Category Archives: COMMENTARY

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

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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]


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.

Death and Taxes

Dear Client, Sorry About All Those IRS Notices – They Clearly Have Their Heads…ummm located someplace it doesn’t belong

By Stacie Clifford Kitts                                                                      image

If you are interested in developing a lucrative practice with a steady stream of income, you might consider specializing in the resolution of erroneous IRS notices.

Sadly, over the last few years, many tax practitioners, my firm included, have witnessed a marked increase in the number of erroneous IRS notices received by their clients.

These notices are usually automatically generated, are lacking in the information necessary to determine the exact issue or issues, and often include a mysterious amount due for taxes, penalties and interest.

For the savvy entrepreneur, this erroneous IRS notice phenomenon might just provide for an interesting business opportunity. That is – if you can stomach the mind-numbing and often infuriating interaction you will have with the Internal Revenue Service.

It’s no secret that the IRS is experiencing some extreme customer service related problems. One need not search long or far to find a truly eyebrow-raising example.

Case in point, this is one of my personal favorites: After waiting as much as three hours for an IRS agent to pick up a call and ending with an extremely rude agent refusing to help because she didn’t understand the difference between a partnership and a single member LLC (a concept this lady should have understood), my shocked staff asked, “Are they always that mean?”

“Sadly”, I explained. “They didn’t used to be.”

Written correspondence sent to the Service doesn’t seem to fair much better. In many cases, it is clear that correspondence has fallen into one of three categories 1) not actually read, 2) read but content ignored 3) issues are beyond the understanding or research ability of the agent.

As a result, you sometimes get the feeling that you are dealing with a high school student who was trained to click the picture of the “value meal” while taking your order at the drive through window. And it’s no wonder. The IRS’s own Internal Revenue Manual “Incoming and Outgoing Correspondence/ Letters” (IRM, is a litany of – if this – then that scenarios. I found the instructions for “working” the correspondence policy particularly entertaining. (As a side note – Dear IRS, clearly it’s impossible to properly respond to all correspondence by using this “checklist” approach when often times it requires a facts and circumstance analysis. I’m just sayin.)

Our law makers have, over the course of the last 100 years or so, created a tax code that is nearly impossible to get right all the time, and for taxpayers and practitioners, whether trained or untrained, you must expect that will be the case. Sometimes, taxpayers won’t get it right.

However, It is ludicrous for taxpayers who did get it right, despite all the obstacles and complications in our tax code, to waste time and resources dealing with the Services inability to recognize a correct application of their own rules or the correct application of settled law. Frankly, if you are not going to properly enforce the rules, there is no point in having them at all – and for that matter there is certainly no point in keeping the Internal Revenue Service around.

Regrettably, something that is becoming more and more common for practitioners, is the need to explain to clients, “sorry about those notices, but we did do it right, they just have their heads up their ….”

Things My Mom Wrote That Made Me Cry

By Stacie Clifford Kitts

I can hardly believe it’s already 2015. A new year, with new possibilities, some new tax laws, and yet another holiday season spent without Mom. Last year my daughter and I flew to Kansas City, and as people do at those times, began the chore of cleaning out Mom’s things. We cleaned closets, packed boxes, took things to goodwill, filled trash bins and marveled at some of the things she kept. And when we ran out of time, we packed up boxes with what remained and shipped them home.

Yesterday, as the new year started, I decided it was time….time to stop delaying and find out what those last boxes contained. And….fine, I admit it. I had this slight hope, okay fantasy, that maybe there was something really interesting and even noteworthy among what remained of Mom’s things…like, I don’t know, a key to a mysterious safety deposit box with instructions to open after her death.

I know. I’m an accountant, okay. And although I do get a thrill out of structuring a good tax plan…you see where I’m going here…discovering a deep dark family secret would certainly liven things up a bit!

But as luck would have it, what I found was much better. Not a deep dark family secret…but a secret non the less. Mom wanted to be a writer. I found pages of notes, beginnings of chapters, and short essays about her uncles and her grandparents…But as interesting and wonderful as this find is, I am sad that she never had time to finish what she had started. I read the things I found and cried when there was no more.

Vic & Velda Van Hook (Mother and Pa)
By Patricia Kennedy

My grandmother was 36 when I was born. She didn’t want to be called Grandma, so she insisted that I call her Mother. And of course there was Pa, and everyone called him Pa, so they were Mother and Pa to me. I didn’t realize this growing up, but Mother was a very pretty woman who loved pretty things.

Mother was a talker. She would start on something and keep going and going and going. Pa would sit there swinging one crossed leg, reading his newspaper, and flipping cigarette ashes into his cuffs until suddenly he would say, “Be quiet Velda” and then she would.

Mother was stubborn and liked to get her way. She wanted to name me Sally. Although, I was named Patricia, that didn’t keep Mother from calling me Sally sometimes. I think she did that mainly to irritate my mom.

Mother taught me songs. “The Doors Swing in – The Doors Swing Out”, “Please Mr. Conductor Don’t Throw me off the Train”, and many more. I could have “stumped the band” on the Johnny Carson Show.

Pa was so quiet that you didn’t realize he was in the room. He left every morning for work and came home every night for dinner.

He loved fried foods, bacon, chicken, pork chops, and even the pork fat normally used when cooking beans, which he would cover with mustard and eat.

Mother always had coffee cans of bacon grease that she saved for the whole family and when Pa died, the doctors said he had the heart of a 20 year old. Cholesterol? Go figure.

Pa loved wrestling. I don’t remember why, but he would occasionally take me to wrestling matches. I still remember Gorgeous George with a head of blonde curls. He would throw gold bobby pins into the audience. Pa would watch the matches and chew on his thumb he got so excited.

Uncle Kenneth
By Patricia Kennedy

My uncle Kenneth named me, Patricia. He taught me, among other things, how to skin a frog, bait a hook, tie a string to a beetles back leg and baste an egg. When I was a little girl growing up in Springfield, sometimes he’d come home with a burlap sack full of watercress, poke, doc greens and perhaps sweet corn acquired from the unknowing generosity of a farmer.

He brought me two wild baby rabbits when he accidentally killed their mother mowing a right-of-way. He knew grandma Van Hook wouldn’t be happy. But he did it anyway because he knew it would make me happy.

He taught me to sing all the verses to “Froggy Went a Courting” and a song about a tattooed lady that I wasn’t to sing in front of my mother.

I learned cribbage by watching him and Victor. And when I was older, he became a fun opponent at poker, even if he did say I was the luckiest blankety blank person he knew.

Just before I got married, he taught me how to baste an egg and said, “Now you and Joe won’t starve”.

He could be gruff and sometime loud, but he was good hearted, kind, and loved.

Uncle Donald
By Patricia Kennedy

Uncle Donald was very artistic and funny. I thought he was the greatest artist ever. I remember some ballet dancers in harlequin costumes that he painted and I remember thinking they were beautiful. Once he saw me tracing out of a coloring book and he told me, tracing is fine, but you should try to draw free hand, and so I did.

Don and Jack would sometimes walk the three blocks to my elementary school and carry me home on their shoulders. I told everyone at school that they were my brothers.

Don would come over to my Grandma’s house and she and Don would put their heads together and come up with unbelievably beautiful things. The one I remember the most, is the Christmas tree they did together. They took the tree into the back yard and skillfully decorated it. Then Don stood on a ladder and sprayed snow over the tree covering the lights and the ornaments. When they brought the tree back into the house and the lights lit up, they twinkled through the layer of fake snow. It was really beautiful.

Don’s house always looked great. He could decorate on a dime and he could find antiques anywhere. He would make trips and find some farmer with old outbuildings and say, “I’ll give you $5 to look in that shed.” And when they would let him, which was most times, he would find something worth restoring. He and grandma worked on a chaise lounge that was lovely. He was able to make beautiful things out of what other people thought was junk because he could see what was beneath.

Love you mom.

Professional Coaching Expert Ken Potalivo pens One of the Most Relevant Business Development Books Around

By Stacie Clifford Kittsmindshare

Several years ago I wrote a post entitled An Accountants Search For The Bat Cave – A Story About Networking: and it went something like this:

As a young staff, I questioned how the firm partners were heading out into the world and bringing back stacks of new clients for me to work on.

I was mystified and oh so innocent…..It seemed like some sort of *magic*.

What else could it be, except maybe an underground society known as “networkers”, who ventured out into the world, performed some secret handshake, and produced clients from thin air?????


But, where was this secret society? Did they have a secret location?… like – The Bat Cave – a giant underground warehouse where they plucked potential clients off the shelf and checked them out at the front of the store?

Was that it?

I longed for someone to tell me…..I had to know the answer to this secret networking magic.

Luckily, the mystery was solved by my good friend and my business coach Ken Potalivo, who I credit with helping me grow from staff to the managing partner of my own firm Katherman Kitts.

Am I worried that I’m giving away the secret to my success? Nope!

We are all unique professionals with our own special super and yes *magical* powers just waiting to be offered to the world. Learning how to recognize and develop those super powers will help you “get the referrals you want by making your competition irrelevant.”

Ken Potalivo’s Book, Secrets of MindShare: Get the Referrals You Want by Making Your Competition Irrelevant offers a clearly defined and targeted path on how to create and maintain referral relationships, how to distinguish yourself so that you stand out from your competition, and explains how to identify those relationships that will provide the most benefit from your time investment. This book is a must for any professional who recognizes that survival in today’s competitive environment is in the hands of those who can attract clients and maintain relationships.

Top ten things accountants know

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