Are your fingers tired from putting numbers into tax returns? How many pages of financial statements have your hands reviewed in the last few months? You need to give your hands a break from the norm – and we have just the solution!

JOB POSTING – could you be the candidate we are looking for? We are seeking someone who:

  • Is a young accounting professional*
  • Has a desire to make a direct and tangible difference to families in Arizona
  • Is interested in networking with young accounting professionals in the Phoenix area
  • Is not afraid to get dirty while cleaning and painting (no prior experience required)
  • Is available from 8:30am-12:30pm on Saturday, November 7th
  • Is in it for the OUTCOME, not for the INCOME
    • Payment in the form of memories, new friends, and lots of bottled water!

* CPA or membership with ASCPA optional, not required

In less than 23 days, you can join forces with other young accounting professionals from around Phoenix to clean and paint housing for families in our community. In conjunction with Save the Family, the ASCPA Young Professionals group invites you to join us in impacting our community for the better. This video will show you more about what Save the Family is all about and how YOU can help (https://youtu.be/2cWsXgQWKdg)

We hope you consider applying for this job posting. Registration is required prior to the event so we can send you additional details. You can use this link: https://www.ascpa.com/continuing_education/YPSERV16-young_professionals_service_project_at_save_the/view_event

For additional questions or information, please email Carina Jansen at cjansen@ascpa.com or call (602) 324-4745. We look forward to having you join our ASCPA family in helping Phoenix families. See you there!

Marissa Graves, CPA

Save the Family is committed to ending homelessness by:

  • Improving Education and Employment Opportunities
  • Accessing Safe, Permanent Housing
  • Building Family Competencies

Save the Family offers programs for adults, youth, and children that build:

  • Parenting Skills, Personal Development Classes, and Support for Victims of Domestic Violence
  • Career Development, Literacy Support, and Financial Education
  • Dental, Vision, and Legal Services
  • Tutoring, After-School Classes, and Camps / Activities for Youth

Many member young professionals of the Arizona State Society of CPAs recognize the importance of supporting the community we practice in, live in and quite possibly grew up in.  We have invited fellow CPAs, attorneys, investment professionals and paraprofessional to a morning of service – November 7, 2015; between 8:30am–12:30pm – not only to network and meet other professionals, but to support an organization that provides programs to those whose voices aren’t always heard.  Save the Family provides youth programs, career services, veteran services, and domestic violence services.  At first glance, it may not be so apparent the need for these services, but with the goal of ending homelessness, these services empower those with the confidence, the skills and the network all done with compassion and care.

We encourage you to come out Saturday, November 7, 2015.  The general location of the event will be near Country Club Dr. and Rio Salado Pkway in Mesa, Arizona, just east of the new Cubs Spring Training facility.  This is the first of many projected service projects, so if this weekend doesn’t work for you, we encourage you to review additional ways to support Save the Family below and watch out for our future service dates.  Follow the Society on Facebook, LinkedIn or contact the Society to be included on future correspondence.

Other ways to support Save the Family:

  • Cash donations qualify for the 2015 AZ Tax Credit for Qualifying Charity claimed on Form 321 – this is a dollar for dollar Arizona tax credit against Arizona taxes.
  • Adopt a Family in Need drive for Thanksgiving and/or Christmas – contact (480) 898-0228 ext. 216 or via email at holidays@savethefamily.org.
  • 2016 Phoenix Waste Management Open – Birdies for Charities, 1 cent more campaign, more information can be found at www.birdiesforcharityaz.com.

For more information and to register, head to http://www.ascpa.com or contact Carina Jansen at cjansen@ascpa.com or (602) 324-4745.


James Sean McGettigan

Many of us have a strong desire to make an impact within our community but few of us actually take additional steps to make it happen. Volunteering can be very rewarding, especially for an organization such as Save the Family. Read More…

NASA recently announced that your name can be embedded in a chip and put on the planet Mars. This is incredibly great news for the people with good fortunes who are thrilled by the opportunity to gain their foothold in the universe and enhance their fame. However, in another space mission, scientists are attempting to find out if any life exists in other planets.

Think about it. If they indeed were able to find the life on Mars and if the inhabitants there happen to be much more advanced than the humans on earth, they are likely to have a tax law that can tax such inbound activities. Beware and think before you make that tempting decision.

Putting your name on a planet may have its other side. If “cross planet” law applies and absence a tax treaty (we are not aware about any as of today), just by putting your name can create economic “nexus” and a “Permanent Establishment” in Mars. If BEPS – Base Erosion and Profit Shifting – laws are much more advanced than our planet earth, you may receive a tax bill from Martian tax authority as soon as your name appears there.

Not enough information is available at this stage if IRS has signed any information exchange pact under FATCA with Mars or whether the tax agencies around the globe are secretly using the “trick” to disclose your name to Martian government!

It will certainly be to your advantage to consult a “cross planet” tax advisor who can keep you out of any trouble. Watch out and do not fall for the trap – think before you leap!!

I had the opportunity to attend a presentation about the idea of eliminating Arizona State Income Tax today.  The presenters were Steve Moore and Stephen Slivinski.  Steve Moore is a contributing editor to the Wall Street Journal, often seen on Fox News, CNBC and is very active in policy debate and opinion.  Stephen Slivinski is the Senior Research Fellow Center for the Study of Economic Liberty at ASU WP Carey School of Business.

I am happy to see the concept of Economic Liberty being a topic of conversation and education at ASU.  I feel the concept of capitalism is becoming more vague as regulations, taxes and restrictive policies increase over time.  Is our society forgetting to some degree what capitalism really is, how it works and how it benefits our country?

Mr. Slivinski provided a 5 Step Summary of how to work towards the elimination of state income tax.  Those steps are listed here from today’s handout:

  1. Maintain spending discipline – Keeping the state’s general fund budget to no more than a 2.3% growth rate (an average of $230 million in new spending each year) will be critical to phasing down the income tax.
  2. Institute a flat-rate income tax in year one – Collapse current five-bracket personal income tax system to flat rate of 4.1%.  Include more generous exemptions for poor families.  Permanent instant expensing.  No capital gains tax.
  3. Find budget savings through program reform – Reforms to urban revenue sharing and the Arizona Commerce Authority can save up to $450 million each year.
  4. Phasedown the income tax rate each year through FY 2023 (or sooner) – Spending discipline and robust economic growth can assure a total phaseout of the personal income tax in seven years.
  5. (optional) Temporarily increase sales tax rate by up to one cent – Voter approval of a one-cent (or less) sales tax rate increase can speed up or guarantee the phasedown of the income tax.  The sales increase must be temporary, all revenue raised must go to buying down the income tax rate, and the sales tax rate increase must disappear in seven years or when the income tax rate reaches zero, whichever occurs first.

(5 Steps Source-A Path to Eliminating the Arizona Income Tax by Stephen Slivinski)

Steve Moore shared that 9 other states currently do not have an Income Tax.  Six others are aggressively trying to eliminate their income tax, and the message was clear they would like to see Arizona be the 10th state in the union to eliminate Income Tax.  He cited several statistics indicating states with zero income tax had much better business growth, population growth and economic growth.  He also referred to the GINI index which can be found by state, and his indication was that zero income tax states looked better on this measurement vs. the extremely high income tax states such as California and New York.  The GINI attempts to measure income inequality, also referred to as the GINI coefficient or ratio.

The argument against flat tax rates being regressive was addressed by proposing an expansion of the zero tax bracket until the income tax was done away with completely.

One guest asked how Arizona would prevent municipalities from creating their own new income taxes.  This was acknowledged as a problem and the solution was less clear, but the idea was that any state income tax changes would need to institute policy to prevent local towns and cities from creating their own new taxes to replace the revenue sharing they receive from the state.

Questions about the stability of income sources was another topic of conversation.  Of the three income sources Income, Sales and Property, they indicated Income Tax was the most volatile.  A shift towards relying on Sales and Property tax was explained as being more stable overall.

The presenters were passionate about the topic and the audience was eager to digest the information.  I found the topic to be thought provoking.  More can be learned about the idea and concept of Economic Liberty through The Center for the Study of Economic Liberty website http://research.wpcarey.asu.edu/economic-liberty/

How topics like this will be viewed by the current administration is interesting to think about.  Even more thought provoking is how ideas like this will be viewed by the candidates vying for the White House in upcoming Presidential Election!

The Arizona Supreme Court, clarifying the breadth of coverage of the anti-deficiency provisions of ARS §33-814(G), decided that the borrowers remained liable on the shortfall on a loan that secured raw law the borrower claimed they intended to build a residence on in the case of BMO v. Wildwood Creek Ranch, Arizona Supreme Court Docket No. CV-14-0101-PR. In doing so, the court also overruled the Court of Appeals ruling in M & I Marshall & Ilsley Bank v. Mueller, 228 Ariz. 478, 268 P.3d 1135 (App. 2011)

Continue Reading »

In addition to the extenders package, the House added on a new provision that was tagged onto the extenders bill under the “Achieving a Better Life Experience (ABLE) Act of 2014.” The bill creates a new type of account (ABLE account) that may be established for eligible individuals.

Eligible individuals must be blind or severely disabled (determined under Social Security definitions) and must have become so before turning age 26. However, a person does not have to be receiving benefits under Supplemental Security Income (SSI) or Social Security Disability Insurance (DI) in order to qualify for the account, nor will qualifying for a §529A account mean the person is eligible for either of those benefits. [§529A(e)(1)(A)]

Generally, a qualified program established under §529A is exempt from current taxation, though it will still be potentially subject to the unrelated business income tax found at IRC §511 that generally applies to tax exempt charities, assuming it has UBIT income. [IRC §529A(a)]

To be a qualified program, the following requirements must be met:

  • The program must be one established by a State, agency or instrumentality which:
    • Allows individuals to make contributions to the program for the benefit of an individual (referred to as an ABLE account)
    • The ABLE account is established to meet “qualified disability expenses” of the individual
    • No individual may have more than 1 such ABLE account
    • Such accounts can only be established for :
      • A resident of the State in question or
      • A resident of a contracting State
    • Which complies with all other requirements of §529A [§529A(b)(1)]
  • Contributions must be limited as follows:
    • Only cash contributions may be made
    • For each year the total contributions may not exceed the gift tax exclusion under IRC §2503(c) for the year ($14,000 in 2014)
    • Any excess contributions may be returned before the due date of the return for that tax year [§529A(b)(2)]
  • A separate accounting must be provided for each beneficiary. [§529(b)(3)]
  • The program must provide safeguards that generally would prevent the contribution of excess aggregate amounts, based on limits established by the State. [§529A(b)(6)]
  • Neither the contributor nor the beneficiary may direct the investments of the ABLE account [§529A(b)(4)]
  • The ABLE account may not be pledged as security for a loan [§529A(b)(5)]

The tax treatment of distributions to the beneficiary is generally governed under the standard annuity rules of §72 except to the extent the distributions are used to pay qualified disability expenses. [IRC §529A(c)(1)(A)] Such excess payments will be subject to an additional 10% tax unless they are paid following the death of the beneficiary or are timely returns of overcontributions. [§529A(c)(3)]

In applying the annuity rules of §72 to determine the amount potentially taxable:

  • All distributions made during the year shall be combined and treated as one (except as provided otherwise by Regulations the IRS may issue) and
  • The value of the contract, income on the contract and investment in the contract shall be computed as of the end of the year (except as to be provided in Regulations the IRS may issue) [§529A(c)(1)(D)]

If total distributions for the year do not exceed the eligible individual’s qualified disability expenses for the year, the entire distribution will be exempt from tax. If the distributions exceed that amount, the amount otherwise includable under the annuity rules will be reduced by an amount equal to the ratio of qualified disability expenses to total distributions. [§529(c)(1)(B)]

Qualified disability expenses are defined as any expenses related to the eligible individual’s blindness or disability which are made for the benefit of an eligible individual who is the designated beneficiary. The law cites specific examples, which include:

  • Education,
  • Housing,
  • Transportation,
  • Employment training and support,
  • Assistive technology and personal support services,
  • Health,
  • Prevention and wellness,
  • Financial management and administrative services,
  • Legal fees,
  • Expenses for oversight and monitoring,
  • Funeral and burial expenses,
  • Other expenses

The expenses must meet the requirements of the (to be written in the future) regulations and consistent with the purposes of such ABLE accounts.

Amounts can be rolled tax free from one ABLE account to another. A distribution will qualify for tax free rollover if the amount of the distribution is paid into another ABLE account no later than 60 days after the distribution. The ABLE account must be for the benefit of the same eligible beneficiary or another eligible individual who is a member of the family of the original beneficiary. [§529A(c)(1)(C)(i)] However, if the transfer occurs within 12 months from the date of a previous transfer to a qualified ABLE program the beneficiary it will not qualify for tax free rollover treatment—so, like IRAs, there is a “once per 12 months” limit imposed. [§529A(c)(1)(C)(iii)]

Similarly, the beneficiary of the ABLE account can be changed during the year to another eligible individual who is a member of the family of the original beneficiary. [§529A(c)(1)(C)(ii)]

A “member of the family” means a brother, sister, stepbrother or stepsister. The same rules that apply for treating adopted children as having any of those relationships for purposes of determining dependents under §152 shall be used for this purpose as well. [§529A(e)(4)]

Special gift tax rules are provided for amounts paid into the ABLE program on behalf of the beneficiary. The gift will be treated as a completed gift of a present interest in the property and it will not be treated as a transfer excluded from gift treatment for payment of educational or medical expenses of the beneficiary under IRC §2503(e). [§529A(c)(2)(A)] Distributions from the ABLE account will not be treated as a taxable gift. [§529(c)(2)(B)]

A change in the beneficiary of an ABLE account will be potentially subject to both gift and generation skipping transfer taxes unless the new beneficiary is an eligible individual and a member of the family of the original beneficiary. [§529A(c)(2)(C)]

If more than ABLE account is established for the same individual, only the first account to be established for the eligible individual will be treated as an ABLE account. Therefore, none of the others will have tax free status for the income of the account. [§529(c)(4)]

The ABLE program will be required to report to the IRS and designated beneficiaries reports with respect to:

  • Contributions
  • Distributions
  • Return of Excess Contributions
  • Any other information the IRS may require [§529(d)(1)]

The trustee of the ABLE account will also notify the IRS upon the establishment of an ABLE account giving the name and state of residence of the designated beneficiary, as well as any other information the IRS may require. [§529(d)(3)]

Excess contributions to an ABLE account will be subject to the excess contributions tax on retirement accounts found at IRC §4973. [§4973(a)(6)] That tax is set at 6% per year on the remaining over-contribution to the account.

Each State will also be responsible for submitting monthly reports to the Social Security Administration statements on relevant distributions and account balances of ABLE accounts. [§529A(d)(4)]

States which do not establish an ABLE program may contract out the operation of such a program to another state that does administer such a program. [§529A(e)(7)]

When the beneficiary of an ABLE account dies, the funds in the ABLE account generally pass to the sponsoring State. However, the amount distributed to the state does not include:

  • Outstanding payments due for any qualified disability expenses
  • Amounts in the account in excess of total medical assistance paid for the beneficiary after establishment of the account (net of any premiums paid to a Medicaid Buy-In program). [§529A(f)]

Any balance that does not go to State would be distributed to the deceased’s estate or a designated beneficiary. The amount of investment earnings would be subject to income taxes, but the 10% penalty would not apply.

Section 4 of the Act provides the rules for the partial or full exclusion of such amounts from determinations of eligibility for various programs. The law exempts the first $100,000 in ABLE account balances from counting towards SSI’s $2,000 individual resource limit, though account distributions for housing expenses would be treated as income for SSI qualification purposes.

Note – at the time this post was written the Senate had not yet taken up this bill.  While the overwhelming vote in the House suggests its likely that the Senate will eventually pass this bill (or that it will pass early in the next Congress), nothing is ever certain where Congress is concerned.  But advisers certainly should be aware of this program, as well as what it does (and does not) accomplish for clients.


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