CONNECTIONS | March - April 2021

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FEATURES

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How to Make Financial Forecasting 6 Essential In times of economic uncertainty, it becomes difficult to forecast accurately. Yet, this is precisely the situation when accurate forecasting and planning becomes more important than ever.

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Aligning Your Marketing & Business Development Strategies

It’s common for your marketing and business development strategies to misaligned with inefficient processes. It only takes eight steps to get them to work together to drive sales and growth.

ASCPA LEADERSHIP

Meet the Newest Incoming Board Members 15 ASCPA Nominations Committee Report & Incoming Board Members

PIPELINE

Deck the Trails Recap 16 ASCPA Educational Foundation

BRADLEY SALT CORNER

Alabama Enacts Landmark TJCA Reform/CARES Act Exemptions and Business Tax Reform Legislation 20 Bruce P. Ely and William T. Thistle, II, Bradley Law

Inside the ASCPA 17

Looking Ahead to the Next Round of Federal Tax Legislation Considerations The next two rounds of federal legislation could significantly impact taxes and local budget issues for the state.

Message from Jeannine................. 4 Message from the Chair................. 5 Member News............................... 10 Remembering................................ 13 Self-Study CPE.............................. 25

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Removing the Targets from the Backs of Small to Medium Size Accounting Firms

Classifieds...................................... 26

Too many financial professionals make the mistake of assuming that “The Bigger the Firm, The Bigger the Risk,” but the reality is that small-to-medium-sized accounting firms are even more attractive targets.

We’re @ALsocietyofCPAs on Facebook, Instagram, & Twitter— follow us to see the latest from the ASCPA.

March/April

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MESSAGE FROM JEANNINE

trades like plumbing, coding, auto mechanics and more. A local law firm wrote a check for $30,000 to help with renovations to the property. We are so proud to have been a tiny part of Mercy House and to see their value recognized by the city and businesses.

P

hilanthropy is a big word for the most universal of impulses, to give. The phrase that it is “better to give than receive” is a truth that we all have experienced. Whether it’s giving the person at the top of the off-ramp a $5 bill or making a pledge to your favorite charity, the urge to share is a heart-warming one. Perhaps “giving back” is an expression of your own success and sense of obligation to others.

Perhaps it is an urge to level out income inequality and social injustice. Honestly, your rationale is not even important. Nor is the amount of money you donate, nor which organizations you support. What IS important is that your generosity reflects the causes that touch your heart.

As an example, the ASCPA has been involved with Montgomery-based Mercy House for the last couple of years. (You can learn more about them at www.mercyhousemgm.org.) On January 18, the City of Montgomery and local NBC affiliate WSFA donated the 60-year-old Channel 12 campus on South Court Street to the organization.

Pastor Ken Austin has expansive plans for serving the community in concrete and positive ways including training people in various

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ASCPA Connections

As CPAs, you are leaders in your towns and cities, and already know the value of giving.

You give your time, you serve on the boards of schools, universities, churches and civic organizations. You provide financial support to those organizations plus public radio and TV, arts organizations and even the rehab of business districts. Some of you are completely hands-on, acting as mentors in formal and informal ways, helping guide the next generation.

The 11 chapters of the ASCPA have all found meaning in supporting local charities and causes. For the Mobile Chapter, partnering with Big Brothers Big Sisters of South Alabama has been a way for our members to create and support one-to-one mentoring relationships that ignite the power and promise of youth.

We can’t have this conversation without talking about the biggest way the ASCPA contributes within our own circle: the ASCPA’s Educational Foundation. Founded in 1967, it has provided financial support to thousands of accounting students at institutions of all sizes across the state. While the process has changed over time, the path is still roughly the same: education, CPA exam, certification. It’s always been so inspiring to see students we meet through campus visits earn their undergraduate degrees, complete an additional thirty hours of education (MAcc, MTA, MBA, etc.) in order to sit for the exam and to become a fellow CPA. Abby Sides, who we first met as an officer of the Beta Alpha Psi chapter at UNA, and who

received an Educational Foundation scholarship, proudly held up her CPA certificate on her Facebook page in mid-January.

Most recently, we have lost one of the ASCPA’s most fervent Foundation advocates, Lamar Reeves, to COVID-19. He served four years on the Foundation’s board, employed interns at Smith Dukes, and was a Trustee on the University of Montevallo Foundation, his alma mater. In his honor, his firm made a $10,000 donation to the Foundation and also secured two large contributions from Lamar’s clients. What an amazing testament to one man’s commitment to the future of the profession!

The board of the Educational Foundation is encouraging all members to make a commitment to the Foundation. Not in terms of dollar amounts (although we wouldn’t turn that down!) but for every member to take a few dollars, $5, $10, $25, $50, etc. and donate it each year. You all have seen how seamless and painless it is when we pay $15 per month for Netflix or Disney+. Won’t you take a moment to dedicate to a cause that is bigger, much bigger than any one of us? https://www.ascpa.org/educational-foundation If the disruption of 2020 has taught us anything, we’ve learned that life is fleeting and to lead our lives in the most meaningful way possible. Help us make someone else’s dream come true. Give.

Jeannine

MESSAGE FROM THE CHAIR

It is hard to believe that it has been almost one year to the day that I am writing this that the World Health Organization declared COVID-19 a pandemic. Only two days later, President Donald Trump declared the novel coronavirus a national emergency. The past year has been like no other that I have ever experienced in my lifetime in so many respects. The disruption that the pandemic has caused on a social level is one I would rather not see again. I believe that it is safe to say that we have all had at least one personal connection that has been affected in in a negative way from the pandemic. We have lost some who we dearly love and have held tightly to those who have recovered. On the business side of things, we have never been busier. I am still trying to figure out if that is a good thing or a bad thing. But seriously, it is a good thing. It has worked almost like a catalyst for accelerated change, and I am glad to say that most everyone I know has fully embraced it.

As we focus this issue on business and industry, I understand that not all businesses and industries are busier than ever. Some have not been able to weather the storm of COVID-19 and others have seen the fruits of their labor dwindle to next to nothing in hopes of trying to keep the business going.

Some have had to close for a period of time, only to reopen to limited capacities and capabilities. But one thing that I have found with those in business and industry is a resilience like no other. They have changed the

ways that they work to serve their clientele.

One thing that they have done that I think is brilliant, is the fact that these businesses are collaborating with each other. Competitors in the marketplace are now working together to help ensure that the industry they are in survives. Whether it is sharing ideas to make sure the doors stay open or using economies of scale to help lower costs to maintain production. Our members in business and industry have played critical roles in this time of great change. While the Government has created many opportunities for help through things such as the Paycheck Protection Program, the Economic Injury Disaster Loans and other grants and tax credits, the business and industry CPA’s role has been critical in maximizing the benefits that are available. We are currently on round two of the PPP loan program and the next round of COVID-19 relief is headed back to the House for approval. It is a critical time for our members in business and industry to stay focused and up to date on all the opportunities available to help them not only survive in these times, but to thrive.

Daylight savings time rolls in soon. For me, I look forward to the longer periods of daylight. I do not know why, but it just gives me a renewed sense of hope. I think that might be what the COVID-19 vaccine is also doing for us. It is that hope that we might be able to get back to a normalcy that we once knew.

It might be a new normalcy, but I am ready for some sort of it again! It also gives me

hope in seeing, although mostly virtually, and reading about all the great things so many are doing for one another in such a great period of change. You, our members, give me such great hope. When I get to see and hear all that you have done and continue to do not only for our profession, but for anyone who needs help, there is no other profession I would rather be in! As your “virtual” Chair, I want to say thank you all and keep at it!

Michael

March/April

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HOW TO MAKE FINANCIAL FORECASTING ESSENTIAL 4 IDEAS TO TURN DREAD INTO DELIGHT

BY BLAKE OLIVER, CPA

This article is not for you if you love forecasting. If, on the other hand, being asked to create a financial forecast fills you with feelings ranging from discomfort to existential dread, keep on reading!

You might feel this way because forecasting is hard for accountants. As a CPA, I can tell you it’s not something that comes naturally.

Accountants prefer certainty. We like dealing in hard numbers. Something we can measure.

Forecasting may seem like the opposite. The task is inherently uncertain because it deals with the future. And the further out we have to forecast, the more uncertain it becomes.

In times of economic uncertainty, it gets even more difficult to forecast accurately. Yet, this is precisely the situation when accurate forecasting and planning becomes more important than ever.

The good news is there are a handful of tried-and-true best practices that can help accountants forecast more accurately. This both increases the value of the work we do while also reducing our own anxiety around forecasting.

Here are four best practices to help you forecast faster and more accurately.

1. Start with your goals, not last year’s actuals Let’s start with what not to do.

Absolutely, positively, do not copy last year’s results and then apply a growth percentage to revenue and expenses.

This is a poor method of forecasting even in a predictable period of growth, even when based on historical trends.

That’s because it falls apart when business models are being disrupted.

What should we do instead? Let’s start with a conversation about goals.

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ASCPA Connections

Thinking about goals can be a lot harder than just projecting out revenue and expenses, which is why a lot of companies skip this step. But it’s important not to. Getting the team aligned around a common set of goals helps everyone see the big picture and gives them something inspirational to work toward.

It also helps to manage expectations.

You may already have a set of common goals. If not, a brainstorming session can help figure out what they should be.

Here’s a list of categories to ponder: •

Revenue

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Growth rate

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Cash on hand

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Expansion to new locations

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Adding new products

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Increasing headcount

2. Combine financial and nonfinancial metrics in a model It’s very likely that some of your goals will be financial, and some will not. Many goals are operational or workforce-related, such as new hires or adding locations.

This is why it’s essential that our forecast consider all of our data, not just what’s in the accounting system.

The next step is to work backward from our goals and build a financial model that shows us how to hit those goals by achieving specific metrics, which we call key performance indicators (KPIs). These KPIs may be financial or non-financial in nature.

For example, if our primary goal is to increase year-end cash on hand for an ecommerce business, KPIs that help

us achieve this may include marketing spend, website visits, orders shipped, average revenue per order, inventory levels, fulfillment headcount, etc.

By combining these KPIs in a financial model, we can project financial performance based on projected business activity, not only what has happened in the past. This allows us to tweak the business model — or perhaps even reinvent it — to achieve our objectives.

While finance professionals have used spreadsheets to build models for decades, accountants on the cutting edge of technology are leveraging purpose-built financial modeling software.

Until recently, these solutions were too expensive for small businesses, but companies such as Jirav are democratizing technology-enabled planning by building financial modeling software that small- and medium-sized businesses can afford.

Be sure to explore all your technology options and don’t just rely on the same old methods.

3. Connect your forecast to your budgeting process A forecast isn’t of much use unless it inspires action. After all, what’s the point of predicting the future if you aren’t going to do anything about it?

That’s why it’s essential that your forecast becomes tightly integrated with the budgeting process.

It’s also why forecasting can’t be done alone. It’s important to involve key stakeholders in the forecasting process so that they agree with the output. Involving department heads, executives and even investors in the annual goal-setting process is a good starting point.

But building consensus doesn’t stop there. Once you’ve built a financial forecast, seek input from your stakeholders on key assumptions in your model.

Ask department managers what they’re planning. Ensure that the revenue model is using the latest targets from the sales team. Ask your head of marketing to validate the lead funnel metrics. Does your operations manager intend to hire in the next 12 months and by when?

Incorporating your departmental managers’ plans into the forecast means that you can convert your forecast into a budget without much trouble at all. That saves time because you’ve combined two processes into one.

4. Convert your annual forecast into a monthly rolling forecast

available that streamline this process so any business can update their forecasts and budgets in minutes. If you’re still using trusty old Microsoft Excel for your financial forecast, it’s time to look into FP&A software.

Not only will it make your job easier, but it will significantly increase your value to the organization as budgeting and forecasting becomes core to setting and achieving goals throughout the year, not just annually.

Blake Oliver, CPA is an entrepreneur, accountants, writer, and podcast host who specializes in cloud accounting technology.

He is one of Accounting Today’s Top 100 Most Influential People and has been named a 40 Under 40 in the accounting profession by CPA Practice Advisor. Blake produces and cohosts the Cloud Accounting Podcast, a Top 50 Business News show on the Apple charts and the most popular podcast for accountants and bookkeepers in the world. He is the director of marketing at Jirav and lives in Scottsdale, Arizona. His article originally appeared in the Minnesota Society of CPAs Footnote magazine.

Find what works for you While the weight of the world is unlikely to ever leave your shoulders completely, hopefully with some direction and experimentation, you can apply these forecast best practices to tweak the model that best suits you and your company’s needs.

Collaborating on your forecast with the team ensures buy-in, but that only lasts as long as the forecast remains accurate. And even the best laid plans can quickly go awry when outside economic conditions change.

To ensure that your forecast (and your budget) stay accurate, it’s essential that you switch from annual planning to a more agile process.

Convert your calendar year projections into a rolling 12-month forecast.

Each month, replace last month’s forecast with your actuals and add a month on to the end. If your forecast has materially changed, copy the new forecast over to the budget, which is now much more flexible.

The beauty of a rolling forecast is that managers, executives, and shareholders are no longer surprised when actuals don’t match what was predicted.

The challenge is that updating forecasts and budgets frequently can be extremely difficult and time-consuming using spreadsheets, which is why until recently most small businesses have skipped forecasting on a monthly basis.

Fortunately, there are now many financial planning and analysis tools

Kathy Brents CPA CBI

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March/April

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ALIGNING YOUR MARKETING & BUSINESS DEVELOPMENT STRATEGIES If you want to be a high-growth firm, you need to align your firm’s marketing and business development strategies.

It’s common for these two areas to be misaligned with inefficient processes, and both wasting time creating content, including blogs, social media posts, email newsletters, case studies and videos, without clear goals.

When these two areas of your firm are in alignment, they work together to drive sales and revenue, dramatically improve your marketing return on investment, and drive growth.

So how can you make that happen? The key is to set clear revenue goals.

8 Steps to Aligning Your Marketing & Business Development Strategies Before diving into marketing and business development strategies, your firm needs

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ASCPA Connections

to have clear revenue goals. This gives your team something to aim for and helps you determine and communicate your priorities. As you start to set goals, you may realize something is not as big a priority as you thought or, conversely, realize that it’s an even higher priority than you initially thought.

Step 1: Understand where you are At Boomer Consulting, Inc., we like to say all progress starts with the truth. So, say you want to grow a new service. Where are you today? Maybe you’re starting from scratch with zero clients or have a small client base you’re hoping to grow. Is this area of your firm trending up or down? Everyone on the team needs to know where you are right now to make progress.

Step 2: Determine where you want to be in three years What is your long-term goal? Do you want to grow this service line to $2 million in three years? You might consider your three-, five-

or ten-year horizon, although most firms we work with tend to have an easier time visualizing three-year goals rather than a longer horizon.

Step 3: Determine where you need to be in one year To grow a $2 million service line in three years, where do you need to be in one year?

For example, if your three-year vision is to have $2 million in revenue, your one-year goal might be to have $1 million in revenue from this service line. Keep in mind that your first stage of growth might move slowly while you learn what you need to do to engage new clients and keep existing clients coming back for more. Make sure your one-year goal reflects this.

Step 4: Breakdown one-year goal into quarterly goals A one-year goal doesn’t naturally transition into a strategy. To drill down into the day-today actions needed to reach your one-year

goal, break down your plan even more by dividing it into quarterly milestones.

Ask yourself, are all four quarters created equal? Or is this service line more heavily focused during certain times of the year?

Step 5: Determine how many clients you need to achieve those goals Let’s say you want to earn $250,000 per quarter. How many clients do you need to achieve that goal? Breaking revenue goals down like this is useful because getting five $50,000 clients is typically very different from the strategy for getting twenty-five $10,000 clients.

Step 6: Predict how many leads you need to get those clients If you want to sign five new clients this quarter, how many people do you need to have in your business development pipeline to end up with ten? Do you need 25 or 50 leads? This isn’t an exact science, but it’s good to have an idea in mind. You can tweak this later as needed.

Step 7: Plan the marketing strategies needed to generate leads What do you need to do to get 25 leads?

Will you launch a new content marketing campaign? Purchase social media ads?

Have exploratory conversations with existing clients of another service your firm provides? Ask for referrals?

Work backward to generate the number of leads it will take to meet your goal.

Step 8: Get to work on the strategy Now that you’ve worked through the previous five steps, you can get to work on your business development and marketing strategies with a lot of clarity.

Alignment isn’t just “nice to have.” It’s critical to your firm’s success. When sales and marketing are aligned and working in tandem, you won’t have two departments operating in a silo. Each team will waste less time and drive more revenue.

Jon Hubbard, Shareholder and Consultant at Boomer Consulting, helps accounting firm leaders find success in the areas of leadership, talent, and growth. Jon is a facilitator for the Boomer P3 Leadership Academy, Boomer Talent Circle and Boomer Marketing & BD Circle. He also guides firms to grow and be more effective in the areas of client service, marketing, and business development.

Jon speaks at various industry conferences, user conferences, state societies, and associations. He is a Storybrand Certified Guide and Certified Kolbe Consultant.

Visit www.boomer.com to find more resources on sustainable success & future readiness.

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MEMBER NEWS Aldridge Borden & Company, P.C. is pleased to announce the following promotions: Melissa Hill has been promoted to Manager. Hill first worked for Aldridge, Borden & Company, P.C. as an intern in the spring of 2014. She began her full-time career with the Firm in September 2015 after graduating with a Bachelor of Science degree in Accounting and a Master of Accountancy degree from Troy University (Troy, AL). Hill works remotely from Huntsville and works in the Assurance Department where she primarily works with contractors and nonprofit entities.

Donovan G. Butler has been promoted to Senior Accountant. Butler interned with Aldridge, Borden in the spring of 2018 and began his full-time career in July of 2018. Donovan graduated from Auburn University with a Bachelor of Science degree in Accounting. Additionally, he earned a Master of Accountancy degree from the University of Alabama at Birmingham. Butler works primarily on audits, compilations, and reviews of nonprofits, government entities, and construction contractors.

Effective December 31, 2020, Partner Jay Reichmann retired from Anglin Reichmann Armstrong after 22 years at the firm and 32 years in public accounting. Joining the firm in 1998 when it had less than 10 employees, Jay played a key role in growing their client base, talent and offices to what it is today. Jay’s client and firm relationships will continue to be served by the firm’s teams in Huntsville, AL, and Pensacola, FL.

knowledge to the Government Contracting industry where she has been instrumental in tailoring forward pricing budget tools and other capabilities within clients’ contracting software. She is also called upon frequently to identify and translate key analytics to help contractors track expenses and more easily manage their businesses.

Joining Anglin’s leadership team, Michelle anticipates continuing to build the Government Contracting practice, with special interest in women in the defense industry and tribal organizations that pursue federal contracts.

“I look forward to providing a voice among next generation leaders that you can be a partner in a firm and carve your own path,” she said of her promotion. “I also plan to increase my involvement in civic and industry groups.”

Anglin’s Managing Partner Gary Anglin was pleased with Michelle’s decision to accept the partnership, he said, because it strengthens the firm’s knowledge base and leadership in government contracting — a key industry for the firm in Huntsville, Ala. and Pensacola, Fla. “Clients frequently recognize Michelle as a collaborative advisor who strives to position them with the right knowledge for success. She represents our team’s values of integrity and problem solving.”

Avizo Group, Inc. (formerly Hartmann, Blackmon & Kilgore P.C.), one of the Gulf Coast’s leading CPA and business consulting firms, has announced the naming of LeeAnn May, CPA as the organization’s newest shareholder.

“After much thought and discernment, it feels like the right time to make a change and pursue other opportunities,” Jay said. “I am grateful to my colleagues and clients for the opportunity to lead and grow a public accounting firm and meet so many wonderful people over the years. I will miss those daily relationships the most.”

LeeAnn has been promoted to Shareholder and is the director of the Mobile office location. She began her career with Avizo Group upon graduating from Troy University in 2008. Her steady growth within the firm can be attributed to her dedication to providing excellent client service, her genuine care for our employees, and her expert technical knowledge of industry standards and regulations. Throughout her career with Avizo Group, LeeAnn has focused primarily in the audit and assurance fields, working with non-profit, governmental, contractor, and employee benefit plan audit clients. She is also a member of the American Institute of Certified Public Accountants.

Managing Partner Gary Anglin, who founded Anglin in 1990, has worked with Jay since he joined the firm. On the leadership team, they built successful practices to serve government contractors, manufacturers, construction clients and professionals. The firm was recently named a Top 400 firm and expanded to its second market in Florida in September 2018.

In welcoming LeeAnn to this position, CEO of the company, Dennis Sherrin says, “LeeAnn is dedicated, willing to get even better every day and, has an intense focus on taking care of people. Servant leaders are rare and unique. She possesses the traits of a servant leader.

We are excited for the firm’s future with her leadership contributing to its success.”

Gary said that Jay was active in the firm’s operations, administration and business development in addition to working with business and individual clients primarily in tax and consulting. In recent years Jay has focused on growing the firm’s manufacturing niche and mergers and acquisition consulting.

BMSS Advisors & CPAs has proudly promoted two long-time employees Caryn Stark, CPA, CMPE, CGMA and Mark Underhill, CPA, CM&AA, CVGA to Member.

“We can’t thank Jay enough for his contributions to the firm,” Gary added. “I greatly appreciate the role he played in helping to lay the foundation that we continue to build upon. We all wish him and his family the best.”

Anglin Reichmann Armstrong is pleased to announce that Michelle Jenkins, CPA, MBA, was promoted to Partner in the firm, effective January 1, 2021. Michelle joined Anglin in 2012 and was promoted to Manager in the Solutions Services Group a short time later.

As a Partner, Michelle will continue to add her 10

ASCPA Connections

Caryn joined the Gadsden office in 2007 after working for 15 years as an administrator for a medical practice group. She is a member of the American Institute of Certified Public Accountants (AICPA), Alabama Society of Certified Public Accountants (ASCPA), National Medical Group Management Association, Alabama Medical Group Management Association (Past President), and the Etowah County Medical Group Management Association (Past President).

A public servant dedicated to the community in which she lives and works, Caryn has served the Altrusa Club of Greater Gadsden (Past President), the Boys and Girls Club (Past Treasurer), United Way of

Etowah County and the Gadsden Area Chamber of Commerce.

Caryn and her husband, Bo, live in Southside and are members of Southside Baptist Church. They have two children, two grandchildren and another grandchild expected in July.

“Caryn has been an instrumental member of our firm for many years; this promotion recognizes her contributions and accomplishments within the firm and also her steadfast commitment to serving our clients and community well,” said BMSS Member Todd Hindsman. “I am extremely happy for her and excited about the opportunities ahead.”

Mark joined BMSS in 2009 and currently serves in the tax department while also leading its transaction advisory services practice, which focuses on both buy-side and sell-side transactions and advises owners to help create value within their businesses.

He serves clients in the industries of real estate, technology, private equity, entertainment, manufacturing, and distribution. Mark specializes in tax planning, consulting, and compliance for large multi-state companies, mergers and acquisitions, Partnerships and S Corporations, 1031 like-kind exchanges and Opportunity Zones.

Over the years, Mark has helped his clients restructure their organizations for increased profitability, maximize their value, and advise clients through mergers and acquisitions. His entrepreneurial spirit, technical skills and determination have shaped Mark into the professional he is today. He is a member of the American Institute of Certified Public Accountants (AICPA), the Alabama Society of Certified Public Accountants (ASCPA), and the Alliance of Merger & Acquisition Advisors (AM&AA).

Born and raised in the Birmingham area, Mark graduated from the University of Alabama, and currently resides in Hoover with his wife, Kayla, and their three children. He and his wife are active members of Hunter Street Baptist Church.

“It’s really special to watch one of our employees grow from a staff accountant right out of college to who Mark is today,” said BMSS CEO and Founding Member Don Murphy. “He has grown up in BMSS’ tax area, become one of our brightest leaders, and is now leading our transaction advisory area. An equally big plus is that he is a genuinely nice person; we are thrilled for Mark to be a Member.”

Crow Shields Bailey is pleased to announce the following announcements: Kirsten Sokom has been promoted to Manager. Kirsten works in their Audit department and specializes in construction contractors, employee benefit plans, and oil and gas support services.

She is involved with the Eastern Shore Young Professionals, Eastern Shore Chamber of Commerce, USA Alumni Association, First Baptist Church of Fairhope, and Distinguished Young Women. She has been with Crow Shields Bailey for seven years.

Brooke Bunting and Andrew Finnorn were both promoted to Senior Accountant. They have each been with the firm for two years.

Dent Moses is pleased to announce that Mike Baker has been appointed to serve on Allinial Global’s 2021 America Board of Directors.

Allinial Global is an award-winning association of legally independent accounting and consulting firms whose members collaborate to bring their clients best-in-class solutions.

“As a member of Allinial Global, Dent Moses gains access to the expertise, resources, and advice of over 200 fellow firms in 85 countries throughout the world allowing us the ability to offer our clients broader services, deeper niche expertise, and more complete geographic coverage. I’m honored to serve on the 2021 Americas Board of Directors for this global organization” stated Baker.

Baker has served as Managing Partner at Dent Moses since 2016.

He joined the firm in 1989 and became a partner in Dent, Baker & Company in 1997. His practice is concentrated in the areas of taxation and general business consulting, and he heads the firm’s legal and engineering segments.

Baker received his accounting equivalency from The University of Alabama Birmingham after receiving his Bachelor of Science in Mechanical Engineering at Auburn University.

In addition to the Allinial Global appointment, Baker serves as Chairman of the UAB Accounting Advisory Board and is involved with Samford University’s Brock School of Business.

Sam Estes has also been promoted to Senior Accountant at Dent Moses. Sam received his Bachelor of Science in Accounting from Jacksonville State University and joined the firm in 2019 after spending three years in public accounting outside of Birmingham. As a Senior Accountant, Sam will focus his efforts on providing audit and assurance services to clients in a variety of industries.

Kassouf promoted 15 team members who are also members of the Alabama Society of CPAs. “We are incredibly proud of these team members for continually striving for excellence, especially during a tumultuous year like 2020,” said Kassouf Director and Shareholder Gerry Kassouf.

Georgina Perry, CPA, CMPE was promoted to Senior Healthcare Advisor.

Anna Arnold, CPA, Caitlyn Tortorici, CPA, Carolina Canales, CPA, Elizabeth Livesay, CPA, Jessica Stewart, CPA, Kami West, CPA, Reagan Glaze, CPA, and Taylor Reed, CPA were promoted to Supervising Senior Accountant.

Ashley Burns, CPA and Bridget Adams, CPA were promoted to Senior Accountant.

Griffin Clark, CPA, Jeremy Green, CPA, and Philip Johnston, CPA were promoted to Staff II. “At Kassouf, we want our employees to succeed. We want to recognize their efforts and reward them for their hard work. Congratulations to this group for going above and beyond this year and advancing their careers,” said Kassouf Director and Shareholder David Kassouf.

Warren Averett is proud to announce that several individuals have been promoted to Members of the Firm, and among them are three ASCPA members. Warren Averett is extremely proud of these individuals’ demonstrated commitment to the Firm and its values.

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Joshua Bowen, CPA, CGMA, CAMS (Audit, Montgomery) Josh provides audits and compliance consulting to the financial institutions and public sector organizations. He has largely focused his practice on providing external and internal audits and Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) compliance consulting.

Jared Koechner, CPA (Tax, Birmingham) Jared specializes in tax planning and compliance for financial institutions. Jared also provides corporate tax compliance and planning services for privately held and private equity owned businesses in a variety of other industries. He helps clients navigate multistate tax compliance and accounting for income taxes.

Van Trefethen, CPA (Tax, Birmingham) Van specializes in tax planning and compliance for closely held and private equity owned businesses, and he provides financial statement reviews and compilations. He is a leader of the Firm’s Paycheck Protection Program Taskforce and is an accomplished thought leader about tax issues.

“Warren Averett is proud of these individuals, their accomplishments and their new designations as Members of the Firm,” said Mary Elliott, Chief Executive Officer of Warren Averett. “These new Members truly exemplify what Warren Averett is all about—going above and beyond to be the best resource possible for our clients, whether that means offering professional expertise, building relationships or serving their communities and the people in them. Our Firm is excited to watch these individuals excel as Members of Warren Averett.”

Wilkins Miller LLC, an accounting and advisory firm with offices in Mobile and Fairhope, is pleased to announce Logan Etheridge has joined the team.

Etheridge joined the Wilkins Miller team as a student administrative assistant in 2019. He became an intern and joined the firm full time in 2021 after graduating magna cum laude and earning a Bachelor of Science in Business Administration with a concentration in accounting from the University of South Alabama.

Etheridge joins the firm as a staff accountant with a concentration in audit.

WHAT’S HAPPENING OUT THERE Anglin Reichmann Armstrong has been recognized in Forbes 2021 Best Tax and Accounting Firms. This is the second year in a row Anglin has received this national Top Firm ranking, joining 278 other firms identified as “2021 Best Tax and Accounting Firms in the U.S.” Anglin receives special recognition among only 172 CPA firms across the nation for their tax and accounting services.

“We are thrilled to be named a Forbes 2021 Best Tax Accounting Firm. Receiving this award for a second year in a row shows that we continue to put our clients first, and adapt our services to their needs,” said Anglin’s Managing Partner, Gary Anglin, CPA. “It’s also exciting to see that we have been recognized for our tax and accounting service areas. Our team always puts our clients first, and it’s exciting to be receiving the recognition for that hardwork.”

“America’s Best Tax and Accounting Firms” are listed on the Forbes website, including a short description of firm services. This 12

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Forbes article also discusses what to look for in a CPA, and how to ensure their services match your business or individual tax needs.

Anglin continues to position the firm for the future by focusing on business advisory services, niche industry consulting, assurance, peer review and complex tax and accounting planning for growing companies. “It appears that the CPA community and clients trust our strategy moving forward,” Gary Anglin said. “That’s important for us to know as we enter a new year that will inevitably have many tax and accounting changes for our clients.”

Forbes named Trussville-based Lykethia Pierce, CPA & Advisors one of the Top 100 Must-Follow Tax Twitter Accounts For 2021 list December 31, 2020. As a member of the Tax Twitter community, Lykethia discusses the complex, ever-changing U.S. federal tax system. She also discusses tax matters relevant to the states of Alabama and Georgia. She

is a licensed Certified Public Accountant in both states.

“I am honored to be considered a reputable member of the Tax Twitter community. I enjoy speaking on topics like business, accounting, and professional development. It is important to me to be recognized by the accounting industry as a subject matter expert. Being recognized by Forbes since 2016 is helpful to accomplishing this career objective.

I look forward to servicing clients with business and accounting advisory solutions. One principle that leads within my accountant-client relationships is great customer service is non-negotiable. The success of my clients is my purpose and that of my company. Thanks Kelly and Forbes for recognizing me on this list,” said Lykethia, CEO – Founding Member of Pierce, CPA & Advisors.

Machen McChesney, one of the region’s leading CPA and business advisory firms, is pleased to announce that Forbes named Machen McChesney to its 2nd annual list of America’s Best Tax and Accounting Firms 2021.

Forbes partnered with market research company Statista to create a list of the most recommended firms for tax and accounting services in the U.S. Of the 278 firms identified, 250 were recommended for tax services, and 200 were recommended for accounting services. Machen McChesney was recognized in both categories.

Marty Williams, the firm’s managing partner, stated, “We are honored to be chosen as a Forbes top tax and accounting firm and grateful to be recognized alongside some of the best firms in the nation. This is a

testament to the hard work, dedication, and commitment of our entire team. It is exciting to know we were recognized by not only our clients but our peers as well.”

Warren Averett has relocated its Foley office to the revitalized Main Street District of Foley. As of January 5, 2021, the Foley team will operate out of a new workspace at 112 West Laurel Avenue, Foley, AL 36535.

“We are excited for this move,” said Kevin Leeser, Foley Office Managing Member. “We’re proud to be a part of the Main Street District’s resurgence, and we’re confident this new location will be a positive move for the Foley team and our clients.”

“We knew downtown Foley would be a great location for our Firm because the downtown area is growing and many exciting things are happening,” said Alexis Willis, a Member in the Foley office. “We want to further enhance our client experience, and the new office location will help us accomplish this.”

The Warren Averett Foley office occupied the former workspace on North McKenzie Street for over 50 years. With this move, Warren Averett joins other Foley businesses that are moving back to this revitalized area of town. The Foley Main Street District was chosen for the Main Street Alabama program, which is part of a national program with a long history of working with downtown districts.

For more information about Warren Averett’s Foley office, visit www. warrenaverett.com/offices/foley.

REMEMBERING OLWYN REESE CARR May 20, 1942-November 5, 2020 Montgomery, AL | Certificate # 1279 O. Reese Carr, 78, passed away November 5, 2020. Reese was a graduate of the University of Alabama, where he played basketball, a partner at Aldridge, Borden & Co. CPA firm, and a member of Frazer Memorial UMC. In lieu of flowers, please make donations to Frazer’s In Christ Way Ministry, 6000 Atlanta Highway, Montgomery, AL 36117 or to your favorite charity.

WILLIAM JOSEPH FOSTER July 18, 1931-January 14, 2021 Russellville, AL | Certificate # 1865 William Joseph Foster, 89, of Russellville, died Thursday, January 14, 2021, at Russellville Hospital.

He was a longtime resident of Russellville and a member of North Highlands Church of Christ where he served as a deacon, treasurer, and song leader. He was a member, past treasurer and president of the Russellville Jaycees and the Russellville Rotary Club. He also served as president of the Russellville Chamber of Commerce and was a member and past president of the Alabama Association of Public Accountants and Tax Preparers.

Mr. Foster was born in Hackleburg, Alabama, on July 18, 1931. His parents were Joseph Henry Foster and Mamie Dillard Foster.

After graduating high school in 1949, Mr. Foster started college at what was then Florence State Teachers College. He started working while attending college and soon decided it would be best to join the U.S. Air Force until he decided what direction he should go.

He attended Air Force Mechanic School in Amarillo, TX. He was retained at the school as an instructor until his four years in the Air Force were completed. After being discharged from the Air Force, he returned home to finish his college education While at Florence State College, now the University of North Alabama, he was president of the Accounting Fraternity and as a senior he received the Outstanding Student Award given by the Alabama Society of Certified Public Accountants. After a year working for a CPA in Florence, he returned to Russellville and started working at the Russellville Post Office and opened his own accounting office. During the next nine years, he worked two jobs as a rural letter carrier and building his accounting practice.

As a member of the Russellville Jaycees he was instrumental in the development of the Twin Pines Golf Course and Country Club.

In lieu of flowers, please make donations to North Highlands Church of Christ Lads to Leaders or North Highlands Church of Christ Food Bank.

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Jeannine P. Birmingham, CPA, CAE, CGMA President and CEO

Jeannine P. Birmingham, CPA, CAE, CGMA President and CEO

January 21, 2021 Jeannine P. Birmingham, CPA Secretary/Treasurer Alabama Society January 21, 2021 of CPAs 1041 Longfield Court Montgomery, AL 36117 Jeannine P. Birmingham, CPA Secretary/Treasurer Re: 2021 ASCPA Committee Report Alabama Society of Nominations CPAs 1041 Longfield Court Montgomery, AL 36117 Dear Jeannine, The ASCPA Nominations Committee met January 21, 2021. Members of the committee include Re: 2021 ASCPA Nominations Committee Report Melissa Barnes, BG Gilbert, Amanda Paul, Lynne Bozeman, Michael Brand and Dennis Sherrin. I agreed to serve as Chair of the ASCPA Nominating Committee. The committee submits the following recommendations in accordance with Alabama Society of CPAs By-Laws. Each Dear Jeannine, nominee has agreed to serve, if elected.

The ASCPA Nominations Committee met January 21, 2021. Members of the committee include Officers: Melissa Barnes, BG Gilbert, Amanda Paul, Lynne Bozeman, Michael Brand and Dennis Sherrin. I Chair of to theserve Boardas Chair of James Moody,Nominating Birmingham, AL agreed the ASCPA Committee.

The committee submits the Chair Elect Jon Heath, Enterprise, AL following recommendations in accordance with Alabama Society of CPAs By-Laws. Each Immediate Past Chairto serve, Mike Brand, Athens, AL nominee has agreed if elected.

Officers: Three-year Chair of the term: Board James Moody, Birmingham, AL Amanda Barksdale Florence, Chair Elect Jon Heath,AL Enterprise, AL Matthew Hilburn Monroeville, AL Immediate Past Chair Mike Brand, Athens, AL Kendra James Montgomery, AL Michael Kassouf Birmingham, AL Three-year term: Amanda Barksdale Florence, AL Respectfully Submitted, Matthew Hilburn Monroeville, AL Kendra James Montgomery, AL Michael Kassouf Birmingham, AL BJ Gilbert, CPA Chair, 2021 ASCPA Nominations Committee Respectfully Submitted, BJ Gilbert, CPA Chair, 2021 ASCPA Nominations Committee

T 334.834.7650 F 334.834.7310

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800.227.1711

P.O. Box 242987, Montgomery, AL 36124

ALABAMA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS www.ascpa.org

P.O. Box 242987, Montgomery, AL 36124

ALABAMA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS

ASCPA Connections T 334.834.7650

800.227.1711

MEET THE NEWEST 2021 ASCPA BOARD MEMBERS

Each year, members of the Nominating Committee select individuals nominated by their peers from across the state and various segments of the CPA profession to join the ASCPA Board of Directors. We are excited to work with the newest incoming board members to gain their insights on how to make the Society stronger and stay relevant for our members.

James Moody, CPA joined Dent Moses in 2006 and became partner in 2014. James works with clients to provide accounting, audit, business consulting and tax services for privately held businesses in many industries, including wholesale distribution, professional service firms and not-for-profit organizations.

James also provides consulting and tax services for high net worth individuals and shareholders of privately held businesses. James is a graduate of Samford University where he earned a bachelor’s degree in accounting in 2006 and Master of Accountancy in 2007. He is currently President-Elect of the Alabama Society of Certified Public Accountants (ASCPA) and has served as the past president of the Birmingham Chapter. of the ASCPA. He is a member of the American Institute of Certified Public Accountants (AICPA).

He serves on the Accounting Advisory Board of the Brock School of Business at Samford University and was honored as the 2014 Distinguished Accounting Alumnus of the Brock School of Business. James enjoys staying connected with the accounting programs at local universities where he participates in career development and awards events and has been a guest speaker for several accounting courses and seminars over the years. A native of Moody, Alabama, James still calls this town home with his wife Leslie and daughters, Lily, Leah, and Lexi. He serves as a deacon and chairman of the finance committee at Cedar Grove Baptist Church in Leeds and volunteers as the treasurer of its Child Development Center. In his free time, James enjoys mountain biking, hiking, spelunking, and spending time with his family.

Jon Heath, CPA is the director of professional services and director of SEC services in Carr, Riggs, & Ingram’s corporate office in Enterprise. He brings more than 20 years of accounting, auditing, and consulting experience— including audit services to large, multi-national companies and smaller SEC registrants in a variety of industries, including utilities and telecommunications. He is responsible for his firm’s quality control (and the associated professional education) initiatives, including initial public offerings (IPOs), secondary public offerings, SOX implementation, periodic filings reviews, and regulatory accounting issues. Jon experience includes serving as partner on dozens of employee benefit plan audit engagements – including both defined benefit and defined contribution plans. He has authored and presented various courses in internal controls for various accounting firms and the Alabama Society of CPAs while also serving as an instructor for both CRI’s CPE Week and The CRI Leadership Academy. He also currently serves as the AICPA Council Representative for the ASCPA Board of Directors.

Matthew Hilburn, CPA, CFE is an accountant for Crowne Health Care in Monroeville and worked for six-years for a large Alabama public accounting firm as a Tax and Audit & Assurance Services Manager. He has years of experience related to staff recruitment and retention, young professional development, improvement of public accounting firm efficiencies, business development strategies, IT initiatives and testing, and focused initiatives to improve

staff and client experiences.

Matthew received his Bachelor of Science in Accounting and Master of Business Administration in Accounting from Troy University.

He is also a member of the AICPA and Association of Certified Fraud Examiners.

Kendra James, CPAs’ background encompasses a wide range of experience, including audits of government and nonprofit organizations to serving at the Director of Accounting with a nation-wide media company.

She began her career as a tax accountant but currently serves as the Director of Accounting at The Health Care Authority of Baptist Health located Montgomery, AL. Kendra obtained her Bachelor and Master of Science in Accounting degrees at the University of Central Florida in Orlando in 2001 and 2002, respectively. She has previously volunteered with the Alabama Society of CPAs as a CPA Ambassador and participated in the Society’s Leadership program.

She currently resides in Prattville, AL with her wonderful husband and 3 wonderful children.

Amanda Barksdale, CPA is a Senior Lecturer for the University of North Alabama’s Accounting Department in Florence. She also serves as the University of North Alabama’s Beta Alpha Psi Chapter Faculty Advisor, Accounting Department Recruiting and Placement Coordinator, Accounting Scholars Chapter Faculty Advisor, College of Business Data and Report Committee Chair, College of Business Scholarship Committee Chair, and previously served as the Accounting Department

Academic Advisor. After she earned her Bachelor of Science Business Administration and Master of Accountancy degrees from Auburn University, she spent nine years in public accounting specializing in multiple audit and tax engagements. She previously served on the ASCPA’s Young CPA Cabinet, is currently a member of the ASCPA’s North Alabama Chapter Advisory Board and is the Muscle Shoals Chapter Vice President of Administration for the Institute of Management Accountants. In the community, Amanda serves as the Rotary Club of Russellville, Scholarship Committee Member, Meals on Wheels Community Volunteer, Junior League of the Shoals Grant Writer, Russellville First Baptist Church Sunday School Teacher, and Russellville First Baptist Church, Finance Committee Member.

Michael Kassouf, CPA is a Director in the Business Services Group at Kassouf & Co, P.C. He specializes in financial reporting, tax planning and compliance and business advisory services to clients in real estate development, healthcare, retail, restaurants, construction, wholesale distribution, and professional services. He earned a Bachelor of Science degree from The University of Alabama and a Master of Professional Accounting degree from The University of Texas at Austin.

Michael is a Certified Public Accountant. He is a member of American Institute of Certified Public Accountants, The Alabama Society of CPAs, The Birmingham Chapter of the Alabama Society of CPAs, and The Monday Morning Quarterback Club. He is also on the Children’s of Alabama Committee of the Future and the Community Foundation Leadership Forum.

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We’re still celebrating the success from our first-ever virtual dash, Deck the Trails, this past December 17-21, 2020! Members from across the state raised scholarship dollars to benefit the ASCPA Educational Foundation through this fun-run!

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Congratulations to the 2020 Deck the Trails winners: Stacy Cummings the Most Festive Participant, Mike Brand the Fastest Male, Kari Wolfe with the Cutest Furry Runner, & Meredith Boteler as the Fastest Female (not pictured). Thank you for supporting the future of the accounting profession and spreading holiday cheer!

LOOKING AHEAD TO THE NEXT ROUND OF FEDERAL TAX LEGISLATION

CONSIDERATIONS FOR ALABAMA BUSINESSES AND INDIVIDUALS KAREN R. MILLER, CULVERHOUSE SCHOOL OF ACCOUNTANCY, UNIVERSITY OF ALABAMA Now that Alabama CPAs have received the critical guidance related to Alabama’s conformity with the federal relief provisions contained in the CARES Act and the Consolidated Appropriations Act, we turn our attention to the next two rounds of federal legislation which could potentially be proposed and/or enacted in 2021. In contrast to the situation that we faced in 2017 after the last change in the presidency, certain Alabama taxpayers could see a potentially significant increase in their federal tax liability, while others could see additional tax benefits resulting from enhanced credits and other provisions designed to assist American families who continue to face hardships as a result of the pandemic. For the state, the impact of Alabama’s inverted relationship with the federal income tax, which is attributable to Alabama’s allowance of a federal income tax

deduction, will create significant challenges for legislators as they face potential declines in both corporate and individual tax revenue.

What to Watch in the First Round of Legislation – American Rescue Plan Considerations Impact for Individuals Soon after his inauguration, President Biden announced the details of the first component of his economic recovery plan, which is titled the “American Rescue Plan.” While the inclusion of an additional round of federal stimulus payments has received most of the media attention for the past four weeks, there are several additional individual tax provisions which could result in lower federal tax liabilities for a large percentage of American taxpayers, including:

• Increased child tax credits, with the possibility of a monthly payment option; • Increased dependent care tax credits; and • Increased earned income tax credits.

At the time this article was published, Congressional leaders were continuing to negotiate the eligibility criteria for the increased credits, and uncertainty still exists regarding the adjusted gross income (“AGI”) levels which will be used to determine eligibility.

As a result, the number of potential Alabama households which could benefit from a lower federal income tax liability in 2021 is still uncertain, but the early indications from the Congressional negotiations point to a fairly high number.

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While most Americans will be able to fully benefit from the additional household tax savings which will result from these increased credits, Alabama taxpayers will need to be mindful of the inverted impact for their Alabama income tax returns. As their federal income tax liability declines, so too will the amount of the federal income tax deduction which they are currently reporting in the calculation of their Alabama income tax liability. In 2018, when we last saw significant decreases in the federal income tax liability for many individuals as a result of the Tax Cuts and Jobs Act (“TCJA”) provisions, this increased Alabama tax liability caught many Alabama citizens by surprise and resulted in an unexpected tax burden which many individuals were not prepared to pay.

As noted above, one of the key elements of the American Rescue Plan will be an additional round of stimulus payments to American households. From an Alabama standpoint, these payments will be excluded from the calculation of Alabama gross income as a result of the provisions in recently enacted Act 2021-1, which included an exclusion for any stimulus payments which may be made in 2021.

Impact for Businesses For Alabama businesses, it will be important to watch the negotiations related to a potential return of the mandate for payments of sick and family leave to employees. In the initial press releases concerning the American Rescue Plan, President Biden outlined a potential extension of the mandate through September 2021 and a possible removal of the original exemptions for businesses with less than 50 employees and more than 500 employees. The removal of these exemptions could be an unwelcome surprise for many small businesses which did not have to comply with the provisions in 2020. The associated payroll tax credit for the paid sick and family leave may also be extended, but it is possible that only employers with less than 500 employees may be eligible.

What to Watch in the Second Round of Legislation – “Build Back Better Recovery Plan” Impact for Individuals During the campaign, President Biden was outspoken about his plans to raise the tax rates for Americans with annual income in excess of $400,000. Proposals specifically referenced by his campaign include the 18

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following: • Restoring the top tax rate for individuals to the pre-TCJA level of 39.6%; • Taxing the qualified dividends and long-term capital gains of individuals with income in excess of $1 million at the ordinary tax rates (which would be restored to 39.6% for those in the top bracket); • Limiting the benefit of itemized deductions for individuals with income in excess of $400,000 by imposing a cap on the tax benefit at a 28% rate; • Removing or modifying the existing Social Security wage cap to tax earnings in excess of $400,000; and • Taxing unrealized capital gains in excess of $100,000 at death or the time of gift.

A potential decrease in the exemption levels for the estate and gift tax was mentioned in earlier campaign discussions, but it is unclear whether President Biden would favor a return

to the pre-TCJA exemption levels, which were approximately $5 million, or instead a return to the 2009 exemption levels, which were $3.5 million for the estate and generation skipping tax and $1 million for the gift tax.

Based on the current projections of the percentage of American taxpayers who would potentially be impacted by these proposals, approximately 30,000 Alabama individual taxpayers could see a significant increase in their federal tax liability if the proposals are enacted. Many Congressional leaders continue to discuss a 2022 effective date for these provisions, which potentially could provide these Alabama taxpayers with a few months to consider tax planning opportunities which could minimize the tax burden of the new proposals. Strategies to consider include those which would potentially accelerate the timing of both itemized deductions and income recognition in 2021 and those which would accelerate the transfer of capital assets which have significant unrealized gains.

These proposals will also create significant budget issues for the state, as the inverted relationship between Alabama income tax collections and the federal income tax liability would result in increased federal income tax deductions for these 30,000 taxpayers and a potentially significant reduction in their Alabama individual income tax liability.

Early estimates of the potential reduction in tax revenues for Education Trust Fund, for which the individual income tax is the largest source of revenue, indicate that the reduction may be in the range of $8-$10 million.

Impact for Businesses President Biden was also outspoken about his plans to increase the corporate income tax rate during the campaign. There are two key components of the overall corporate tax increase: • Increasing the corporate tax rate from the current 21% rate to 28%; and

fective tax rate increased from approximately 4.32% pre-TCJA to approximately 5.2% after the TCJA was enacted. If the federal corporate income tax rate is increased to 25%, the Alabama effective tax rate for many of these corporations will decrease to 4.95%.

Similar to the impact which was noted in the preceding section for the proposed federal income tax liability increases for individuals, an increase in the corporate tax rate and/or an increased federal tax liability as a result of the new alternative tax on global book income would create significant budget challenges for the state. The state significantly benefitted from the corporate income tax windfall associated with the TCJA-related decrease in the federal income tax deduction for the 2018-2020 tax years, but the state could now see the reversal of that benefit and a potential loss of approximately $18-19 million in annual corporate income tax revenue for the Education Trust Fund.

Other Items to Watch As of the time of publication, President Biden’s views on several other TCJA provisions which are set to change or phase-out beginning in either 2022 or 2023 have not been disclosed. Practitioners should closely monitor the announcements from President Biden concerning his views on: • The change from EBITDA to EBIT in calculating the Internal Revenue Code Section 163(j) limitation on interest expense deductions, which is currently scheduled to take effect in 2022; • The change to required capitalization for research and experimentation expenditures under Internal Revenue Code Section 174, which is also scheduled to take effect in 2022; and • The upcoming phase-out of bonus depreciation, which is scheduled to begin in 2023.

• Implementing a new alternative tax on global book income.

Initial reactions from some of the moderate Democratic leaders in the Senate have focused on their concerns related to the proposed rate increase, which would once again cause the US to have the highest combined income tax rate of any OECD country.

Many of the moderate Democratic leaders in the Senate have suggested that they would not be in favor of a rate in excess of 25%.

The extent of the corporate income tax rate increase, and the determination of the level at which the new alternative tax on global book income would apply, will likely be key points of the negotiation once President Biden officially announces the final details of the legislation.

As noted above, the proposed effective date for the new provisions is currently projected to be in 2022, which would provide corporations with an opportunity over the next few months to consider tax planning strategies which would accelerate income recognition into 2021 or defer deductions into 2022 or later years.

Corporations which have significant operations in Alabama could soon see the opposite situation from what they experienced in 2018, when the lower federal income tax rate of 21% resulted in a decrease in the federal income tax deduction used to calculate the Alabama corporate income tax liability. For many of these corporations, the Alabama ef

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ALABAMA ENACTS LANDMARK TCJA REFORM/CARES ACT EXEMPTIONS AND BUSINESS TAX REFORM LEGISLATION In this installment of the Bradley SALT Corner, we focus on Alabama Act 2021-1 (the “Act”) – a landmark piece of tax legislation that Governor Kay Ivey signed into law on February 12. The Act received unanimous votes in both chambers (94-0 in the House; 27-0 in the Senate), and was quickly signed into law only slightly more than two weeks after being introduced.

The Act makes sweeping changes to Alabama’s income tax laws and is designated as three separate acts: (1) the Alabama Taxpayer Stimulus Freedom Act of 2021; (2) the Ala-

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bama Business Tax Competitiveness Act; and (3) the Alabama Electing Pass-Through Entity Tax Act. This critical legislation exempts from Alabama income tax a variety of federal CARES Act/Consolidated Appropriations Act of 2021 tax benefits, grants, loans and subsidies, while implementing other business tax reform measures, and allowing certain pass-through entities to elect to be taxed at the entity level,for Alabama income tax purposes, as a means to address the federal $10,000 annual “SALT Cap.” The latter two components were considered briefly by the

Legislature during the Spring 2020 regular session, and stem from proposals vetted by the Legislature’s bipartisan Tax Cuts and Jobs Act (TCJA) Task Force. A summary of each part of the final legislation follows, although we commend the act to your careful reading: The Alabama Stimulus Freedom Act of 2021 exempts or excludes from Alabama income tax: 1. Tax stimulus or advance refund payments received as a result of The Coronavirus Aid, Relief, and Economic Security Act of 2020 (“CARES

BABC SALT CORNER

Act”) and Consolidated Appropriations Act of 2021 (“CAA”) “and other similar COVID-related relief measures for individuals enacted by the U.S. Congress “as applicable to the 2021 tax year.”

2. What would otherwise be cancellation of indebtedness income from loans forgiven under the Paycheck Protection Program (PPP) and a wide variety of other SBA-backed loans or subsidies, while allowing expenses incurred by the borrower and funded by these loans to be deductible (retroactively in some cases) to the same extent as for federal income tax (FIT) purposes.

from the current double-weighted sales factor to a single sales factor, effective January 1, 2021. Financial institutions are not affected.

2. Repeals the so-called throwback rule (same effective date) not only for sales from in-state facilities to private sector customers located outside of Alabama, but also all sales to the U.S. government.

3. De-couples (retroactively) from the TCJA’s Section 118(b) amendment that would have purportedly taxed certain tax and non-tax incentives/ site grants provided to new or expanding industry.

3. Amounts received from a Qualified Emergency Federal Aid Grant to the same extent as they are excluded for FIT purposes.

4. De-couples (retroactively) from the TCJA’s Section 951A “GILTI” rules with respect to income from non-U.S. intangibles such as royalties.

4. Payments of principal or interest by an employer on an employee’s qualified education loan to the extent excludible from the employee’s gross income for FIT purposes.

5. Implements a modified approach with respect to the IRC Section 163(j) interest expense limitation for members of a federal consolidated group by allowing consolidated group members (even those filing separate Alabama returns) to avoid a state-level limitation if the federal consolidated group is not limited under IRC Section 163(j). If the group is limited at the federal level, the separate members are required to compute their 163(j) limitation on a stand-alone basis or, if applicable, on the basis of the elective Alabama consolidated group. The act does not de-couple from Section 163(j) as some other states have done, since the TCJA Task Force pointed out that Alabama conforms with (and the act did not de-couple from) the IRC Section 168(k) bonus depreciation provisions.

5. Amounts received as grants from the state’s Coronavirus Relief Fund administered by the State Finance Department, although expenses paid with grant funds will not be deductible per the Alabama Department of Revenue (vs. PPP loans).

6. Qualifying disaster relief payments under IRC Section 139 to the extent they would be excluded for FIT purposes.

7. SBA-subsidy payments for “covered loans” described in the CARES Act; Emergency EIDL Grants under the CARES Act or CAA; and grants to “shuttered venue operators” or as Targeted EIDL Advances under the CAA. Like PPP loans, expenses funded by these grants or subsidies remain deductible for Alabama income tax purposes.

The Alabama Business Competitiveness Act deals with corporate income tax reform: 1. For most industries, converts the multistate apportionment formula

K or Subchapter S rules, as appropriate, and apportioned in accordance with the state’s multistate business apportionment rules. The PTE owners do not receive a credit for the state income tax paid on their behalf by the electing entity, but their distributive share of the entity’s income is excluded from their taxable income. Alabama joins 8-9 other states with these so-called “SALT cap workarounds” of various stripes.

In addition to the Act, the Legislature and the Governor also fast-tracked Act 2021-2 (House Bill 192), which retroactively extends the Alabama Jobs Act and reinstates the Growing Alabama tax credits, and includes additional enhancements to both programs. It was also passed quickly by both houses and signed into law by Governor Ivey on February 12. We will devote a separate column to that act and several other tax incentives bills once the dust settles. If you have any questions about Alabama Acts 2021-1 or 2021-2, please feel free to contact the authors at bely@bradley.com or wthistle@bradley.com.

The Alabama Electing Pass-Through Entity Tax Act establishes a new alternate tax regime applicable to electing partnerships/LLCs treated as pass-through entities and to S corp’s.

For tax years beginning on or after January 1, 2021, a PTE can elect annually to be taxed at the entity level at the highest marginal individual income tax rate (i.e., 5% today) calculated in accordance with the Subchapter

© Bruce P. Ely / William T. Thistle, II / Bradley Arant Boult Cummings.

All rights reserved. February 19, 2021.

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Removing the Targets from the Backs of Small to Medium Size Accounting Firms

BY PAUL MURPHY, CYBERSECURITY SPECIALIST AT BLACK TALON SECURITY LLC

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ASCPA Connections

Accounting firms of every size are lucrative targets for hackers. Criminal hackers are after the financial and personal data stored by every accounting firm. Too many financial professionals make the mistake of assuming that “The Bigger the Firm, The Bigger the Risk,” but the reality is that small- to medium-sized accounting firms are even more attractive targets for criminal hackers. Most, if not all, large firms employ dedicated teams of cybersecurity experts who are 100% focused on attack prevention. These teams of experts are typically credentialed, well-trained security professionals who build highly effective security infrastructures designed to find and remediate the areas where those firms are most vulnerable. This strong, but expensive, strategy is also one that most small- to medium-sized firms cannot afford. Cyber criminals are well aware of this and they typically take the path of least resistance when targeting organizations.

What does this mean for the small- to medium-sized firms?

What if on a Monday morning you arrive at your office and find 100% of all your computers encrypted with ransomware? Your IT vendor comes onsite and says, “We have a major problem”. Not only is your data encrypted, but the hackers left a note indicating they also STOLE all your data.” Then you find out that all your backups, including your Cloud backup, are gone. Through an investigation, it is determined that hackers installed screen-sharing software 4 weeks prior to the ransomware attack and have been watching everything you do on your computer—including accessing your Cloud software. What will you do?

This is a very common problem that we see in the financial services space. Some common themes that we have seen in all these attacks against accounting firms are: 1.

Each firm thought they were protected by their IT company

2.

All firms had a firewall and anti-virus software

3.

The recovery costs and business interruption resulted in firms spending in excess of $100,000

4.

All local backups were encrypted with ransomware, and many of the Cloud backups were destroyed by the hackers

5.

Most systems had been compromised for days or even weeks prior to the IT company or firm knowing that they had been breached

If you store the same type of data as the large organizations, yet cannot afford a full-time staff of dedicated cybersecurity professionals, what can you do to protect your clients and your business? Do you cross your fingers and hope for the best? Do you rely on tools like anti-virus software and firewalls to protect you the same way that you did in 2010? Neither of these options is taking a proactive approach to cybersecurity. There are steps that you can take today that are effective and affordable for any size firm. The first, and possibly most significant, step is understanding that your IT provider is not a cybersecurity expert. A typical IT company’s area of responsibility is the installation and maintenance of a network. Most IT companies do not have the tools, training, certifications or

real-world experience to offer an effective security solution.

I strongly recommend that you have this conversation with your IT provider. If they encourage you to engage with a dedicated cybersecurity company, then at least you know that you’re working with a technology partner who has your best interest at heart.

Taking the next step and engaging with a dedicated cybersecurity company is easier and less expensive than you think. There are companies who offer affordable, effective security solutions that add the necessary layer of protection that accounting firms should have in place to protect themselves and their clients. At a minimum, any company who you would consider working with should offer the following 4 pillars of an effective security solution: 1.

Cybersecurity Audit - A complete audit of your operations, technology, policies and procedures.

Once the audit has been completed, a gap analysis should be provided which details the areas of risk in your firm.

2.

Vulnerability Management - This will help to manage vulnerabilities that exist on your network.

These vulnerabilities are present on everyone’s network and are what hackers use to gain access to your data. They exist on your computers, firewall, printers, and any “smart” devices that you may have in your firm. The discovery and remediation of these vulnerabilities are critical parts of creating a more secure environment.

3.

Cybersecurity Awareness Training - This helps further educate you and your employees to better understand the risks that exist to your firm. It empowers them with the knowledge to help them minimize these risks. Building a “Human Firewall” is necessary in today’s business environment.

4.

Penetration Testing - Penetration tests should be performed against your network on (at least) an annual basis. Most cybersecurity companies employ ethical hackers. These individuals have the same talents and capabilities as the “bad guys”, but their role is to test the security that you have put in place. If an ethical hacker has a difficult time gaining access to your data, then it’s likely that a criminal will have the same difficulty and move along to an easier target.

As we begin 2021, we want you to feel empowered and take the steps necessary to protect your business. Take some of the power away from the ruthless cybercriminals who have wreaked havoc against the financial, medical, and legal industries in 2020.

You are not powerless. You can avoid becoming a victim and remove that target from your back and encourage your clients to do the same!

Paul has over 20 years of experience in the technology field. He regularly leads training and educational workshops on the latest trends in data security.

Learn more about your organization’s potential vulnerabilities at www.blacktalonsecurity.com.

March/April

23

102ND ANNUAL BUSINESS MEETING

ANNUAL CPE MEETING

06.15

09.30

.2021

.2021

1 HOUR OF CPE AWARDS + BOARD INSTALLATION

4 HOURS OF CPE ASCPA.ORG/AM2021

SAVE THE DATE

CPE SPECIAL FEATURE

MIKE FROST ON SUCCESSION PLANNING TWO OPPORTUNITIES

MAY 7, 2021

MAY 14, 2021

ON ONE TIMELY TOPIC

1 HOUR WEBINAR

2 HOUR WORKSHOP

Many CPA firms are now grappling with succession issues, according to the results of the AICPA's 2020 Succession Planning Survey. More than half of multi-owner firms (55%) said they are currently experiencing succession challenges, up from 26% in 2016, the last time the survey was conducted.

Join us for this two-part succession planning series to find out what you need to know a out succession planning, and what you need to do to successfully navigate these challenges.

SAVE YOUR SEAT ON WWW.ASCPA.ORG/CPE

24

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SELF-STUDY CPE SCHEDULE BUNDLE40 ASCPA’s Build Your Own 40-Hour Bundle ASCPA | Self Study | Other: 40

AUGN-MG ASCPA’s Annual Update for Governmental and Not-for-Profits ASCPA | Self Study | AA: 4

NFPAA-MG ASCPA’s Not-for-Profit Accounting Update ASCPA | Self Study | AA: 4

AEIS-JM ASCPA’s Ethics for CPAs in Industry or Searching ASCPA | Self Study | Ethics: 2

BUNDLE20 ASCPA’s Build Your Own 20-Hour Bundle ASCPA | Self Study | Other: 20

FVA09 ASCPA’s Fair Value Accounting 2020 ASCPA | Self Study | AA: 4

ECPP-JM Ethics For Public Practice ASCPA | Self Study | Ethics: 2

BBB-LS ASCPA’s Small Business Workout & Bankruptcy Strategies ASCPA | Self Study | TX: 1

IAT-JM Impairment Accounting Toolkit for the Local Practitioner ASCPA | Self Study | Other: 4

GAU-MG ASCPA’s Governmental Auditing Update: Yellow Book & Uniform Guidance What You Need to Know ASCPA | Self Study | AA: 4

ASEA-JM ASCPA’s The Corona Virus Accounting ToolKit for the Local Practitioner ASCPA | Self Study | AA: 4 AAAU-JM ASCPA’s A&A Update For the Local Firm ASCPA | Self Study | AA: 4 BCNI08 ASCPA’s Business Combinations & Non- Controlling Interests ASCPA | Self Study | AA: 4 AAGE-MG ASCPA’s What’s Changing in A&A for Governmental Entities ASCPA | Self Study | AA: 4

PEAAE-OL ASCPA’s Understanding The Independence Guidelines of the Accounting Profession ASCPA | Self Study | AA: 4 SSARS-JM ASCPA’s SSARS Update (Preparation, Compilation and Review) ASCPA | Self Study | AA: 4 WGASB-MG ASCPA’s What’s Going on at the GASB ASCPA | Self Study | AA: 4

AAAE ASCPA’s Ethics ASCPA & NASBA Self Study | Ethics: 2 ANAR-JM ASCPA’s SSAE 19 - What a Relief for Agreed-Upon Procedures Engagements ASCPA | Self Study | AA: 2 ASUT-BE ASCPA’s Sales and Use Tax Highlights for AL CPA’s ASCPA | Self Study | TX: 2 CHCOV-SS COVID-19 Economic Stimulus Webinar with Karen Miller & Lisa McKinney ASCPA | Self Study | TX: 2

MCCP-MG ASCPA’S Managing Change in an ASU-OL Ever Changing Profession ASCPA’s Auditing Standards Update ASCPA | Self Study | AA: 2 ASCPA | Self Study | AA: 4

EUPC-KD ASCPA’s Economic Update, Post COVID-19 ASCPA | Self Study | Other: 1 CHAA-MB ASCPA’s COVID-19 Impact on Your Accounting and Auditing Practice ASCPA | Self Study | AA: 1 ICBA-KM ASCPA’s Refund Opportunities for Indi viduals & Businesses CARES Act ASCPA | Self Study | TX: 1 TCJA-KM ASCPA’s State Income Tax Considerations- CARES Act & TCJA ASCPA | Self Study | TX: 1 PDDA Preparing for the Data-Driven Age ASCPA | Self Study | Other: 0.2

GO TO WWW.ASCPA.ORG FOR NEW CLASSES AND MOST CURRENT INFORMATION.

ASCPA

PRESENTS

ETHICS FOR BUSINESS & INDUSTRY CPA'S MIKE

BRAND|

2

ETHICS

CREDITS

MARCH 19, 2021 8:30 A.M. - 10:10 A.M. WWW.ASCPA.ORG/BI-ETHICS

March/April

25

CLASSIFIEDS

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ASCPA IS PROUD TO PRESENT

20 CONFERENCES 21 & WORKSHOPS QUARTERLY B&I POPUPS 03.19.21 • 06.18.21 • 09.17.21 • 12.17.21

FINANCIAL A&A CONFERENCE 09.25.21

ANNUAL BUSINESS MEETING

102ND ANNUAL CPE MEETING

06.15.21

09.30.21

SUMMER EDUCATION CONFERENCE

GO ERNMENTAL A&A FORUM

GULF SHORES | 07.18-22.21

12.11.21

FIND THESE & MORE THRILLING CPE RELEASES ON WWW.ASCPA.ORG/CPE

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The Alabama Society of Certified Public Accountants 1041 Longfield Court P.O. Box 242987 Montgomery, AL 36124

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