Four Cost Saving Ideas for Real Estate Entities
By Kris Hebert, CPA

Companies are often confronted with the difficult task of attempting to increase revenues while cutting costs. The current economic climate has forced companies to consider the most effective ways to do this. Implementing cost saving ideas is the easiest way for companies to increase their operating cash flow. Here are four unique cost saving ideas that real estate entities can employ.

Suspend Capital Improvements
Real estate companies that rely on their building to generate revenue typically invest money in the building through capital improvements. Suspending improvements is one way to improve cash flow.

Require Detailed Invoices from Vendors
Cost segregation studies can greatly accelerate depreciation. However, these studies can be expensive. One way to achieve a similar result without spending money is by requiring vendors to provide a detailed breakdown of their services in future invoices. This will allow the landlord to breakout the capitalizable items into different life buckets and, in turn, accelerate the depreciation for some items, whereas before the total cost of the project might have fallen into 39 year life without the detail.

Energy Bundles
Energy bundles are a hot topic and a great way to generate cost savings. They create buying power by pooling utility accounts. Utility companies then bid down the price through a reverse auction, which ultimately costs the landlord nothing. It also provides access to online budget information with the ability to compare budget to actual in real time. The savings are tracked and compared to what the utility is currently charging.

Structure a New Lease
A landlord may have lease inducement costs when structuring a new lease. Inducement costs may come in different ways and have different tax effects. Tenant improvement allowances are written into a number of leases and their costs are capitalizable to the landlord and are often depreciated over thirty-nine years (fifteen years for qualified leasehold improvements in 2009). A landlord should specifically state what the allowance can be used for when writing these items into the lease. When the allowance is used for shorter lived assets, the tax deduction is accelerated.

Accelerate your tax deduction for these inducement payments by writing them into the lease as a lease inducement cost. Lease inducement costs are amortized over the life of the lease. This can significantly accelerate the tax deduction. The following is an example of the above-mentioned scenarios regarding tenant improvements and lease inducement costs:

A tenant signs a five year lease and the landlord incurs $50,000 in lease inducement costs.

The above mentioned ideas are just a few of the ways a company can realize significant savings if implemented properly and timely. For further advice in this area, contact your DGC representative.

When the Chips are Down, Best Bet for Nonprofit Organizations Is Best Practices
By Filomena Scibelli, CPA

We are all trying to make due with less these days, but nonprofit organizations are being hit particularly hard. Giving is down and funding sources are limited. Compliance requirements and oversight from funding sources are more stringent. If you happen to run a nonprofit organization or sit on a board of directors, you know it’s a balancing act. This is when best practices can have the greatest impact on the overall success of an organization and maintaining a healthy public perception.

In the spirit of Sarbanes Oxley, the IRS is encouraging best practices through a series of governance, management and disclosure policy questions on the annual Form 990. Some of the questions include:

• Does your organization have a written conflict of interest policy?
• Does your organization have a whistleblower policy?
• Does your organization have a written document retention and destruction policy?
• Was a copy of the Form 990 provided to the organization's governing board before it was filed?

While not required by the Internal Revenue Code, these policies have been introduced because authorities believe they are appropriate practices relevant to governance and tax administration. Additionally, the IRS will use this information along with other information reported on the form to assess the risk of noncompliance with federal tax law.

Governance
A nonprofit should be governed by an engaged board of directors comprised of independent individuals who meet on a regular basis. Board members should be actively involved in overseeing the organization's mission, operations and finances. Best practices for those charged with governance include:

• Assisting with and approving realistic operating and/or capital budgets
• Ensuring that internal control policies and procedures in place are adequate
• Implementing policies for determining executive compensation
• Maintaining minutes of meetings particularly outlining decisions reached
• Implementing policies for investment strategies, objectives and choices

Management
Effective management requires involvement at all levels of the organization. This includes directors, management, support and administrative staff. Management best practices involve:

• Maintaining accurate books and records to support compliance with taxing authorities and funding sources
• Implementing internal controls over accounting and finances and monitoring those controls on a periodic basis
• Regular review of the organization's financial statements, information returns and evaluation of program and fundraising accomplishments
• Instilling the organization's mission and goals with all employees on a regular basis
• Provide appropriate training and supervision of staff

Disclosure
Disclosure means ensuring that the organization is transparent and accountable in all respects, both fiscally and in accordance with its mission and goals. This is key to the success of an organization. Best practices in this area include:

• Ensuring the accuracy of financial information available to the public
• Ensuring that information regarding the organization's mission, programs and finances is made available to the public and where that information is made available
• Ensuring that tax filings are prepared and filed timely

There is an abundance of best practice information available to nonprofit organizations which can be found at www.irs.gov and various states' attorneys general websites, particularly in the area of governance. However, a knowledgeable CPA is an ideal resource because all of these aspects—governance, management, disclosure—are directly related to the tax-exempt status of a nonprofit organization. Your best bet is to call upon that resource for assistance with best practices.s.

Tax Savings to be Gained by Way of Loss for Investors
by Sarah Wulf,CPA

Investors should know that there are potential tax saving opportunities to be gained by way of loss. Losses on certain investments may qualify as ordinary losses rather than capital losses. Ordinary losses are available to offset ordinary income such as wages, interest and dividends. Investors who are married and filing jointly can claim up to $100,000 of qualifying losses as ordinary losses each tax year ($50,000 for those who file single).

Investors should review their portfolios periodically to determine if any of their stock holdings meet the following criteria:

• The company is a U.S. corporation,
• When the stock was purchased, the company’s total capital was less than $1 million,
• The stock was purchased with either cash or other property, and
• The company primarily earned its revenue from normal business operations.

If you answered yes to all of these questions, you may be in a position to qualify for an ordinary loss of up to $100,000.

Please call your DGC team member to discuss your specific facts and to discuss how a transaction might affect your tax situation in 2009 or future years.

Upcoming A&E Webinar – How to Maximize Your Overhead Rate on Government Contracts
To be profitable on government contracts, where firms are reimbursed under an allowable overhead rate billing model, A&E professionals need to understand the impact that small differences can have when applied to an annual contract value. On February 25, Chad DaGraca and Jim Lemay will present a webinar through ZweigWhite aimed at helping you and your team get your anticipated results by preparing you for the process.

Learn how to define and calculate your overhead rate, how to maximize your reimbursable rates, and how to avoid losing money and profit related to the audit process and unallowable costs. Also learn:

• The effect and importance of overhead rate to your firm's profitability
• What you must know about the process and pitfalls of overhead rate contracts
• Ways to maximize overhead rate reimbursements
• An overview of FAR and review of common allowable and unallowable costs
• Tips to maximize your reimbursable overhead rate
• What you need to consider before you decide to play in the 'sandbox'
• Inside the contract audit process--and how to minimize the pain

Who will benefit from this webinar?
CFOs, Project Managers, Principals, and Business Development Professionals

WHEN:
February 25, 2010? |? 2 - 3:30 pm ET

FEE:
$195 single connection (unlimited listeners)

CREDITS AVAILABLE:
This webinar offers continuing education credits to the primary registered attendee. Additional certificates available for $25 per person.

CLICK HERE to register.

Feb. 17 – Greater Boston Chamber of Commerce  - Executive Forum
Feb. 18 – Cambridge Chamber of Commerce – Chinese New Year BAHsh
Feb. 23 – Greater Boston Chamber of Commerce – Women’s Networking Breakfast
Feb. 23 – Real Estate Finance Association (REFA) – Troubled Real Estate Restructuring
Feb. 24 – Turnaround Management Assoc. (TMA) – Wine Tasting
Feb. 24 – Boston Estate Planning Council (BEPC) – Mock trial
Feb. 25 – Association for Corporate Growth (ACG) – DealMakers 2010 Outlook Conference
Feb. 25 – DGC Webinar for ZweigWhite – How to maximize overhead rate on gov’t contracts
March 2 – Cambridge Chamber of Commerce – March Networking Breakfast
March 11 – Boston Estate Planning Council – Wealth and the Family

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