Business Up Front - November 2006

Business Up Front

New Law May Affect Tax Returns

 The American Society of Appraisers (ASA) recently completed a five-year effort to get legislation enacted to change appraisal standards. President Bush signed Senate Bill H.R.4 into law in late August, ensuring that in the future only “qualified appraisers” will be eligible to submit appraisals for charitable gift tax purposes. Future appraisals will also be required to conform to the generally accepted appraisal standards for all professional appraisers.            

Under the new law, all appraisers who submit appraisals for tax purposes will be held to a higher level of accountability with the IRS. In addition, both appraisers and taxpayers will face increased penalties for valuation misstatements.           

 According to the ASA, the new legislation is a result of Congress’s growing alarm in recent years about the poor quality of many tax-related appraisals. Prior to the new legislation, extremely weak and ineffective requirements regulated who could submit valuations to the IRS. A wide variety of private and corporate tax returns will be affected, including personal income tax returns, estate and gift tax returns and corporate tax returns.           

Business appraisers value billions of dollars of closely held stock and intangible assets each year, as well as many other types of entities, including Family Limited Partnerships, which are becoming increasingly important in estate valuation, the new legislation affects the full range of appraisal disciplines, including personal property, real property, gems and jewelry, and machinery and technical specialties.            

The next step is for the IRS to implement the law through new regulations and changes to tax forms. ASA will be actively engaged in the implementation of the law.   

Home Office or Corner Office?

 Many professionals are considering telecommuting as an economical work option, but spending too much time working from home can mean saying goodbye to the corner office. In a recent survey by OfficeTeam, 43 percent of respondents said telecommuting is best suited for staff-level employees, compared with 18 percent who felt telecommuting is most beneficial for managers.              

Executives were also asked, “Overall, how frequently do senior executives at your firm telecommute?” Their responses showed that 67 percent “rarely” or “never” commuted, while only 28 percent “very frequently” or “somewhat frequently” commuted.           

“Effective management requires plenty of ‘face time’ with employees,” said Diane Domeyer, executive director of OfficeTeam. “Supervisors should have an open-door policy, and that means being available to staff who need guidance with projects.”           

According to Domeyer, it’s often easier for staff-level employees to telecommute because their work often can be performed autonomously. However, she noted that even those people who work from home need to spend time in the office. “Employees who work from home must ensure that being out-of-sight doesn’t also mean being out-of-mind for promotions, team projects and plum assignments,” Domeyer said.   

SBA Loans Set Records

 Small businesses turned to the U.S. Small Business Administration for commercial financing in record numbers in fiscal year 2006, setting records for both the number of loans and the dollars loaned, SBA Administrator Steven C. Preston recently announced. The SBA backed a net 100,197 loans totaling $19.1 billion under its two primary small-business loan programs during the 12 months ending on Sept. 30. Both the number of loans and the dollar amount represented a single-year record for the agency. The previous records were set last year, when SBA provided a net 94,554 loans worth $18.1 billion under the same two programs.            

The 7(a) loan guaranty program – most often used for working capital – produced 90,477 loans worth $13.46 billion. The Certified Development Company, or 504, program, which is used for the purchase of real estate and fixed assets, provided 9,720 loans worth $5.61 billion.           

 A third of the loans in FY 2006 went to minority borrowers, 32 percent went to start-up businesses, 22 percent helped fund businesses owned by women and 21 percent went to businesses located in rural areas. Increases were recorded in loans to African Americans, Hispanics, Asian Americans and Native Americans.