deductions (boo) except mortgage interest and charitable giving.
  • They have further proposed to limit the amount of total itemized deduction to $100,000 (Single) and $200,000 (Married).  This proposal will reduce the tax incentive for charitable giving once your itemized deductions reach the allowed limit.
  • Significantly for us here in California, state income taxes paid would no longer be deductible on Federal returns.

Investment income

The top rate for long term capital gains is currently 20% plus the 3.8% investment tax imposed by the Affordable Care Act (for high income earners), for a total top rate of 23.8%.  Interest and non-qualified dividend income is taxed at ordinary rates.

Trump’s Plan

Trump proposes to repeal the affordable Care Act including the 3.8% tax which will cap long term capital gains at 20%.

 House Republican’s Plan

On the other hand, the House’s plan would apply tax to 50% of interest income, dividends and capital gains at ordinary income tax rates.  The remaining 50% would not be subject to tax.   This translates to a top rate of 16.5% for investment income.

Estate and gift tax

Under current law, estates are subject to a 40% tax on the estates value over $5.45 million. In addition, beneficiaries of the  estate receive a step-up in the basis of the assets value equal to the fair market value at the date of death.

Trump and the House Republican Plan propose a repeal of the estate and gift tax entirely.  Trump proposes to repeal the step up in basis provision and replace it with a carryover provision for computing taxable gains on sales for estates in excess of $5 million (single) or $10 million (married).  The Republican Plan provides for carryover of basis on all assets.

Business tax

The top corporate tax rate is currently 35%.  Income from pass-through businesses such as partnerships and S-corporations are taxed at individual rates.

Trump’s Plan

  • Trump’s plan would reduce top corporate income taxes from 35% to 15% and repeal corporate AMT tax.
  • Individuals can elect a tax rate of 15% for business income from pass-through entities (including sole proprietorships).
  • Distributions from large pass-through businesses received by owners who elected the 15% flat rate would be taxed as dividends.  (included in overall personal taxable income)
  • The Trump plan eliminates all tax credits (tax incentives) except the research credit.
  • The plan would allow businesses to elect to expense capital equipment, structures and inventories directly rather than over time. However, if direct expense is elected, interest expense deductions would not be allowed.

House Republican’s Plan

  • The Republican Plan would reduce the corporate tax to a flat 20%.
  • Eliminate the corporate alternative minimum tax.
  • Income from pass-through entities would top out at 25%.
  • Costs of capital investments are immediately deductible
  • Eliminates the deductibility of net interest expenses on future loans.
  • Restricts the deduction for net operating losses to 90 percent of net taxable income and allows net operating losses to be carried forward indefinitely, and increased by a factor reflecting inflation and the real return to capital. Does not allow net operating losses to be carried back.
  • Eliminates the domestic production activities deduction (section 199) and all other business credits, except for the research and development credit.
  • Creates a fully territorial tax system, exempting from U.S. tax 100 percent of dividends from foreign subsidiaries.
  • Enacts a deemed repatriation of currently deferred foreign profits, at a tax rate of 8.75 percent for cash and cash-equivalent profits and 3.5 percent on other profits.[Tax Foundation]

Conclusion

An analysis of your personal itemized deductions along with the type of income to be reported on your return, including pass through or investment income,  is necessary to determine the actual impact of these proposed tax plans on your 2017 income tax.  Higher income earners might consider deferring income into 2017 if possible.

Katherman Kitts Mourns the Loss of Fallen San Jose Police Officer Michael Katherman

All of us here at Katherman Kitts want to express our sincere condolences for the tragic loss of 34 year old San Jose Police officer Michael Katherman.  Michael Katherman was the beloved nephew of one of our founding partners, James Katherman.

Jim attended the touching memorial service this week in San Jose and was in awe of the love and support shown to his family by the San Jose police department and the community of San Jose.

Mike

The following article was published in the San Jose Mercury News:

SAN JOSE — Amid more than a thousand officers from across the region, it became quickly clear Michael Katherman’s impact on the San Jose Police Department went far beyond his 11 years on the force.

His academy classmates, who had exactly as much time on the force as he did, aspired to his passion, preparation and joy for the job. His commanders, who each had at least double his police experience, envied how he carried himself as a man of family and faith.

“Mike means so much to me because he represents everything I’ve wanted to become: a good moral person,” said Sgt. John Carr, who supervised Katherman.

A portrait of San Jose Police Department Officer, Michael Katherman sits at the front of the stage before his memorial service at SAP Center in San Jose, Calif., on Tuesday, June 21, 2016. Katherman was killed in a traffic collision while on patrol on his police motorcycle last week. (Photo by Gary Reyes/Bay Area News Group) ( Gary Reyes )

Carr was among several colleagues to eulogize Katherman, a well-respected motorcycle officer who died June 14 in a traffic collision, at a Tuesday memorial. A gathering of about 3,500 that included police officers from the region and well beyond sat solemnly inside the SAP Center in downtown San Jose to honor the 13th SJPD officer killed in the line of duty, and the second motorcycle officer.

Mike 4

Motorcycle police officers from throughout the state accompany their fallen colleague, San Jose police officer Michael Katherman, in a procession to his memorial service at SAP Center, Tuesday morning, June 21, 2016, in San Jose, Calif.(Karl Mondon/Bay Area News Group)

 

 

 

 

Many wore their badges with black bands over them emblazoned with “3900” the fallen officer’s badge number. Many also made reference to his love of ice cream, thought to have been inherited from his mother, to the point he inspired mythology that he knew the location of every ice-cream and frozen-yogurt shop within 100 miles.

Tom Katherman paid tribute to how his son wove his Christian faith into all aspects of his life, from serving in the police chaplaincy to instilling those values in his sons, 10-year-old Josh and 8-year-old Jason.

“This alone is a pinnacle, a zenith,” Tom Katherman said. “You have no idea what that legacy means to his mother, Diane, and I.”

The elder Katherman said, “Michael loved putting on that uniform and he loved those who served with him. I’m sure for those who know him, you would agree, he is a hero.”

Motorcycle police officers from throughout the state accompany their fallen colleague, San Jose police officer Michael Katherman, in a procession to his memorial service at SAP Center, Tuesday morning, June 21, 2016, in San Jose, Calif.(Karl Mondon/Bay Area News Group) ( Karl Mondon )

Austin Nielsen, Katherman’s roommate for two years at Simpson University in Redding, echoed that “Mike’s happy-go-lucky personality was coupled with a deep faith and willingness to put others before him,” adding, “Mike has left a legacy and it needs to be shared.”

Michael Whittington, a close friend of the officer since their days in the police academy, spoke to a recurring theme among the eulogies, mainly that Michael Katherman’s medium stature — about 5-foot-9 in shoes — belied what many would discover to be surprising athleticism and indefatigable physical spirit.

Whittington said he learned that lesson early and forcefully, when the person he knew as “Kat-Man” — a Valley Christian High School alum who would go on to play basketball at Simpson — knocked him over with a basketball pass. When someone doubted his skill, Michael Katherman would have a video clip queued on his cellphone showing him dunking on a regulation rim.

“The boy was built for power,” Whittington said.

Friends and family said Michael Katherman passed on his love for basketball and other pastimes — including dirt biking and fishing — to his sons. They noted it was a particular thrill for him to coach the boys in basketball, something he honed in college when he traveled to China and ran basketball clinics there.

San Jose firefighters from Station 21 salute as the funeral procession for San Jose motorcycle officer Michael J. Katherman makes its way on West San Carlos Street in San Jose, Calif., Tuesday, June 21, 2016. From left are Jay Carranza, Stan Wong, Josh Frantzich and Tyson Rollins. Katherman died June 14 when his motorcycle was hit by a minivan on North Tenth Street near Horning Avenue. A memorial service was held at SAP Center in San Jose. (Patrick Tehan/Bay Area News Group) ( Patrick Tehan )

“It was the kind of mentoring that Mike enjoyed and he was good at it,” Tom Katherman said.

At one point in the ceremony, Michael Katherman himself spoke to the audience, through an archived video interview he gave shortly after he was sworn in to SJPD in 2005.

“I always wanted to be a police officer. It’s always something you dream about when you’re a kid,” he said, later showing his appreciation to his family. “To my wife, thank you so much for your love and support, my parents, thank you very much, my brother.”

Carr remembered how the officer would turn down extra work, recalling him once saying, “I need to go home. My family needs me more.”

Mike 8.jpg

Motorcycle police officers from throughout the state accompany their fallen colleague, San Jose police officer Michael Katherman, in a procession to his memorial service at SAP Center, Tuesday morning, June 21, 2016, in San Jose, Calif.(Karl Mondon/Bay Area News Group) ( Karl Mondon )

Police Chief Eddie Garcia and others remembered how Michael Katherman, an avid motorcycle rider, had to wait several years for a spot to open up on the SJPD motor unit. Once he made it last year, Garcia said it was tough to get the officer off his police bike.

“If he could have ridden his motorcycle into the locker room, he would,” Garcia said.

Garcia also took a look at Michael Katherman’s personnel file and found a note of gratitude from a woman whose troubled granddaughter turned her attitude around after a heart-to-heart with the officer.

“This wasn’t an arrest or (citation). He was doing what he was trained to do before police work, to be a lighthouse” for someone on a dark path, Garcia said.

One way Michael Katherman made himself known in police circles was his involvement with the Keith Kelley Club, an organization within the department formed to help the families of officers facing hard times. In the same spirit, Michael Katherman recently rode in the Police Unity Tour bicycle ride in Washington, D.C. to honor Officer Michael Johnson, who was fatally shot while on duty in San Jose last year. Several local officers with whom he rode appeared at Tuesday’s ceremony in their tour jackets.

Detective Chau Pham, an academy classmate of Katherman, called on the attendees to contribute to the club to continue their fallen colleague’s commitment to the larger police family.

Mike 9

“It’s his turn to rest,” Pham said. “It’s our turn to take his watch.”

Before and after the memorial, more than a thousand officers stood at attention outside, including hundreds of motorcycle officers, as an American flag hung overhead from raised ladder trucks from the San Jose Fire Department. Michael Hensley, a sergeant with the Napa Police Department, said the turnout for the memorial is a testament to how much police forces support each other.

“We’ve had officers at other memorials from New York, so it’s not uncommon, especially in a line-of-duty death, for us to come together and support each other,” Hensley said.

As the memorial came to a close, Michael Katherman was formally signed off duty through a countywide police dispatch broadcast.

“9204, no response,” the dispatcher said, referring to the officer’s call sign. “Attention all units, please observe a moment for Officer Michael Katherman, badge 3900 … 9204, Godspeed.”

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