Breaking News
Marcum & Kliegman Merges with Largest Forensic Accounting Firm in the New York Area
Marcum & Kliegman LLP, Certified Public Accountants and Consultants, has closed on its merger with RosenfarbWinters LLC, the largest forensic accounting firm in the New York metropolitan area. RosenfarbWinters will now be known as M&K Rosenfarb LLC (MKR). “This merger fits our strategic growth plans,” states Sam Rosenfarb, Managing Director of MKR. “Our clients will benefit from Marcum & Kliegman’s technical expertise in tax, audit, litigation support, and investment services.”
“This exciting business venture presents us with a tremendous opportunity to build out our accounting practice in New Jersey and expand our forensic practice in New York,” states Marcum & Kliegman’s Managing Partner Jeffrey M. Weiner. “As one of the fastest growing accounting and professional services firms in the nation, our diversely-skilled team of experts remains committed to delivering the highest level of personal service.”
In spite of an overall downturn in the economy and unfavorable job numbers, the accounting industry is still growing. “There is absolutely no shortage of available positions at M&K,” states Weiner. With offices in New York City, New Jersey, and on Long Island, Marcum & Kliegman looks to grow from approximately 500 employees to more than 1,000 within the next 3 years. This is the second major transaction that Marcum & Kliegman has completed in the past year. Last July, the Firm acquired the CBIZ/Mayer Hoffman McCann New York City accounting and tax practice.
In addition to its core accounting, audit, and tax services, Marcum & Kliegman offers a multitude of comprehensive services including SEC compliance, information technology solutions, trust and estate planning and administration, financial and investment advisement, network security, back office support, personal financial management, litigation support and forensic accounting. The Firm ranks 22nd in the nation and 5th largest firm in the Northeast by Accounting Today and 1st on Long Island, according to Newsday and Long Island Business News.
M&K Rosenfarb has unique expertise in forensic accounting, valuation, litigation, as well as dispute consulting, divorce accounting, expert testimony, fraud investigation, and government services. In addition to its headquarters in New York City and Marcum & Kliegman’s Melville office, M&K Rosenfarb has offices in Tinton Falls and Roseland, New Jersey.
SALT ALERT
THE U.S. SUPREME COURT UPHOLDS KENTUCKY’S INCOME TAX EXEMPTION OF IN-STATE MUNICIPAL BOND INTEREST
May 20, 2008
The United States Supreme Court (“SC”) has upheld Kentucky’s income tax laws regarding the taxation of municipal bond interest. The Court concluded that Kentucky’s (“KY”) existing exemption for interest income derived from bonds issued by KY and its political subdivisions (hereafter, “in-state bonds”) and its taxation of interest income earned from bonds issued by other states and their political subdivisions did not violate the Commerce Clause and therefore was constitutional. See Department of Revenue of Kentucky v. George W. Davis, ET UX.; No. 06-666; decided May 19, 2008.
In summary, George and Catherine Davis, KY residents, paid income tax on interest from out-of-state municipal bond income, and then sued the tax collector in state court for a refund claim. The Davis’ suit stated that KY’s differential taxation of municipal bond income “impermissibly discriminates” against interstate commerce in violation of the Commerce Clause of the U.S. Constitution. The trial court decided in favor of the State. The KY Appeals Court reversed the lower court’s decision in favor of the Davis’. The case was appealed to the SC and certiorari was granted.
In yesterday’s 7-2 decision, the SC upheld the long standing practice by 41 states that provide favorable income tax treatment for in-state bond interest. Justice David Souter wrote the main opinion for the Court. In the opinion he relied on a previous SC decision (United Haulers Assn., Inc. v. Oneida-Herkimer Solid Waste Management Authority ) where the court explained that “a government function is not susceptible to standard dormant Commerce Clause scrutiny owing to its likely motivation by legitimate objectives distinct from the simple economic protectionism the Commerce Clause abhors.”
Justice Kennedy wrote the dissenting opinion where he stated “Differential taxation favoring local trade over interstate commerce poses serious threats to the national free market because the taxing power is at once so flexible and so potent.”
Taxpayers that filed protective refund claims with any of the 41 states affected by this decision, will likely have their refund claims denied Taxpayers that filed refund claims and received the refund will likely be notified by the state that the refund, plus interest, is due back to the state. For taxpayers that filed state income tax returns with a disclosure of the pending Davis case, and did not pay tax on the out-of-state muni interest recognized, the state will likely assess the tax on such interest income plus interest as a result of this decision.
If you have any questions, please feel free to contact Steven P. Bryde, J.D., SALT Partner, at 212-981-3071 or any member of the Marcum & Kliegman LLP SALT Consulting Group.
M&K TAX FLASH
CONGRESS AGREES ON STIMULUS BILL
In February 2008, Congress passedthe Economic Stimulus Act of 2008, which is designed to jumpstart the US economy. The President has agreed to sign the bill which passed by an overwhelming bi-partisan vote. Highlights of the package include the following:
- REBATES
A rebate refund check will be issued to qualified individuals starting in May. Generally, the rebate will be $600 for single taxpayers and $1,200 for married couples filing a joint return. The rebate will not exceed the net tax liability reported on the 2007 tax return. However, a special rule provides for a $300 to $600 rebate to those individuals with at least $3,000 of combined income, Social Security and disability benefits. The rebate is reduced as adjusted gross income exceeds $75,000 for single filers and $150,000 for those married filing jointly.
Individuals eligible for the rebate may also be eligible for rebates of $300 per qualifying child. A qualifying child must be under age 17 and qualify for the dependency exemption.
It is the lawmakers’ intent in issuing rebates in the form of a check, rather than as an offset to tax liability, that recipients will promptly spend the funds and stimulate the economy.
- ENHANCED SECTION 179 EXPENSING
The new law temporarily increases the amount of Section 179 expensing for 2008 to $250,000 and increases the threshold for reducing the deduction to $800,000 of property purchased. The new rules apply to property purchased in years beginning in 2008. The enhanced expensing will enable companies to write off a greater amount of their investments in business use property, thus encouraging acceleration of capital expenditures.
- BONUS DEPRECIATION
In an effort to further encourage business investment, the legislation includes 50% bonus depreciation on new equipment acquired or placed in service in 2008. This will allow for half of the cost of the property to be recovered in the year placed in service, with the remaining cost depreciated using normal depreciation rules. Property eligible for bonus depreciation includes most tangible business property with a life of less than 20 years, water utility property, off-the-shelf computer software and certain leasehold improvements. Bonus depreciation is only applicable for assets placed in service during 2008, unless a binding contract existed prior to January 1, 2009. (The placed in service date is extended one year, through December 31, 2009 for property with a recovery period of 10 years or longer, transportation property and certain aircraft.)
- LUXURY AUTO LIMITATIONS
The first year limitation under the luxury auto rules is increased to $8,000 for 2008 to reflect the new bonus depreciation. The previous first year limit on depreciation was $2,650.
If you have any questions related to the new legislation, please contact your M&K Tax Advisor.
Joseph Perry Carolyn Mazzenga Robert Spielman
631-414-4510 631-414-4540 631-414-4756
The IRS has just released two new publications- Compliance Guide for Private Foundations and Compliance Guide for Public Charities. You may view these documents by clicking the appropriate links below:
Compliance Guide for 501(c)(3) Private Foundations
Compliance Guide for 501(c)(3) Public Charities
M&K TAX FLASH
FASB DEFERS EFFECTIVE DATE OF FIN 48
FOR NONPUBLIC COMPANIES
REQUIREMENTS FOR FINANCIAL STATEMENT
DISCLOSURES WILL CHANGE
In November 2007, the Financial Accounting Standards Board (FASB) agreed to grant a one year deferral on implementation of FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes for nonpublic . FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement No. 109, Accounting for Income Taxes.
As a result of the deferral, FIN 48 will now be effective for periods beginning after December 15, 2007. Companies requiring calendar year financial statements will need to adopt this provision for their 2008 financial statements.
The adoption of FIN 48 requires a company to assess all of its income tax positions taken in any tax year in which the statute of limitations remains open. All federal, state and foreign filing positions are subject to analysis. As a result of the adoption of FIN 48, companies are required to disclose tax reserves for financial reporting purposes assuming that any governmental taxing authority successfully challenges any tax positions. FIN 48 requires a company to determine whether its tax positions are more-likely-than-not sustainable under current laws. The disclosures require implementing a process of determining the level of risk involved related to tax positions taken and the potential for disagreements upon evaluation by taxing authorities.
The decision behind extending these requirements is a result of many private companies being unaware of the guidance and provisions. The provisions apply to all entities, including partnerships and S Corporations.
If you have any questions about the above Tax Flash, please contact your M&K tax or audit professional or
Joseph Perry, Partner-in-Charge Tax Practice at (631)414-4510 or
Greg Giugliano, Partner-in-Charge Assurance Practice at (631)414-4222.
We have also set up a FIN 48 Q&A email to assist companies and Banking professionals:
Contact M&K at FIN48@MKLLP.com if you would like to be included on the distribution list.
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