Connections - November/December 2021 by Alabama Society of CPAs

NOVEMBER

P R A CT I C E M A N A G E M E N T I S S U E • • • •

3 WAYS THE PANDEMIC AFFECTED PEER REVIEWS IS SOMEONE SPYING ON YOUR BUSINESS? TAX PLANNING FOR 2022 WHERE ARE WE ON THE NEW PTE TAX REGIME?

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DECEMBER

2021

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TA B L E O F C O N T E N T S

FEATURES

COLUMNS

7 3 Ways the Pandemic Affected Peer Reviews Plus, three significant pieces of Peer Review News from the Partners in Peer Review.

2021 Student Summit The Summit provided accounting students an incredible opportunity to interact with the ASCPA’s diverse network of professionals.

Young CPA Charity Cornhole Tournament Recap Relive the fun, new event benefitting the Educational Foundation.

Tax Planning for 2022 Continued uncertainty for taxpayers as we approach the last quarter of 2021.

MEMBER PROFILE There’s More Than Enough Meet ASCPA Member Garey Morrison

SALT

Where Are We On the New 18 Elective PTE Tax Regime? William T. Thistle, II and Bruce P. Ely

CGMA RESOURCES

How Effective Leaders 23 Communicate Difficult Change Teri Saylor

ASCPA PARTNERS

5 Reasons CPAs Should 25 Implement QR Code Payments CPACharge

TZ ON TAX Thoughts on Year-End Planning Thomas C. Zoebelein

Inside the ASCPA Message from Jeannine................... 4 Message from the Chair................... 5

20 Is Someone Spying On Your Business? Takeaways for Businesses to Prevent Corporate Espionage and Cyber Attacks.

Windows 11 is Here

Member News................................ 28 Classifieds........................................ 33 CPE Calendar.................................. 33 Self-Study CPE................................ 34

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November / December

MESSAGE FROM JEANNINE

skills that happen organically when together with professors and peers.

The end of the year is approaching quickly and for most it has been a doozie of a year! As you are reading this, I hope that you are planning time with your loved ones and looking forward to the holiday and a happy new year. We have pivoted, anticipated, and re-entered so many faucets of our lives during the on-going pandemic, and need reasons to celebrate! Speaking of re-entry, many of you know that I have a sophomore student at Auburn University. Being that we are just minutes away from Auburn, we frequent the AU football games and enjoy a few precious minutes with the kiddo while there. The first game of the season, I was absolutely overwhelmed to see students experience “normal.” Thankful is not an adequate word to express how I feel about universities being back to normal. Students had a real challenge last year not being able to attend classes. My hope is that those students can regain the real experiences of being in class not only for the academic curriculum but also for the real-life communication and networking

ASCPA Connections

Recently, I had lunch with one of our members who is a partner at a small firm, and I empathized with them as they outlined the various ways the pandemic has affected their practice. The combination of negative setbacks and searching for new sustainable solutions have caused them a significance amount of stress. Like many of you, they are understaffed, trying to stay connected to the latest tax and A&A issues to best serve their clients, and working late into the night without many opportunities to connect with others. Work as they knew it has become unsustainable. But they emphasized that our nano-bytes learning experiences and pop-up legislative updates helped them feel less like they were treading water. The ASCPA has always tried to provide timely and sustainable solutions to your needs—now more than ever. That is why in this Practice Management Issue, our team has compiled articles to help you navigate a plethora of issues including cybersecurity threats, year-end tax planning, the latest PTE concerns, legislative forecasts that will potentially affect you and your clients, and resources from partners who want to help you remedy problems. I am so grateful that our Alabama based authors are willing to share their expertise and be a resource to you. (Sidenote, if you are interested in publishing in ASCPA Connections, please let me know. We are so proud of our many Alabama members who author articles for us.) Thank you for being a resource to our upand-coming CPAs by supporting and being a valuable part of our latest accounting pipeline projects. Our membership and student initiatives teams enjoyed collaborating with

you to offer the Student Summit at the end of September and the brand-new Young CPA Cornhole Tournament just a few weeks ago. We hope that these fun, relational events continue to grow in 2022, and that you will join us to help equip and empower the accounting pipeline. We look forward to seeing you at future chapter events, on webinars, and as we continue to visit firms throughout the state. I hope you will share ways we can help you and your organization, but also tells us more about your small wins so that we can celebrate with you! One last thing, in many small firm and educator meetings of late, I have heard members say that you really hope we bring back our Annual Member’s Meeting “in-person.” Please savethe-date, June 14, 2022, Birmingham, The Club. YES – we will be back together for our 103rd ASCPA Annual Meeting. Thank you for encouraging us to host this important meeting. We are working on bringing you something awesome with a little lagniappe. Stay tuned.

Jeannine

MESSAGE FROM THE CHAIR

My wife and I just completed construction and moved into our new house a couple of months ago. Although we had a great experience with our home builder, I joked several times throughout the process (when something didn’t go right) that the crews were just “practicing” on our house. I often use the same dry humor to describe practicing doctors, lawyers, and of course, accountants. Why would all these professions use the term “practice” to describe what they do every single day? Why wouldn’t we choose to “Perform” every day? Should we rename this issue of Connections “Profession Management”? We use the term practice because we are continuously working and learning to get better. Practice is verb! We are just like an athlete who works year-round to perform for just a few hours a week, or in some cases, a few hours a month or less. I saw some of you athletes at the YCPA cornhole event last month showing off the skills you’ve been practicing! Take a minute today and think about your practice. Which skillsets do you need to work on? Which area(s) of your organization needs attention? What can you do to coach, mentor, and develop the next generation?

If those questions are overwhelming to you, then you and I have a lot in common. My mind starts racing about all the tax and audit technical knowledge that I’m not familiar enough with. I’m no Karen Miller or Jim Martin, that’s for sure! Did Congress draft another bill last night? What’s in it? How might it impact my clients? Then I think about firm management issues like personnel, recruiting, technology, software, insurance, the type of drinks in the fridge and snacks on the counter, firmwide social gatherings, the website, social media, services we offer, staff training, business development, volunteer events, etc. My goodness, I could fill this entire page with all the firm management areas we deal with on a weekly basis. If you are like me, we need to slow down. We can’t tackle everything at the same time. It is overwhelming, intimidating, and impossible to “fix” it all if that is your goal. What one thing can you do to start addressing the needs of your firm? What can you do today? How can you coordinate efforts and leverage the skillsets of the rest of your management team? Better yet, forget about your management team. How can you leverage the skillsets of your entire team to make the firm better? Or should I say...to make your “Practice” better?

As we look forward to 2022, I wish all our members a very happy and healthy holiday season. May our families be brought together during these special weeks and may damaged or distant relationships be restored. May we reflect on all we have to be thankful for. May we all share kindness and love with those around us.

James

November / December

GOVERNMENTAL ACCOUNTING AND AUDITING CONFERENCE

DECEMBER

9 – 10, 2021

3 WAYS THE PANDEMIC AFFECTED PEER REVIEWS Plus, three significant pieces of Peer Review News from the Partners in Peer Review. by Chuck Jordan, Partners in Peer Review Director of Peer Review Professional Standards The Alabama Society of CPAs administers the AICPA Peer Review Program in Alabama, Arkansas, and Mississippi under the name of Partners in Peer Review. Our Partners in Peer Review Committee selected this name to reflect that the administration of Peer Review within our geographic footprint is truly a partnership effort. Our committee members are practicing CPAs and peer reviewers from each of the 3 states volunteering their time and expertise to the administration of the program with dedication to a quality peer review program supporting the public accounting firms enrolled in peer review.

3 Ways the Pandemic Affected Peer Reviews The pandemic has impacted all aspects of our lives. Firms are responding to the needs of their clients and Peer Review is adapting to meet the needs of those that we serve. The following three points are the result of the effects of COVID-19: • Last year the AICPA Peer Review Program provided an automatic extension of time to firms with due dates falling between January 1 and September 30, 2020, to help firms cope with the effects of COVID to their firms and their workload. After that date many additional extensions were granted to firms with subsequent due dates for COVID related reasons. We are now seeing a high volume of reviews being submitted to the Partners in Peer Review Committee for acceptance. Our committee members are working diligently to review and accept these reviews in a timely manner. We applaud our committee members for their hard work.

• COVID-19 funding for your clients could have impacted your firm’s clients and could also impact your peer review. Some firms may have provided agreed-upon procedures engagements to assist clients with PPP loan forgiveness calculations. If these services were provided under the Statements on Standards for Attestation Engagements (SSAE), your firm would be required to undergo a peer review. If your firm was not otherwise required to have a peer review, your firm would now be required to undergo an engagement peer review. If you have questions, please feel free to reach out to Partners in Peer Review peer. review@ascpa.org or call (334) 834-7650. • Do you have clients that need a single audit for the first time? The

Coronavirus Aid, Relief, and Economic Security Act (CARES) allocated significant amounts of funding to entities, which as a result would require many of those entities to have a single audit for the first time. Single audits are specialized audits focused upon compliance with federal laws and regulations and the internal controls over federal funding and compliance with those federal laws and regulations. A single audit requires that the associated financial audit follow Governmental Auditing Standards (GAS). The GAO Yellow Book outlines the requirements for audit reports, professional qualifications for auditors, and audit organization quality control. If your firm performs a single audit, it will be required to have a system review peer review. If your firm’s last peer review was an engagement review, this may accelerate your next peer review. Be sure to update your Peer Review Information (PRI) in PRIMA to indicate that single audits are performed.

3 Significant Pieces of Peer Review News 1. Employee Benefit Plan Audit Quality Many of you likely recall the Department of Labor’s (DOL) Employee Benefits Security Administration study assessing employee benefit plan (EBP) audit quality based upon 2011 form 5500 filings. The DOL published a report on the study in May 2015—which you can read at bit. ly/3Dm9X1P. The study resulted in a focused effort on audit quality for EBP audits across our profession. It is already time for the DOL to begin its next study of quality of EBP audits. The DOL has said it will start contacting plan sponsors and firms in November 2021 for 2020 filings of 5500s for this study. Auditors are reminded to be sure they have adequately documented their audits as a record of auditing procedures applied, evidence obtained, and conclusions reached. If you are asked to provide the DOL with a full set of audit workpapers supporting the audit, be careful to send all documentation, including workpapers

kept in other related files. The DOL will not permit supplemental submissions. The AICPA Employee Benefit Plan Audit Quality Center (EBPAQC) has various resources that are helpful in identifying best practices and common deficiencies in ERISA EPB audits. 2. Risk Assessment Standards The peer review guidance for risk assessment matters related to peer review is changing. The National Peer Review Board approved guidance for peer reviewers to follow for noncompliance with risk assessment standards to be applicable for peer reviews commencing during the period beginning October 1, 2018 and ending September 30, 2021. With the expiration of that guidance, nonconforming engagements for risk assessment matters will more likely result in elevation to deficiencies or significant deficiencies. This interim guidance was designed to allow all firms one peer review under the relaxed standards. Peer reviewers and firms are reminded of this change. 3. Learn More About Peer Review and Become Better in These Two Areas Are you interested in becoming a peer reviewer? Becoming a peer reviewer has many benefits for you and your firm. You will become more knowledgeable of the peer review process enabling you better prepare your own firm for peer review. Peer reviewers are exposed to the best practices of other firms, enabling them to transfer knowledge to their own firm and the other firms that they review. I served as a peer reviewer for many years, and I can attest that it helped me to become a better auditor and I received more benefit than ever expected. If you are already a peer reviewer, please consider applying to be a member of our peer review committee. This will give you insight into peer review that cannot be acquired solely as a reviewer and will provide the opportunity to network with other peer reviewer/committee members at the top of their game professionally. If you are interested in either of these options, please contact us to learn more at peer. review@ascpa.org or call 334-834-7650.

November / December

2021 STUDENT SUMMIT Our 2021 Student Summit was held September 30 and October 1, 2021. The Summit kicked off with roundtable discussions between business leaders and students. Each roundtable discussion was designed to allow students the opportunity to learn more about the skills needed to successfully transition from college to future CPA. Day 1 concluded with a keynote address from John Garrett, author of What’s your And? (whatsyourand.com). What’s Your “And”? rejects the conventional wisdom that professionals must conform to a specific stereotype to be successful at work. According to Garrett, “Your outside-ofwork interests aren’t distractions. They are relationship enhancers.” On Day 2, students had the opportunity to meet virtually with public accounting firms, government agencies, and businesses from across the state. Thank you to the following recruiters: Alabama Examiners of Public Accounts Aldridge, Bolden & Company, P.C. Anglin Reichmann Armstrong American Honda Motor Company Borland Benefield, PC BMSS, LLC Crow Shields Bailey PC Deloitte IRS-Criminal Investigation

• Benefits of Developmental Feedback – Scott Bradbary & Callie Mauldin, Warren Averett • Professionalism 101 – Jennifer Neal & Assada Gilmore, KPMG • Interview and Resume 101 – Charles Baughman, ITAC Solutions • Working with a Diverse Team – Jon Hubbard, Boomer Consulting • Navigating Unintentional Bias – Amy Jordan/Virginia Staton, Deloitte

This event would not be possible without the generous support of our sponsors.

Jackson Thornton JamisonMoneyFarmer PC Kassouf & Company Mauldin & Jenkins, LLC PangeaTwo Pearce, Bevill, Leesburg, Moore P.C. The Retirement Systems of Alabama Till, Hester, Eyer, and Brown P.C. Warren Averett Wilkins Miller

The Summit provided accounting students an incredible opportunity to interact with the ASCPA’s diverse network of professionals and gain valuable insight from their experiences. It also allowed recruiters access

to students from over 20 colleges and universities from across the state.

November / December

Young CPA Charity Cornhole Tournament Recap A Fun, New Event Benefiting the Educational Foundation Thank you to our sponsors and teams who played for the cornhole crown on Saturday, October 16, 2021! With your help, we raised $30,392.52 through this year’s Young CPA Charity Events—the 2021 Student Summit and the Young CPA Charity Cornhole Tournament—to benefit the ASCPA Educational Foundation. We enjoyed celebrating and gathering with you for a great cause! Over the past twenty years, the ASCPA Young CPA Charity Events have raised more than $500,000 thanks to generous and loyal sponsors and members who believe in the mission of our organization—the ASCPA’s Educational Foundation. Find out how our mission supports the accounting pipeline and how you can make a difference through it at www.ascpa.org/EdFoundation, or make a contribution today at www.ascpa.org/s4s!

ASCPA Connections

November / December

THERE’S MORE THAN ENOUGH WITH ASCPA MEMBER GAREY MORRISON

ASCPA Connections

Records were lost; clients had legal, financial, or banking colleagues whose offices were now gone. I know I had a huge knot in my stomach the first time I went back. He should have been there. In lower Manhattan. On September 11, 2001. But the staff at the Cap Gemini/E&Y Resource and Design Center had not progressed as far as Morrison had expected on his project. They were working with him to improve a new service line he helped create to assist hospitals improve their clinical documentation and coding. The documents, however, were not ready and Morrison adjusted his schedule to make client visits elsewhere, instead of remaining in New York City into the second week of September. He and a colleague from Chicago met at a client’s office in West Virginia and that’s where he was when the World Trade Center towers collapsed. “It was instant chaos, with airline travel at a standstill. We had people from our consulting firm all over the country and our number one concern was getting those folks back home. There were no rental cars available and we had to be creative to get everyone home safely.” The good news, of course, was that no one in the offices where he regularly visited were injured or killed in the destruction. The bad news was that no one in lower Manhattan, or the entire world for that matter, will ever forget or remain unaffected by the events of that day. He learned from project team members that survivor’s guilt is a very real and very tough emotion to experience. “Because I worked alongside healthcare providers, I saw what an enormous effect the catastrophe had on them. In the aftermath, it was hard for businesses, even those not in the twin towers, to pick up and restart. Records were lost; clients had legal, financial, or banking colleagues whose offices were now gone. I know I had a huge knot in my stomach the first time I went back.” Garey Morrison is an Alabama guy, born and bred, from the tiny town of Bynum, outside Anniston. He went to Walter Welborn High School, worked in grocery stores and in trucking as a teenager (his family operated grocery stores and a trucking company) and was advised by a guidance counselor NOT to go into pre-med at the University of Alabama, but that’s where he started his college career. “Honestly, I wasn’t feeling the love in the liberal arts division, where I had a lot of my classes. I discovered the amazing camaraderie in UA’s School of Business and decided to test the waters over there. During registration for my second semester, I convinced my business school advisor to let me take a sophomore level accounting class, to see if making a change was going to work. I immediately felt at home, changed my major and never looked back.” Morrison was recruited by Ernst and stayed there from June 1977 through June 2009. He spent two years in the healthcare consulting group at Cap Gemini/Ernst & Young, returning to EY in August 2002.

“I was on the audit side and enjoyed the chance to look into someone’s business; I had audit clients who became friends. After three years or so I was looking for another challenge and found an opening in the healthcare consulting group at Ernst. At that time, consulting was not considered to be on the same level with tax and audit. But it offered me a chance to connect the dots at a medical practice or hospital and go beyond where an audit would go. For example, we were asked by a hospital to get their linen costs under control. Theirs were running a full 30% above other hospitals of a similar size. What we found was that the housekeeping staff was not in the communication loop. Patients might be out of the room for a procedure, or even checking out that day, but the beds were being completely stripped and remade. With a few changes, labor and higher laundry costs were brought back into line.” In January of 2009 the healthcare consulting group learned that their division was closing. Morrison retired from EY on June 30. After six months he started his own firm, working with non-profit health systems to fill interim management roles. The challenges of being a hands-on executive were very different than consulting, but very rewarding. “I found myself enveloped in technology more than I wanted to be and had to learn whole billing systems to complete some of my contracts. On one occasion, I was acting as the interface manager for the install, complete with technical advisors in another state doing a NASAtype countdown to launch. I was VERY motivated to finish since I didn’t want to miss seeing the University of Alabama compete in the national championship game!” On the tenth anniversary of 9/11, Morrison was on a plane headed back to New York. He knew of several services of remembrance; he threw his bag down in his hotel room and rushed to Christ Church NYC for their service. He was invited to go to an interfaith service later that day but did not write down the address and did not know where to go. He decided to go to Ground Zero. The church at Ground Zero, St. Paul’s Chapel, was conducting a service that afternoon. When he arrived, he was greeted by someone from the religious order and offered a ribbon that said, “There is more than enough”. The church was filled with families of first responders, and it was a very moving experience. When he asked for a couple of extra ribbons to take back to his home church, they gave him a whole roll of them. The stewardship theme for Trussville First United Methodist Church that year, with Morrison as campaign chair, was “There is more than enough”. “I’m sure that there are many other ASCPA members who have personal stories of clients, friends and family who were in New York City on that terrible day. I’ll certainly never forget how close I came to being one of them.”

November / December

TAX PLANNING FOR 2022 Continued Uncertainty for Taxpayers as We Approach the Last Quarter of 2021 BY KAREN R. MILLER, INSTRUCTOR, CULVERHOUSE SCHOOL OF ACCOUNTANCY

ASCPA Connections

With the arrival of October, many of us had hoped that we might have more certainty regarding the key individual and business tax proposals which could become effective for 2022 and future years. As the negotiations continue on Capitol Hill, practitioners and their clients now face the likelihood that the enactment date for these provisions may occur later in the fourth quarter, leaving practitioners with the daunting task of quickly assessing the final legislation and calculating the impact of the provisions before the start of the year-end work. With a large number of potential tax revenue raisers and tax incentive provisions still under consideration, it is likely that we could see a scenario similar to what we faced in late 2017 with the enactment of the Tax Cuts and Jobs Act. As of the time of publication for this issue, the Infrastructure Bill, which was previously passed by Senate, is still pending in the House of Representatives. Taxpayers and practitioners are closely monitoring the ongoing negotiations to determine if the provision in the Senate bill which required the early termination of the Employee Retention Tax Credit on 9/30/2021 will remain in the final version of the House legislation. With the uncertain timing of the final vote in the House, practitioners will need to ensure that their clients are aware of the potential cash flow impact resulting from the loss of the credit. The Senate version of the Infrastructure Bill also contains additional provisions which would strengthen the reporting and compliance requirements for cryptocurrency transactions, an initiative which has been a top priority for the IRS over the past two years. The timing of the final vote on the Infrastructure Bill is also uncertain due to the desire by many members of the House to link the votes for this legislation to the vote for the Biden Administration’s broader tax and job creation plan, the Build Back Better legislation. Many moderate Democrats continue to express concerns over the size and scope of the legislation, preferring a fiscal impact which would be significantly less than the originally proposed $3.5 trillion plan. Negotiations will likely focus on the potential tax incentives included in the Build Back Better legislation, including the proposed extension of, and enhancements to, the child tax credit, the child and dependent care credit, and the earned income tax credit. As we await the final decisions concerning those proposals, our focus will be on the draft legislation released by the House Ways and Means Committee, which contains significant changes to the individual and business proposals which were outlined in the Green Book released by the Biden Administration this summer.

INDIVIDUAL PROVISIONS In an effort to secure the needed votes for the legislation in the House of Representatives, two of the more controversial provisions from the original Green Book have been removed: • Taxation of unrealized gains at the time of death or gift; and • Restrictions on the ability to utilize a like kind exchange for real estate transactions with gains in excess of $500,000 per taxpayer. It is noteworthy that the current draft of the legislation released by the Ways and Means Committee does not contain any provisions related to the existing $10,000 limitation on the deduction for state and local taxes. However, the Chairman of the House Ways and Means Committee issued a statement on September 13 which indicated that meaningful relief for the state and local tax deduction cap would appear in the final legislative package. The details of this relief have not been disclosed as of the time of publication for this issue. In order to replace the lost tax revenue from the Green Book proposals which were removed, the House Ways and Means Committee has included additional tax revenue raisers such as: • A new 3% surcharge on high income taxpayers; • New restrictions on IRAs and defined contribution plans for high income taxpayers; and • A reduction in the estate tax, gift tax, and GST exemption; and • Restrictions on valuation discounts and trust-related estate tax planning strategies. While the effective date for the majority of these proposals will be for taxable years beginning after 12/31/2021, provisions which have a different proposed effective date are highlighted in the discussion which follows.

New 3% Surcharge on High Income Taxpayers The proposed new 3% surcharge would apply to taxpayers with modified adjusted gross income (AGI) greater than $5 million ($2.5 million if married filing separately) and trusts or estates with modified AGI in excess of $100,000. The provisions include an exception for charitable trusts “all the unexpired interests in which are devoted to one or more purposes described in section 170(c)(2)(B).” For individual taxpayers, modified AGI is defined as AGI reduced by the deduction allowed for investment interest expense. For trusts and estates, modified AGI November / December

Reduction in the Estate, Gift, and GST Exemption Despite the exclusion of this provision in the Green Book, the proposed legislation released by the House Ways and Means Committee incorporates the long-expected reduction of the estate tax, gift tax, and GST exemption to the $5 million level, indexed for inflation, which was previously in effect as of 2010. The Joint Committee on Taxation has considered the inflation adjustments which would be applied and currently projects that the exemption level would be approximately $6.02 million. Under current law, the existing exemption level is $11.7 million. Restrictions on Certain Valuation Discounts and Trust-Related Estate Tax Planning Strategies The draft legislation includes two new IRC sections which would significantly impact certain estate tax planning strategies:

would be calculated under the provisions of Internal Revenue Code (IRC) Section 67(e). The new provisions also state that the surcharge will not be considered a tax for purposes of calculating the amount of any credit under this chapter of the IRC or for purposes of the alternative minimum tax under IRC Section 55. The ASCPA State Taxation and Legislation Committee will continue to monitor the status of these provisions and any potential impact on the ability of taxpayers to deduct the surcharge as a component of the federal income tax deduction for Alabama tax purposes.

New Restrictions on IRAs and Defined Contribution Plans for High Income Taxpayers In an effort to restrict the ability of high-income taxpayers to utilize traditional IRAs, Roth IRAs, and defined contribution plans for retirement tax planning, the draft version of the legislation released by the House Ways and Means incorporates a number of new restrictions, including: • New limitations on contributions to IRAs and defined contribution plans for taxpayers with aggregate account balances in excess of $10 million as of the end of the prior tax year, if the taxpayer has adjusted taxable income above $400,000 if single; $450,000 if married filing jointly; and $425,000 if filing as a head of household. • New required minimum distributions for taxpayers with aggregate account balances in excess of $10 million, if the 16

ASCPA Connections

taxpayer has adjusted taxable income above $400,000 if single; $450,000 if married filing jointly; and $425,000 if filing as a head of household. • Prohibition on investments in certain non-publicly traded entities if the IRA owner has direct or indirect ownership in the entities of 10% or greater or if the IRA owner is an officer or a director. • Prohibition on investments in unregistered securities which are only available to accredited investors who have a specified minimum amount of income or assets, must complete a specified minimum level of education, or hold a specific license or credential. • Prohibition on conversions from traditional IRAs, 401(k) accounts, 403(b) accounts, 457(b) accounts to Roth accounts for any taxpayer if the taxpayer has adjusted taxable income above $400,000 if single; $450,000 if married filing jointly; and $425,000 if filing as a head of household. Note that this proposal would apply to distributions, transfers, and contributions made in tax years beginning after 12/31/2031. • Prohibition on conversions of after-tax contributions held in a traditional IRA, or in a non-Roth account in an employersponsored retirement plan, to a Roth IRA. Note that this proposal would apply to distributions, transfers, and contributions made after December 31, 2021.

• Newly created IRC Section 2901 would require that all grantor trusts be included in a deceased owner’s taxable gross estate when that deceased individual is deemed to be the owner of the trusts for income tax purposes. • Additionally, newly created IRC Section 1062 would treat sales between a grantor trust and the deemed owner as sales between the owner and an unrelated third party, thus triggering the recognition of gain on any appreciated assets. In connection with this proposal, the definition of “related taxpayers” in IRC Section 267(b) would also be modified to include a grantor trust and the person treated as the owner of the trust. This modification would therefore disallow the deduction of any losses realized from a sale between a grantor trust and the deemed owner. These provisions would apply to trusts created on or after the date of enactment and to the portion of the trust attributable to contributions made on or after the enactment date.

BUSINESS PROVISIONS While the draft legislation includes many business tax proposals which closely mirror those in the Green Book, there were several significant changes. As anticipated, the draft legislation released by the Ways and Means Committee incorporates a revised new top tax rate for corporations, reducing the Green Book proposed rate of 28% to a new top rate of 26.5%. However, several moderate Democratic Senators have continued to express concerns that the rate should not exceed 25%, and thus it is likely that the final legislation may incorporate

a corporate tax rate which is closer to that level. The need to secure additional votes in the House and the Senate also led to several noteworthy changes to the business provisions previously announced in the Green Book, including: • The removal of the controversial provisions which would have enacted a new alternative tax based on GAAP income for some of the largest US corporations. • The removal of the provisions which would have disallowed many of the favorable deductions currently available to companies in the fossil fuel industries, including restrictions on the use of percentage depletion and the expensing of intangible drilling costs. • A delay in the effective date of the Tax Cuts and Jobs Act provisions which would have required capitalization of research and experimentation expenses beginning in 2022. One of the surprises in the draft legislation released by the House Ways and Means

Committee was the inclusion of a provision which would allow S corporations to convert to a partnership structure through a tax-free liquidation which would occur over a two-year period beginning on 12/31/2021. An eligible S corporation is defined as one which has been an S corporation at all times since 5/13/1996, the time period during which the check-thebox regulations were released. Practitioners who have S corporation clients should consider the potential benefits of this limited time opportunity. The draft legislation released by the Ways and Means Committee also incorporates a significantly enhanced restriction on conservation easement deductions, another area which has been a top priority for the IRS over the past year. The new provisions would result in the denial of a charitable deduction for contributions of conservation easements by partnerships and other pass-through entities, if the amount of the contribution exceeds 2.5 times the sum of each partner’s adjusted basis in the partnership related to the donated property. The proposed effective date for this provision incorporates a significant retroactive component, applying to contributions made

on or after 12/23/2016 (the date of the relevant IRS Notice on this topic). Practitioners who have clients which have taken conservation easement deductions since that time should closely review these provisions to identify any potential impact for their clients. In a year filled with legislative developments, it appears that 2021 will end in the same way in which it began, with the potential enactment of significant individual and business tax provisions and a very short time period for practitioners and clients to evaluate the impact. As developments occur, the ASCPA State Taxation and Legislation Committee will continue to provide frequent updates through the weekly email alerts and through special webinars, as needed.

Help Clients Get the Credit They Deserve 61% Business owners recently surveyed who were unaware of

the Employee Retention Tax Credit. Help your clients understand the benefits: • They have until Dec. 31, 2021 to claim this refundable credit • Paychex clients who claimed the credit have saved, on average, tens of thousands of dollars We can help enhance your consultations with clients.

Learn more about the ERTC at payx.me/alabama-ertc

Paychex is proud to be the preferred payroll provider for the Alabama Society of CPAs.

November / December

SALT CORNER

WHERE ARE WE ON THE NEW ELECTIVE PTE TAX REGIME? WILLIAM T. THISTLE, II AND BRUCE P. ELY

ASCPA Connections

Earlier this year, Alabama became one of 19 or so states to enact a pass-through entity tax as a workaround to the so-called “SALT Cap” enacted as part of the Tax Cuts and Jobs Act of 2017, which limits the deductibility of state and local taxes to $10,000 (MFJ) annually.

Background The Alabama Electing Pass-Through Entity Tax Act (Act 2021-1) established a new alternate state income tax applicable only to electing partnerships/LLCs treated as pass-through entities and to S corporations (collectively, “PTE’s”). For tax years beginning on or after January 1, 2021, a PTE can elect annually to be taxed at the entity level for Alabama income tax purposes at the highest marginal individual income tax rate (currently 5%) calculated in accordance with the Subchapter K or Subchapter S rules, as appropriate, and apportioned in accordance with Alabama’s multistate corporation apportionment rules. Initially, the PTE owners’ pro rata or distributive shares of income were to be excluded from their Alabama taxable income, but the Legislature quickly amended the law through Act 2021423 to provide that the PTE’s income still flows through to its owners. In return, the owners are each entitled to claim a refundable credit in an amount equal to their pro rata or distributive share of the Alabama income tax paid by the electing PTE. The credit mechanism is intended to allow PTE owners to take full advantage of their federal income tax deduction. This way, the PTE Tax will work much like the composite return regime, but with a SALT Cap workaround that can provide a tax benefit at the federal level. Act 2021-423 also authorized the Alabama Department of Revenue (ADOR) to waive interest and penalties resulting from the underpayment or the electing PTE’s failure to pay the estimated tax due on April 15, 2021. Shortly after the PTE Tax was amended, the ADOR provided guidance that if the underpayment is $500 or less, then penalties and interest will not be incurred. If the underpayment is greater than $500 and is due to the retroactive effect of Act 2021-423, then taxpayers will be eligible for penalty and interest waivers as well.

ADOR’s Proposed Rule on the PTE Tax

on the mechanical requirements to make the election and pay the tax. According to the Proposed Rule, to make the PTE Tax election, the PTE must file Form PTE-E, Pass-Through Entity Election Form, electronically via the ADOR’s My Alabama Taxes website “on or before the fifteenth day of the third months following the close of the tax year for which the entity elects to be taxed as an Electing PassThrough Entity.” The election is binding for the tax year to which it relates and all subsequent tax years “until a request to revoke the election is [timely] made.” Thus, once the election is properly made, the PTE must affirmatively optout to terminate the election. There are certain voting requirements both for making the election and for opting out. The Proposed Rule further provides that an entity making the election must file Alabama Form EPT, Electing Pass-Through Entity Payment Return, in addition to a complete Form 20S, S-Corporation Information/Tax Return, or Form 65, Alabama Partnership/Limited Liability Company Return of Income, for the applicable taxable year for which the election was made and all taxable years thereafter unless the election is terminated. The Proposed Rule also addresses quarterly estimated payments. Specifically, the Proposed Rule tracks previous informal guidance from the ADOR by defining the “required annual payment” as the lesser of 100% of the tax shown on the return for the taxable year or 100% of the tax shown on the return for the preceding year. Although the Proposed Rule doesn’t include this, previous guidance from the ADOR provided that if the entity was a PTE during the previous year and therefore didn’t owe income tax for that year – the previous year’s tax safe harbor is calculated as if the PTE was a C corporation.

Issues We Hope the ADOR Clarifies Certain areas that we requested clarification on included confirming that PTEs electing to pay the PTE Tax are not required to file composite returns with respect to their nonresident members. Additionally, we proposed revising the Proposed Rule to expressly provide that a nonresident owner of an electing PTE will not be required to file an Alabama income tax return to report its respective share of the income from the PTE, unless (1) the owner is a resident of Alabama, (2) the owner has Alabama income from sources other than the electing PTE and thus separately has an Alabama income tax filing obligation, or (3) it seeks to claim the refundable PTE Tax credit. Both of those topics were addressed in informal guidance issued by the ADOR on June 14, 2021. Other areas of concern focused on the ability of electing PTEs to utilize net operating losses and claim tax credits. The Proposed Rule limits the income tax credits available to the electing PTE to just the Alabama Historic Rehabilitation Tax Credit and the Railroad Modernization Act Credit. “All other tax credits shall pass through to and may be claimed by an eligible taxpayer under the provisions applicable to that credit.” The comment letter we filed on behalf of several scholarship-granting organizations (SGOs) asked for clarification that if the PTE makes a donation to a qualified SGO, the credit from that donation will indeed pass-through to the owners and will not affect the 50%-of-tax limitation on donors. The public hearing on this proposal was held October 5, 2021 and we now await the hearing officer’s report and hopefully a final rule that reflects the input of the ASCPA and our clients. If you have any questions about the Alabama PTE Tax or the ADOR’s Proposed Rule, please feel free to contact Bruce or Will.

Although the Proposed Rule provides much insight regarding the mechanics of the new PTE Tax, much remains unclear. To that end, our law firm and the Alabama Society of CPAs separately filed extensive comment letters with the ADOR, proposing revisions to and requesting clarifications on the Proposed Rule. [For a copy of those comment letters, please contact Jeannine Birmingham at jbirmingham@ascpa.org.]

On August 31, the ADOR issued Proposed Rule 810-3-36-.01 (the “Proposed Rule”) implementing the PTE Tax. The Proposed Rule primarily focused Bruce Ely

William Thistle

November / December

IS SOMEONE SPYING ON YOUR BUSINESS? Takeaways for Businesses to Prevent Corporate Espionage and Cyber Attacks BY PAUL PERRY, FHFMA, CISM, CITP, CPA, CDPSE Is someone spying on your business? Or even worse—stealing from it from right under your nose? At the end of 2020, one cybersecurity attack was so pervasive and serious that it should have sent business leaders on an urgent errand to ask this question for their organizations. And yet, many still haven’t even heard anything about it. Here, we’ll step back and break down the SolarWinds attack (as much as we know) and determine what defense and preparation strategies your company may be able to implement in response.

THE ATTACK (OR WHAT WE KNOW SO FAR) The story is constantly developing, but here’s what we know at this moment. Who The attack targeted SolarWinds, a company that produces a network- and applicationsmonitoring platform called Orion. The users affected most were those using the cloudbased version of the software, but it also impacted major government organizations and companies. What Threat actors gained access to the company’s system and distributed malicious updates to

a network- monitoring product and to the software’s users. Why Much is still unknown, including the actual source and the motive behind the attack. Several countries and nation-states are being blamed, but this part of the story could be one of the most highly contested aspects of the attack for years to come.

WHAT THE ATTACK MEANS FOR COMPANIES This incident highlights the severe impact that software supply chain attacks can have and the unfortunate realization that most organizations are largely unprepared to prevent and detect such a threat. If, and when, they determine who was responsible, and if it is determined to be part of a larger attack or potential pretext to cyber war (of which we have never experienced), the effects could be wide sweeping. One possibility is that it could cause a larger invalidation of cybersecurity insurance policies or changes to future policies that could drive up the cost of premiums to remove such a clause. Regardless, it’s important that companies are aware of how to protect themselves. This attack proved that anyone is vulnerable, and no matter how much money you spend on protecting

yourself, there is always risk that needs to be understood. No one person or organization, outside of the threat actors and possible nations involved in the aforementioned attack, is to blame for this attack occurring. So, is there anything companies can do to protect themselves? Can you be prepared for an attack of this magnitude? How can we apply a lesson learned from another company’s cyberattack to better our own education, defense, and preparedness?

THE DEFENSE AND PREPARATION NEEDED Companies everywhere can look at this attack, learn and generate some takeaways for their own organizations. There are a few tactics that companies should employ to better their security posture and improve their technology environment. Below are a few classics to consider related to this type of attack.

Know Your Vendors Vendor management is a big part of having strong technology controls, yet, it doesn’t have much to do with your company’s technology itself. Its advantage is awareness and understanding. Knowing who your vendors are can help determine if you are impacted by a globally acknowledged cyber-attack or breach. While

Listen to The Wrap podcast episode: Deception Perception [Understanding and Preventing Corporate Espionage] at warrenaverett.com/deception-perception. 20

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many organizations rely on one person to remember all their third-party vendors, it’s solid practice to keep an updated log of: • Who they are; • What processes or activities they perform for you; and • Who your contact is. Also, performing risk-based due diligence of their involvement with your daily controls and processes will help you better understand (and be aware of) any shortcomings they have that you need to protect yourself against. Making sure they perform the same due diligence on their third parties (known as your fourth-party vendors) is also crucial. Many companies will soon learn that their fourth- and fifth-party vendors may be overseas companies or companies that are included on the Office of Foreign Assets Control (OFAC) SDN lists that you cannot do business with.

UNDERSTAND YOUR CYBER LIABILITY INSURANCE POLICIES Make sure you fully understand what is covered by your cyber liability insurance policy—and what isn’t covered. Organizations can get into a messy situation when they expect an insurance policy to protect them completely or to reimburse them if a threat actor successfully compromises their system or data. Cybersecurity insurance is there to help you if your controls and processes fail—not restore your system without you doing anything to help prevent the attack or breach. Most cyber liability insurance policies have a section in the policy (or included in the underwriting process) that details the controls your organization should be performing if an attack occurs. For most insurance companies, those activities will include (but might not be limited to):

• A risk assessment process (internal and/or external); • Security awareness training; • Intrusion detection or prevention systems and processes; • Incident response plans; • Vendor management process; and • Data backup procedures. These controls ensure that your organization is pulling its weight related to the rights of the insurance policy. If it turns out to be part of cyber warfare and your organization is/was impacted, check your cybersecurity insurance policies for the exclusion clauses related to damages due to an “act of war.” In addition, make sure all exclusion clauses are reviewed and understood before enacting the policy. This includes what costs are not reimbursable and when the policy is not valid (i.e., act of war clause). This aspect should concern organizations that were impacted in the SolarWinds attack the most. With attacks becoming larger in scale and actors getting more and more devious, the cyber liability insurance industry could become too large for anyone to handle or afford.

TESTING YOUR INCIDENT RESPONSE PLAN Update and test your incident response plan so that you can effectively respond to an actual attack when it happens. In 2018, the AICPA, in connection with the guidance on SOCs for cybersecurity, issued their tenets of cybersecurity, with one stating that preparing your company to respond to an attack with “as minimal disruption in your business as possible” is just as important as implementing controls to defend against these attacks and

threat actors. A solid incident response plan should consider all potential threats and risks to the organization. One plan could have multiple threats and courses of action should a cybersecurity event occur, and every organization should update their documents for “software supply chain attack.” Testing the plan can be as simple as: 1. a table-top exercise where all parties involved (including external consultants or vendors) would sit around a table (maybe virtual these days) and talk through who does what, in what order, and how to handle communications, issues and what can go wrong; or as complex as 2. simulating the attack and responding accordingly in real time. 3. Both have their advantages and disadvantages, but something should be done to prepare your organization for all possible attacks and threat actors.

PROTECT YOUR ORGANIZATION AS MUCH AS POSSIBLE AGAINST CYBER ATTACKS While human error or insider threat still remains the largest threat to prepare to protect and defend against, knowing your vendors, understanding your risks, knowing where you can get assistance and preparing for the worst can go a long way in preparing your organization to have as little disruption in your operations and finances as possible.

Paul Perry has been with Warren Averett since 2004 and is a Member and the practice leader of the Security, Risk and Controls Group. Paul and his team focus on cybersecurity, information technology related projects, risk assessments, internal controls, internal audit and control-related projects, including System and Organization Control engagements. Paul is also the leader of the firm’s Data Analysis Group, a team of individuals within the firm who provide data analysis solutions to both internal and external clients. For more than 11 years, he specialized in auditing and assurance services. Paul has extensive experience serving clients in the nonprofit, governmental, financial, insurance and healthcare facilities/hospital industries during this time. Paul has earned the Certified Information Technology Professional (CITP) certification. This credential is awarded to CPAs who possess both information technology and business expertise. Paul is a thought leader, published columnist and regular speaker on topics such as cybersecurity, data analysis, internal controls and information technology. During the year, Paul performs 20+ external presentations on a wide variety of technology and control related topics to groups including corporate clients, ASCPA, HFMA, IIA and ISACA. He also offers insight to business leaders in his role as a co-host of Warren Averett’s podcast, The Wrap.

November / December

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HOW EFFECTIVE LEADERS COMMUNICATE DIFFICULT CHANGE A communication plan and a positive attitude will help ease fears amidst major change. BY TERI SAYLOR The COVID-19 pandemic brought about major disruptions in the global marketplace that we will be feeling for years to come. The job losses, remote work arrangements, transition from in-person interactions to digital platforms, and business closures have left in their wake a workforce fraught with uncertainty. Some pandemic-related changes are likely temporary, but others could be permanent, such as staff reductions, downsized office space, or mergers with other firms. “Organizational change is usually positive — it signals growth and market adaptation. But that doesn’t mean it isn’t hard on the humans,” said Lisa Hannum, president and CEO of Beehive Strategic Communication in St. Paul, Minnesota, in the US. “Employees and customers take comfort in what we know. Change creates uncertainty.” Employees tend to resist change, not because they want to block it, but because they don’t understand it, she said. She pointed out that while change creates uncertainty, when it is well managed and effectively communicated, it can be positive and energizing. “Change often fuels creativity, innovation, and momentum, but to facilitate successful change, you must get the employees on board,” she said, and added the best way to do that is through communication. “When you are proactively and consistently communicating, listening, and inviting feedback, you are minimizing resistance,” Hannum said. “Even if it’s hard in the short term, change is designed for long-term benefit to an organization’s stakeholders.” Hannum joins a group of change management experts to offer six tips for effective communication that can smooth the pathway to transformation in your workplace. Consider your organization’s culture. The first step in crafting your communication strategy is to examine your company’s culture, Hannum said. “Whether you are a two-person team or a large corporation with 2,000 employees, it pays to understand the shared values, goals, attitudes, and practices that characterize your workplace,” she said. How you communicate is a key component, so crafting a communication strategy that fits your culture will raise your employees’ collective comfort level, and an important part of that process includes focusing on how your employees like to receive information.

A well-thought-out strategy should include the communication channels you typically use, such as face-to-face meetings, email correspondence, or apps like Slack or Microsoft Teams.

appoint a change management team by identifying champions in various departments and business units who will keep an eye on helping move the change forward, he said.

Craft a communication plan. Change management consultant Paul Townsend of Luxembourg suggests building a communication road map, including a timeline.

Involve employees. Depending on the type of change you are facing, it is often a good idea to involve employees in implementing it. This will help empower them, give them a sense of control, and help them feel included in the process, Suglani said.

Mileposts might include preparing your messaging by anticipating questions employees might ask and creating a script for both in-person conversation and staff meetings that includes plenty of time for open conversation, feedback from employees, and questions. “It is crucial to give employees space to voice their thoughts and concerns, to help identify resistance and pain points, as well as good ideas and opportunities,” he said. Be transparent. Simply be open, honest, respectful, and authentic about changes that may be coming, said Dr. Lalitaa Suglani, a Birmingham, UK-based psychologist and leadership coach. “Let employees know change is coming, even if you don’t have all the facts,” she said, adding that employees can sense disruption in your office environment even if your plans go unspoken. “If you keep your plans hidden, you may breed distrust,” she said. Suglani suggested that firm leaders support employees by letting them know change is on the way and understanding that disruptive change can also impact their home life and their families. “Give employees a chance to mentally prepare for change and time to digest it,” she said. “Even if you don’t have all the facts, be transparent and explain that while there is uncertainty around the change, you will keep them informed along the way as you learn more facts.” Start at the top. Communicating change should begin with top decision-makers, like the CEO, board, or management, depending on the company’s size. “Whether the change is suddenly forced upon you, like the shift COVID-19 brought, or it was planned months or years out, top leaders absolutely have to own the change and communicate to employees its importance,” said Benjamin Friedman, founder and CEO of Build Scale Grow, a New York City-based consultancy. After making the initial announcement and setting the tone for change, leadership may

On the other hand, if employees sense the organization is making significant changes without them, they may feel neglected and left out, which could lead to negativity and resistance. “Employees will resist change for different reasons, but the main reason is fear of not being able to cope with it and loss of control,” she said. “An important component of communicating change is first understanding how change is affecting individuals, validating their feelings by acknowledging that change can be frightening, and helping them overcome fear by including them in the process.” Focus on success. In communicating your organization’s changes, consider how to put your new vision for the future into concrete terms employees can understand. One way is to explain what effective change will look like, describe the reasons for it, and discuss its scope, Friedman said. “Be prepared to describe scenarios for success as well as what might happen if change does not occur,” he said. It is also important to provide regular updates describing where you are in the process and celebrate progression. “Humans have many cognitive biases, including a propensity for focusing on the one negative thing in a sea of great things,” he said. “By acknowledging each accomplishment and celebrating the small wins that occur along the way, you can help conquer negativity and inspire optimism in the midst of disruptive change.” Teri Saylor is a freelance writer based in the US. She originally authored this article for Financial Management Magazine, the CGMA’s magazine for financial leadership. You can find more about the CGMA designation and their Financial Leadership Program at cgma.org/ becomeacgma/finance-leadershipprogram.html

November / December

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CPAS SHOULD IMPLEMENT REASONS QR CODE PAYMENTS

In today’s world, payments technologies are key to ensuring your cash flow is healthy and steady. More specifically, there are three technologies all accounting professionals should be taking advantage of to drive their revenue: 1. An online payment solution to enable card and eCheck payments from your clients 2. A mobile payment app with a Bluetooth reader to let you accept payments on the go 3. A QR code connected to a secure payment page to let your clients easily submit payments themselves If you’re not familiar, a QR code is a barcode that can be scanned by the camera on a mobile device to access certain web pages automatically. By scanning a QR code from CPACharge, your client can be automatically directed to your unique payment page and submit a payment from their device. But there are additional benefits QR codes can provide. We’ll cover five of the best advantages QR code payments can give to you and your clients.

#1 - MAKES PAYMENTS FASTER AND EASIER By implementing QR code payments in your firm, you can give your clients several easy opportunities to pay your bill, increasing the rate you get paid and improving your revenue stream as a result. For example, you could display your QR code within your office, such as at your desk or at your reception area. Your client can then scan your code and submit a payment for your services before they step out the door. You can also print your QR code onto your mailed invoices, allowing your clients to make electronic payments without needing to type in your payment page URL. A scan of the code will take them to your payment page automatically, and they can enter their payment information right away. QR codes can also encourage clients to start using electronic payment options and move away from the slower process of paying by check.

THIS ARTICLE ORIGINALLY APPEARED ON THE CPACHARGE BLOG

#2 - Modernizes your payment experience More and more of today’s consumers are using contactless forms of payment, not only because of the convenience they provide but because it allows payments to occur safely without the need to hand over their physical card to a retailer or service provider. This concern has only increased in light of the COVID-19 pandemic, where social distancing has become the norm. In fact, a recent study from Mastercard showed that almost 80 percent of today’s consumers use contactless payments, saying that safety, cleanliness, and convenience are their main reasons for doing so. Additionally, data compiled by Blue Bite, a digital marketplace platform, saw that QR code interactions doubled on their service between 2018 and 2020. Simply put, today’s clients are gravitating towards paying with mobile options such as QR codes, and it would be in your best interest to offer this form of payment as soon as you can. Not only can you meet client expectations, but you can boost your bottom line in the process.

#3 - ALLOWS FOR SOCIALLY DISTANCED PAYMENTS As previously mentioned, QR codes let your clients submit payments in-person while still adhering to social distancing guidelines. By using their phones or other mobile devices, your client never has to hand you their card and can safely submit a payment entirely with their device. Plus, the best online payment solutions allow you to give your clients email receipts, which helps reduce your paper consumption and supports a more paperless office environment.

#4 - INCREASES PAYMENT SECURITY Not only are QR codes safer in person, but they also offer more secure payments in the digital space, as well.

Anytime your client scans your CPACharge QR code, they’re sent to your payment page that is hosted on our secure networks, ensuring their payment data is kept as safe as possible. When their payment data is entered into your page, our systems work to encrypt it and it’s kept safe in our secure vault rather than stored locally. Plus, since your client enters their own information, you can reduce your firm’s liability since you aren’t required to handle and store their data yourself.

#5 - ENHANCES THE CLIENT EXPERIENCE Most importantly, all of the reasons we’ve offered above go a long way in providing an exceptional client experience. Accepting QR code payments is an excellent way to expand your payment options, make payments more convenient, and ensure payments are processed as safely as possible. By offering easy-to-use and modern payment options, you can position your firm as one that values the time and interests of its clients and can be flexible to accommodate their needs. The more you can demonstrate this level of attention to your clients, the more likely they will return to you with more work, either of their own or by way of referrals. To learn more about CPACharge’s new QR code payment feature, as well as all the other great features CPACharge can provide to your firm, schedule a personalized demo today!

November / December

ZOEBELEIN ON TAX

THOUGHTS ON YEAR-END PLANNING Once again, we are faced with uncertainty over tax legislation, making 2021 year-end planning difficult. The present administration’s 3.5 trillion spending bill, as well as the infrastructure bill passage are both uncertain as I write this article. Given that bills are uncertain, I will just cover some of the key provisions that may impact your clients in 2022 with retro application to 9/13/2021 for certain provisions. The proposed legislation targets individual taxable incomes of over $400,000 (single), $425,000 (head of household) $450,000 (married filing jointly), $225,000 (married filing separately), and $12,500 (estates & trusts). The marriage penalty is exacerbated by only a difference of $50,000 compared to single taxpayers $400,000. Unless noted below, the above thresholds are implied. Now for the bad news: • Top capital gain (dividends) to increase to 25% for all transactions after 9/13/2021. Binding contracts entered before 9/13/21 will be grandfathered. Will §1250 rate be 30%?

• Upper individual tax rate reverts to pre TCJA 39.6% o AG more than $5 million (AGIinvestment interest) and estates and trust over $100,00 will be subject to an additional 3% surtax. • Corporation upper rate to climb to 26.5% (18% $400,000 21% >$5 million). • 3.8% investment tax on all passthrough income. Income >$400,000 single and $500,000 MFJ. Not applicable to income subject to self-employment taxes. Taxpayers will be subject to either 3.8% Medicare tax or 3.8% net investment tax • The 20% QBI (§199A) deduction capped at $500,000 MFJ (1/2 MFS), single $400,000, and estates & trusts $10,000. • Lowering of the $11.7 gift tax exemption to $6 million, effective 1/1/2022. • Carried interest holding period extended to 5 years.

• Small business stock exclusion (§1202 stock) will revert to the original 50%.

• Eliminates Roth conversions over the same tax rate thresholds, effective 12/31/2031.

• Loss limitation from the TCJA made permanent.

• Eliminating the back-door Roth IRA, effective after 12/31/2021

• TCJA interest expense limit is proposed to shift to the partner/shareholder.

• Allowing S corporations to reorganize as partnerships for S corporations that have been such since 9/13/1993.

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Despite the severe measures above, capital gains will still be given favorable treatment - be it only 14.6% at the highest rate. Biden’s capital gains and dividends at ordinary rates (39.6) were eliminated in the proposed bill as the elimination of realty like-kind exchanges. Dead on arrival was attempts to reinstate corporate AMT. Missing from both proposals is the elimination of the state income tax cap of $10,000. It is rumored it will be in the final bill. If absenct from the final bill, it will warrant taking a hard look for our pass through entities to review whether to elect to be taxed at the entity level. It is worth bringing up in your year-end client meetings.

Year-end Defense Plays to Mitigate the Proposed Tax Law Changes Tried and True Obvious Defense That old tax planning standby of accelerating income and delaying deductions will be important to consider in your year-end planning to mitigate the proposed legislation. • Considering electing out of the installment method in 2021. Your client has until the 2021 tax return is filed when the fate of the legislation should be certain. • For post 9/13/2021 sale of a business, consider accepting installment if it gets

your client under the $400,000/450,000 threshold for the higher taxes. • Consider not doing the like-kind exchange. After 2021 LKE may become more important.

Gift Tax Exemption Defense The most significant of the above proposed changes to the tax code is the lowering of the gift tax exemption. The current gift tax exemption utilized is protected in the exemption is lowered future. It is very important that you discuss this with your high-net-worth clients.

Roth IRA defense • Making backdoor Roth Contributions. • Converting to a Roth IRA while rates are low.

What is on the books for 2021/2022 Charitable contributions: • Above the line $300 cash contributions for individuals $600 MFJ (2021). • Cash contributions up to 100% of AGI (2021). • C corporations limit increase to 25% (2021).

Business Meals Don’t forget the business meal deduction is 100% when purchased from restaurants - this is available in 2021 and 2022.

Tax Credits for COVID-19 Wages Paid to Workers There are two important credits for employers who paid employees impacted by COVID-19; the first was the two weeks and family medical leave under the FFCRA. If it was not claimed in earlier years can be claimed as a credit to the employers’ FICA/Medicare taxes by filing Form 941-X for applicable quarter(s). The Employee Retention Credit under the CARES Act available in both 2020 and 2021 for continued pay for employees impacted by COVID and could not work. There are two maximums 2020 is 50% of employee paid wages to a max of $10,000 ($5,000) and 70% or $7,000 for 2021. To qualify for the ERC the rules are as follows: • In 2020, the ERC covered employers forced to shut down due to government directives in response to COVID-19. • The second test is for employers paying wages who suffered a 50% or more

reduction in gross revenue in any quarter when compared to the same quarter in 2019. • In 2021 the threshold is in a reduction in any quarter of 20% or more. The period covered for 2021 presently is through 12/31/2021 ( 9/30/21 if the infrastructure bill is passed). ERC Covered Wages: • All wages for the qualifying quarter 100 or less employees in 2020 500 or less for 2021. • All others only those employees paid who were impacted by COVID (had COVID or were quarantined). • Please note – qualifying employers in one quarter continue to qualify through the recovery quarter (minimum coverage of two quarters) • Wages must be reduced by the credits received.

Bonus Depreciation Commercial Real Estate A reminder qualified improvement property, “QIP”covers interior building improvements and includes owner-improved commercial property. QIP is 15 year property that qualifies for bonus. QIP does not apply to residential rent property (27.5 yr.). The residential rental taint commences with the beginning of the tax year in which 80% is residential rental. QIP also does not apply to new construction. Planning: • QIP does apply to property already placed in service placing new construction in service when certificate of occupancy is obtained should allow tenant improvements to qualify as QIP after that date. • In a mixed commercial and residential rental property (commercial on first floor) if possible place the 1st floor commercial in service in one tax year and the residential the next tax year. The building will be considered commercial and QIP in the first tax year. Next year, with 80% residential it will no longer qualify as QIP.

Property Tax COVID Impact The pandemic hit commercial and residential real estate hard, resulting in a decrease in the value of rental real estate. Employees working from home during the pandemic have caused management to reconsider the need for brick and mortar space. All these factors may have lowered the market value of your real estate

rental clients. The county’s assessment using standard values may overstate the fair market value of your clients’ property. I suggest that your real estate clients meet with their local assessor to get their properties properly valued.

Real Estate Foreclosures Cancelation of Debt Income COVID’s impact on rental revenue make cause clients to have their real estate foreclosed. Remember that recourse debt is treated differently than nonrecourse debt on the property. Nonrecourse is simple - it is treated as a sale for the debt forgiven. Recourse debt is different - the deemed sale is broken into two components. The difference between the FMV of the property and the debt forgiven is treated as COD (ordinary income), the balance like nonrecourse. Foreclosure with recourse debt the client can have both ordinary income and a possible capital loss (held for investment). If the property is used in a trade or business the capital loss portion will be ordinary under §1231. Note: COD income is not recognized to the extent of insolvency (insolvent after COD debt is removed). The COD income testing is at the entity level for corporations & S corporations and at the partner level in partnerships/LLCs.

Penalty abatements: Don’t forget to ask for the first-time abatement. I believe it restarts every seven years.

Amended Returns E-File amended returns for tax years 2019-forward thus avoiding the IRS paper chase.

CARES Five Year NOL Carryback for 2020 Remember 12/31/21 is the last day to file quick refunds using Forms 1045 individuals and 1139 for C corporations. When filing Form 1045, don’t forget to include the amended returns in the carryback years and include the AMT Form even if not applicable. I have seen them rejected for those items not being included. I hope this is some help for your client year-end planning in these uncertain times. Thomas C. Zoebelein, CPA, MBA, CGMA is a Director of Tax Research for Pearce, Bevill, Leesburg, Moore P.C. in Birmingham, AL. He blends 28 years of industry experience with 21 years of public accounting experience, bringing a wealth of knowledge and insight to the to the accounting profession.

November / December

MEMBER NEWS Jody M. Singleton has been appointed by Lt. Gov. Will Ainsworth to the Alabama Commission on Higher Education (ACHE). He will serve as a representative of the state at-large and will be subject to confirmation by the 2022 Alabama Senate. Singleton is a CPA and the owner of his own firm. He is a managing member of Avinna, LLC, an affiliation of CPAs, sharing resources and best practices to serve their clients more efficiently. The Headland native is active in his community, currently serving on the city council and as mayor pro tem. He is a past president of the Headland Kiwanis Club, Headland High School Diamond Club, and has served as chairman for the Headland High School Business/ Industry Education Certification Team. Singleton’s is also a member of AICPA and the National Federation of Independent Business Tax Advisory Committee. The magna cum laude graduate of Troy University has been inducted into the school’s Accountancy Hall of Honor. “Commissioner Singleton’s business background and passion for education will be tremendous assets to the Commission,” said ACHE Executive Director Jim Purcell. Purcell echoed Chairman Buntin’s acknowledgement of Singleton’s background, adding, “his leadership role will be extremely beneficial for state service.” Anglin Reichmann Armstrong, a regional certified public accounting firm, recently promoted several professionals located in the firm’s Huntsville location. Promoted to Supervisor: Ellen Deasy, Maggie Douglas and Raven Howlet as well as Whitney O’Rear. Sutton Parker is promoted to Senior Accountant. “I’m proud to work among a group of individuals that display such dedication to their jobs, their goals and their own success,” says Gary Anglin, Managing Partner of Anglin Reichmann Armstrong. It’s rewarding to recognize the contributions they have made towards our clients and our team.” BMSS Member Mark Underhill, CPA, CMAA, CVGA has been named a 2021 Top 40 Under 40 by the Birmingham Business Journal. This illustrious list honors up-and-coming stars of the Magic City’s business scene who have distinguished themselves in their fields before the age of 40. Underhill, 35, is one of only two employees to have risen from college intern to member at BMSS. He’s a leader in the firm’s tax department and leads the transaction 28

ASCPA Connections

advisory group within BMSS’ business advisory and consulting services practice area. During the height of COVID-19, Underhill led PPP and Cares Act webinars for audiences of up to 800 guests. As a result of his leadership, approximately 75% of the firm’s clients were assisted in successfully navigating the waters of the PPP loan process to take advantage of the financial relief. To date, he has been involved with numerous clients in both buying and selling their businesses totaling over $1.5 billion. Congratulations to BMSS Staff Accountant Kiara Cates for becoming a Certified ProAdvisor in QuickBooks. Bern, Butler Capilouto, & Massey, P.C. is happy to announce the addition of three new Staff Accountants to their Firm. Hunter Barnes, Tanner Bozeman, and Jordan Hamilton will all began work in July 2021. Hunter graduated from Faulkner University with his Bachelor’s in Accounting in 2019. Tanner graduated from Auburn University with his Bachelor’s in Accounting May 2021. Jordan graduated from Troy University with his Bachelor’s in Accounting in 2016 and is currently working towards his Master’s. Their three new Staff Accountants will perform work in the areas of auditing and tax while continuing to study for the CPA exam.

Carr, Riggs & Ingram is proud to announce that Phyllis Ingram, founding partner of the firm, as one of the 2020-2021 Most Powerful Women in Accounting. The American Institute of CPAs and CPA Practice Advisor give the award annually to women leaders who are helping to define and advance the profession. This recognition celebrates the increasing presence of women at the highest positions in accounting firms and organizations that oversee the profession and recognizes those who have had the most impact. Nominations were open to the public and the final selection of recipients were determined by the AICPA’s Women’s Initiatives Executive Committee (WIEC), which sponsors research, mentorship, and networking opportunities. “This year’s group of winners are an excellent example of the impact that women are making throughout the profession,” said Gail Perry, editor-in-chief of CPA Practice Advisor. “These leaders serve as an inspiration to a generation of women who are starting their career in the profession.” CS Tax, LLC is excited to announce its Southeast regional expansion with a new office in Montgomery and welcomes Adam Finesilver as its Regional Director. Adam brings over 13 years of experience providing tax advisory services to clients in real estate, financial and professional services industries. He graduated Summa Cum Laude, earned a Master of Accountancy, and has devoted his time to public

accounting since 2007. Adam said he “is thrilled to join ICS Tax to better serve his clients with tax saving opportunities such as cost segregation, 45L credits and R&D tax credits.” In his role, he will be collaborating with taxpayers and tax professionals to identify credits, deductions, and incentives that can significantly reduce tax liabilities and increase profitability. Montgomery, Alabama has been home to Adam for the past twenty years, where he resides with his wife and three young children. He has given back to his community by serving on the Montgomery Chamber of Commerce and as an ASCPA Ambassador. Jackson Thornton, a certified public accounting and consulting firm headquartered in Montgomery, AL, is pleased to announce that Alan Alexander has been named Chair of the CPA Firm Management Association (CPAFMA) and that they have several recent promotions. Alexander, who serves as Jackson Thornton’s Chief Operating Officer (COO), was recently installed as Chair at the CPAFMA’s annual meeting. Founded in 1984, the Association was created to enable accounting firm managers to communicate with one another as well as serve as one representative voice of the profession. Alexander came to Jackson Thornton from RSM US where he was a Strategic Project Director/Senior Manager. He had served as the COO for Sellers, Richardson, Holman & West prior to their acquisition by RSM US. Alexander is a graduate of Auburn University and the University of Alabama Birmingham and holds a Master of Accounting with a tax concentration. In addition to the CPAFMA and ASCPA, he also maintains professional membership in the AICPA. “I am humbled and honored to become the Chair of the CPAFMA Board, said Alexander. “CPAFMA is an organization I am passionate about and I look forward to working with the board and all of our members to promote the mission and vison of the Association in the accounting industry.” Lindsey Goddard was promoted to Senior Manager. Goddard joined the firm in 2017 and specializes in family-owned businesses with interrelated entities. She has also been instrumental in developing tax processes and managing the various software used by Jackson Thornton’s tax line of business. Goddard serves as an ambassador for the Montgomery Area Chamber of Commerce and completed RSM’s 2020 Breakthrough Leaders Institute program. She holds her BS and MBA in Accounting from Mississippi College. Frankie Wilbourne was also promoted to Senior Manager. Wilbourne joined the firm in 2015 and specializes in the construction industry for the firm’s tax line of business. He has also been instrumental in developing tax processes and providing technical tax training to the firm. Wilbourne is a member of Auburn Young Professionals and serves on the board of Habitat for Humanity. He is currently serving as president of the JT Allies program and vice president of Jackson Thornton Young Professionals (JTYP) and is also participating in RSM’s 2021

Breakthrough Leaders Institute. Wilbourne completed both his BS and Masters in Accounting at Auburn University. Jackson Thornton also promoted Amy Pugh to Manager and Ryan Shubird to Supervisor. Pearce, Bevill, Leesburg, Moore P.C. is pleased to announce that Chase Campbell has been promoted to Director. Campbell is a native of Birmingham, Alabama and holds a Master of Accountancy degree from the University of Alabama at Birmingham (UAB.) He has over thirteen years of experience in public accounting and three years of experience with a privately held company in the healthcare industry. Campbell joined the Firm in 2008. He provides tax compliance and business consulting services to small business owners and high net worth individuals. Campbell is also a member of the American Institute of CPAs, the Health Care Advisors Association, and the Alabama Medial Group “Since joining the Firm, Chase has had a positive impact on client services, team leadership, and overall growth in the Firm” said Carlos McDonald, Managing Partner. “We are honored to welcome Chase into the group and look forward to his growth as a Director.” Pierce, CPA & Advisors is proud to announce that Lykethia Pierce, CPA, CB is a Birmingham Business Journal (BBJ) Who’s Who in Accounting 2021 Honoree. The individuals recognized are leaders in Birmingham’s accounting industry. They have a track record of helping individuals and businesses reach their milestones like growth. Lykethia Pierce is the founding member of Pierce, CPA & Advisors and serves as the entity’s chief executive officer. Beginning in 2014, she has provided start-up to 8-figures businesses with business and accounting solutions. T. E. Lott & Company takes pleasure in announcing the election of Michael D. Watkins as shareholder of the firm. Prior to joining the Firm in 2009, Michael received his Master of Accountancy from The University of Alabama. For more than twelve years, he has been a member of the firm’s Financial Institution Services group, providing audit/attestation and consulting services for public and non-public banks. Michael also works with small businesses and individuals to provide tax preparation and consulting services. He is also a member of the AICPA and the Mississippi Society of CPAs. A native of Millport, Alabama, Michael, his wife, Camille, and their son, Maddox, currently reside in Starkville, Mississippi. He and his family attend Starkville First United Methodist Church. Dr. Steve Grice, Director of the School of Accountancy at Troy University, was named the 2021 Sun Belt Conference Faculty Member of the Year. November / December

The annual award recognizes a faculty member from each Sun Belt institution who has a passion for teaching, engaging and inspiring students, while also separating themselves from their peers outside of the classroom by regularly supporting and displaying enthusiasm for the athletics department. As the Director of Troy University’s School of Accountancy and the Botts Professor of Accounting, Grice earned the 2018-19 Outstanding Accounting Educator by the Alabama Society of CPAs. “Dr Steve Grice is a scholar and role model for our students,” Troy University Chancellor Dr. Jack Hawkins said. “He has been recognized at the state and national levels for excellence in teaching, research and service. The SBC could not have selected a more deserving person for this coveted award.” In 2016, Grice was a gubernatorial appointment to the Alabama State Board of Public Accountancy, and he was assigned to the National Association of State Boards of Accountancy Education Committee for 2019-20. Grice holds a Bachelor of Science degree in Accounting and Business Administration from Troy University, a Master of Accountancy from the University of Alabama and a Ph.D. in Financial Accounting from the University of Alabama. “Without question, my experiences with these young student-athletes have added a flavor to my academic career that is unmatched,” Grice said. “It has been an honor to play a small role in their lives.” The Henderson Bancshares Board is pleased to announce that Ross Jinright has been named as directors at Troy Bank & Trust. Originally from Troy, Jinright graduated from Charles Henderson High School and attended Troy State University on a President’s Scholarship. He was a member of the TSU Baseball Team from 1987-90, including the 1987 National Championship Team. Jinright was also a Baseball Academic All-American who graduated in 1991 with a bachelor’s degree of Accounting. He became a licensed CPA in 1995. Jinright became a partner in 2001 with Gibson & Carden Accounting firm. He is a past board member of the ASCPA, is a member of the American Institute for Certified Public Accountants, in the Troy University Accounting Hall of Fame, and is a past President of the South Central Chapter of CPAs. Additionally, Jinright is a past President and member of the Troy Exchange Club, the Troy Rotary Club, past board Member of the Pike Liberal Arts foundation, coached baseball, softball and soccer through the Troy Parks & Rec Department, and basketball through the Upward Basketball Program. Married to the former Taylor Cox, they have a daughter and twin boys, and attend First Baptist Church of Troy. Warren Averett CPAs and Advisors is pleased to announce that Michael Andrews, CPA, ABV, a Senior Manager in the Firm’s Estate Division in the Montgomery office, has been elected to serve as president of the Montgomery Estate Planning Council (MEPC). Andrews has served on the Board of Directors since July 2018. The MEPC was formed in the 1960s to provide 30

ASCPA Connections

a better understanding of estate planning and the services that estate planners can provide to the general public. Members of the Council strive to promote cooperation among the various disciplines (attorneys, certified public accountants, chartered life underwriters, chartered financial consultants, trust officers and certified financial planners) involved in estate planning and to foster a better understanding of the relationships that each discipline bears to the other, their clients and the community. Andrews joined Warren Averett in 2012 and has more than nine years of public accounting experience in Montgomery. He is primarily responsible for estate and trust compliance and planning, income tax compliance and planning for individuals and family-owned businesses, entity planning and providing valuation services for estate and transactional purposes. He resides in Millbrook, Alabama, with his wife and son. Wilkins Miller LLC, an accounting and advisory firm with offices in Mobile and Fairhope, is pleased to announce that Lyndsey Dixon, CPA, CVA was named a “Leading Lady” by the Girl Scouts of Southern Alabama and Erin Jones, CPA was named to the 2021 Class of Associated General Contractors “40 Under 40”. The Leading Ladies Award celebrates individuals who are making a positive impact in their professional lives and in their communities, especially when they are directing those efforts to support the advancement of girls and women. Among various other community contributions, Dixon has taken a leadership role in launching the Wilkins Miller Women’s Initiative. She participates in designing programming for the initiative and encourages connections for women within the firm and community through networking opportunities. The Associated General Contractors “40 Under 40” list is comprised of individuals who demonstrate an extremely high level of leadership, professional excellence, and commitment to the construction industry throughout the state of Alabama. With over 15 years’ experience in public accounting, Jones specializes in construction businesses; helping many navigate complex tax, accounting, and consulting issues. She has been involved with Associated General Contractors for five years.

What’s Happening Out There The Delta Chi Chapter of Beta Alpha Psi (BAP) at the University of Alabama at Birmingham (UAB) was recognized as one of 10 (out of 300 chapters) as a Gold Chapter for the 2020-21 academic year. This honor is the highest recognition a chapter can obtain, and recipients are challenged to leverage innovation to elevate their chapter on campus and within their communities. Gold Chapters must also be a Superior Chapter for the 2020 and 2021 school year, participate in a regional meeting as a chapter operations presenter or Best Practices competitor, participated in the 2021 Annual Meeting as either a chapter operations presenter, Best Practices competitor or participant in Project Run With It, and submit a 5-minute video demonstrating why their chapter deserves the award and why a student would want to become part of the BAP organization. Eddie Nabors, accounting instructor at the Collat School of Business and faculty member in

UAB’s Department of Accounting and Finance, commented, “we are so excited and proud of our students.”

and instituted other policies to help create an improved work-life balance and helped employees navigate the pandemic.

Jackson Thornton Asset Management (JTAM), a wealth management firm with offices in Montgomery and Dothan, AL, is pleased to announce that it has been named to CNBC’s 2021 Top 100 Financial Advisors list.

“It is an honor to be recognized as one of the top three large firms in Accounting Today’s 2021 Best Firms to Work For,” said Mary Elliott, CPA, the Firm’s Chief Executive Officer. “The past year has presented multiple challenges for our employees, and they’ve responded by exceeding any and all expectations. It’s always been important to the Firm to help our employees be successful, and it’s my goal to continue providing a work environment where they can thrive.”

From an initial list of more than 38,000 firms considered, JTAM was ranked 79th of the Top 100 firms across the US. “We are honored to be included in CNBC’s Top 100,” said Thomas Bedsole, President of JTAM. “Our purpose every day is help clients reach their financial and retirement goals. Recognition like this serves to increase the confidence of those clients in JTAM and our team.” The methodology for the 2021 edition of CNBC’s annual FA 100 ranking of registered investment advisors (RIAs) was prepared in partnership with data provider AccuPoint Solutions. A variety of core data points from AccuPoint Solutions’ database of RIAs were analyzed, ranging from the firm’s compliance record and years in business to total accounts and assets under management. Warren Averett CPAs and Advisors is proud to have been named as one of the Top 50 Construction Accounting Firms by Construction Executive for the second year in a row and recently ranked as one of Accounting Today’s 2021 Best Firms to Work For. Warren Averett’s Construction Practice Group is made up of 50 experienced professionals who meet monthly to stay abreast of regulatory changes and tax strategies so that they can best serve the needs of their construction clients. They work one-on-one with clients to help operate successful businesses through various tax strategies, construction accounting and business consulting services. “Warren Averett is excited to have been ranked as one of the top 50 construction accounting firms again this year,” says William Aderholt, CPA, the Construction Practice Group Industry Leader. “Our team works hard every day to provide the best service to our construction clients and I’m thrilled that we’ve been recognized. We look forward to continuing to provide exceptional service and helping our clients thrive.” Accounting Today’s 2021 Best Firms to Work For distinction is designed to identify and honor the best employers, notably those who have found ways to connect and evolve during the pandemic. Warren Averett ranked third in the large firm category (250+ employees). To determine the list, Accounting Today partnered with Best Companies Group and ranked companies based on the results of anonymous employee surveys, as well as data on the firms’ employment, HR and benefits policies. Common denominators for firms that made the list included employers who provided flexibility

Wilkins Miller, an accounting and advisory firm with offices in Mobile and Fairhope, has been named one of the 2021 “Best Companies to Work for in Alabama” by Business Alabama and the Best Companies Group and one of the 2021 “Best Accounting Firms to Work for” by Accounting Today for the seventh year in a row. The firm earned third place for best companies in Alabama by Business Alabama and the only accounting firm recognized. This is the seventh consecutive recognition to the list for Wilkins Miller, with all rankings placing in the top three. “Our team is humbled to be recognized as a top three company in Alabama for the past seven years,” Wilkins Miller Managing Partner Allen Carroll said. “We recognize that people are our biggest asset, so we strive to make sure we have the right people and then help them reach their potential.” This survey and awards program was designed to identify, recognize, and honor the best employers in Alabama, benefiting the economy, workforce, and businesses. To assist in making its selection, the Best Companies Group conducts a two-part survey process which includes evaluating workplace policies, practices, philosophy, systems and demographics and employee surveys to measure employee experience. The combined scores determined the top companies and the final ranking. Out of only 100 firms selected for the “Best Accounting Firms to Work for” designation by Accounting Today, Wilkins Miller was ranked 23rd in the midsized firms (50-249 employees) and one of four accounting firms in Alabama for the seventh year in a row. “Our team is honored to be named to this prestigious list of firms for the seventh time,” Wilkins Miller Managing Partner Allen Carroll said. “This is a testament to the dedication of our entire team to making Wilkins Miller a top firm in the country to work for.” Wilkins Miller was selected among almost 250 companies across the country by Accounting Today for a place on the 2021 list. The annual survey and awards program, which is conducted in partnership with the Best Companies Group, is designed to identify, recognize, and honor the best employers in the accounting profession.

November / December

WINDOWS 11 IS HERE – ARE YOU READY? THOMAS G. STEPHENS, JR., CPA, CITP, CGMA

Microsoft formally released Windows 11, a free upgrade for most Windows users, on October 5. The newest version of Windows offers several welcome new features, enhanced security, and improved performance. However, not all computers will be able to run the latest version of Windows. Therefore, you should verify your computer meets the minimum requirements necessary to run Windows 11.

What Are the System Requirements for Windows 11? According to Microsoft, the minimum specifications for Windows 11 include the following: • 1 GHz or faster 64-bit multi-core processor or System on a Chip • 4GB of RAM • 64 GB or larger disk drive • UEFI, Secure Boot capable • Trusted Platform Module (TPM) version 2.0 • DirectX 12 or later graphics card with WDDM 2.0 driver • High-def display (720p or higher) larger than 9” diagonally • Internet access for updates

How Can I Test My Computer? Many users will struggle to determine if their computer meets the specs outlined above. Fortunately, Microsoft makes available a tool you can use to check your computer to see if it meets the system requirements outlined above. Specifically, you can use the Windows PC Health Check app to determine if your computer can run Windows 11. You can download the Windows PC Health Check app by visiting https://aka.ms/ GetPCHealthCheckApp to download the tools. Once the download completes, access your Downloads folder, and click on the downloaded file to complete the installation. When the installation finishes, click the Check now button to test your computer. Your results will appear almost instantly, confirming that your computer 32

ASCPA Connections

will run Windows 11 or letting you know of any deficiencies.

What If My Computer Doesn’t Meet the Minimum Specification? If your computer does not meet the Windows 11 minimum specifications, you may still be able to run Windows 11. In that circumstance, you can still install the operating system if your device meets the following specifications. • 1 GHz or faster 64-bit multi-core processor • 64 GB or larger disk drive • Trusted Platform Module (TPM) version 1.2 or newer However, in this situation, Microsoft will not support your instance of Windows 11, and you will not have access to updates or security patches. Significant risks abound with this type of implementation, and, accordingly, we do not recommend using it.

How Long Will Microsoft Support Windows 10? The support cycle for Windows 10 extends through October 14, 2025. Therefore, if you must continue to use Windows 10, you will have four years to plan your migration to Windows 11 or some other platform.

My Computer Is Up to Standards, So How Do I Get Windows 11? If your computer is up to Windows 11 standards, you can expect to receive your free Windows 11 upgrade over the upcoming weeks and months. A recent statement from Microsoft indicated that the company plans to have upgrades offered to all eligible customers by mid-2022. When your upgrade is available, it will download and install through the Windows Update feature.

What New Features Should I Look for In Windows 11? The most visible new feature in Windows 11 is a redesigned user interface that centers the

Taskbar and the Start menu in the middle of the screen. Further, Microsoft simplified the Start menu, with live tiles removed and a cleaner, fresher appearance. Another feature that many will likely use is the improved Snap tool. Using Snap Layouts, you can quickly arrange apps on your screen. You can also create groups of apps using Snap Groups and access all grouped apps by clicking a single icon. Moreover, Windows 11 features improved support for multiple monitors. When you disconnect from multiple monitors, the apps open on the disconnected monitor minimize, instead of moving to the connected monitor. Upon reconnecting to multiple monitors, the minimized apps return to the place on the reconnected monitor. An essential improvement to Windows 11 is better security. The mandate to have a TPM chip installed on a Windows 11-based computer exemplifies this point. For example, the TPM chip enables Windows Hello and BitLocker, two key security features in the operating system. Additionally, Microsoft is simplifying the update process for Windows 11. In the new environment, Microsoft will release major updates only once a year. Further, Windows 11 installs updates in the background without interrupting end-user activities.

Summary We often take operating systems for granted, only noticing them when things go wrong. However, with Windows 11, it appears that the upgrade is going to provide some welcome new features, alongside improved security. Accordingly, if you are a Windows user, we recommend you take advantage of the upgrade. Tommy is one of the shareholders of K2 Enterprises. At K2, Tommy focuses on creating and delivering content and is responsible for many Firm management and marketing functions. You may reach him at tommy@k2e.com, and you may learn more about K2 Enterprises at www. k2e.com.

CLASSIFIEDS

SELLING YOUR FIRM IS COMPLEX. LET US MAKE IT SIMPLE. Accounting Biz Brokers has been selling CPA firms for over 17 years and we know your market. We have a large database of buyers ready to purchase. Our “Six Steps to Success” process for selling your firm includes a personalized, confidential approach to bring you the win-win deal you are seeking. Our brokers are Certified Business Intermediaries (CBI) specializing in the sale of CPA firms. We are here to help you navigate through the entire sales process – from marketing to negotiating, to closing and successfully transitioning the firm. Contact us TODAY to receive a free market analysis. Listings: NEW: Memphis, TN Gross $708k; Memphis Area $2.56M; Rankin County, MS Gross $567k; MS Gulf Coast Gross $490k; Bartlett, TN Gross $550k-Sale Pending; Huntsville Gross $200k-SOLD; NE MS Tax & Bookkeeping Firm Gross $850k-SOLD. Kathy Brents, CPA, CBI. Cell 501.514.4928, Office 866.260.2793, Kathy@ AccountingBizBrokers.com, visit us at www.AccountingBizBrokers.com

YOUR PRACTICE WANTED Thinking about selling your practice? Accounting Practice Sales delivers results, bringing you the best price, optimal terms and a buyer who represents an ideal fit for your clientele. Contact us today for a confidential discussion. Our current listings include: • Montgomery CPA grossing $440,000 * New * • Cullman County CPA grossing $340,000 * New * • Northwest of Birmingham CPA grossing $315,000 * New * • South of Birmingham (Shelby County) CPA grossing $150,000 * New * • Columbus, MS (near AL border) CPA grossing $200,000 • Escambia County, FL (near AL border) CPA grossing $415,000 • Nashville area accounting and tax practice grossing $180,000 • Nashville area audit and review practice grossing $30,000 For more information on these listings or to sell your practice, contact Lori Newcomer, CPA and Tim Price, CPA at (888) 553-1040 or PNgroup@APS. net, or visit www.APS.net.

CPE CALENDAR LS11008 Live Stream: Business Law for Accountants Wednesday, November 03, 2021 7:00 AM – 2:30 PM Wiggins, Michael R. | 8 OTHER

96V SSARS 25 – Major Changes to Review Engagements Thursday, November 04, 2021 9:00 AM – 10:40 AM Oestriecher, Kurt | 2 A&A Before the SUB10 listing:

LS11038 Live Stream: Successfully Leading 5.5 Generations Tuesday, November 16, 2021 7:00 AM – 2:30 PM Elder, Jennifer | 8 Other

LS12027 Live Stream: Don Farmer’s 2021 Federal Tax Update (CFP) Tuesday, November 16, 2021 7:00 AM – 2:30 PM Farmer, Don | 8 TX

OK3200 Fall Woman’s Empowerment Summit Wednesday, November 17, 2021 8:30 AM – 4:20 PM 2 ETHICS, 6 MG

SUB10 Getting Ready to Implement SAS 135 – 140 (Other New Auditing Fun) Thursday, November 18, 2021 12:00 PM – 1:15 PM Martin, Jim D. | 1.5 AA

LS11058 Live Stream: Creative Strategies for Buying, Selling, or Gifting a Business Tuesday, November 23, 2021 7:00 AM – 2:30 PM Werner, Arthur | 8 TX

LS11066 Live Stream: Audit and Attest Quality Matters That Should be on Your Radar: Avoiding Common Peer Review Deficiencies in SAS, SSARS and SSAE Tuesday, November 30, 2021 7:00 AM – 2:30 PM Louis, Jennifer | 8 AA

LS12003 Live Stream: The Latest Nonprofit Internal Control Scoop: Practical Insights into Mitigating Financial Reporting, Compliance and Other Risks Wednesday, December 01, 2021 7:00 AM – 2:30 PM Louis, Jennifer | 8 AA

LS12004 Live Stream: Foreign Investment in Real Property (NEW) Wednesday, December 01, 2021 7:00 AM – 2:30 PM 8 TX

LS12006 Live Stream: Preparing and Reviewing Workpapers – Essential Tips for Avoiding Deficient Audit and Other Attest Engagements Thursday, December 02, 2021 7:00 AM – 2:30 PM Louis, Jennifer | 8 AA

LS12009 Pat Garverick’s Federal Tax Update: Individual and Business Current Developments Friday, December 03, 2021 7:00 AM – 2:30 PM Garverick, J. P. | 8 TX

LS12011 Live Stream: Excel Dollars and Sense (Bring Your Own Laptop)

LS12031 Live Stream: CFO Series: Emotional Intelligence (New)

LS12054 Live Stream: Don Farmer’s 2021 Federal Tax Update (CFP)

SUB11 ASU 2020-07: Disclosures of Non-Financial Donations to a Not-for-Profit

Monday, December 06, 2021 7:00 AM – 2:30 PM Calhoun, Charlton P. | 4 AA, 4 OTHER

Tuesday, December 07, 2021 7:00 AM – 2:30 PM Farmer, Don | 8 TX

LS12064 Live Stream: Don Farmer’s 2021 Individual Income Tax Workshop (CFP) Wednesday, December 08, 2021 7:00 AM – 2:30 PM Peters, David | 8TX

LS12065 Live Stream: Don Farmer’s 2021 Corporate/ Business Income Tax Workshop (CFP) Thursday, December 09, 2021 7:00 AM – 2:30 PM Peters, David | 8TX

GAAF ASCPA’s Governmental Accounting and Auditing Conference Thursday, December 9, 2021 - Friday, December 10, 20211 8:00 AM – 3:30 PM 8 AA

TXBT2115 Live Stream Series: Tax Bites with Art Auerbach: Episode 15 Friday, December 10, 2021 8:00 AM – 10:00 AM Auerbach, Arthur | 2 TX

Tuesday, December 14, 2021 7:00 AM – 2:30 PM Farmer, Don | 6 OTHER, 2 ETHICS

Thursday, December 16, 2021 12:00 PM – 1:15 PM Martin, Jim D. | 1.5 AA

035 B&I Quarterly Meeting-December Friday, December 17, 2021 8:30 AM – 10:10 AM 2 Other

TXBT2116 Live Stream Series: Tax Bites with Art Auerbach: Episode 16 Friday, January 14, 2022 8:00 AM – 10:00 AM Auerbach, Arthur | 2 TX

SUB12 Final Preparations for the Leasing Standard

Thursday, January 20, 2022 12:00 PM – 1:15 PM Martin, Jim D. | 1.5 AA

TXBT2117 Live Stream Series: Tax Bites with Art Auerbach: Episode 17 Thursday, February 10, 2022 8:00 AM – 10:00 AM Auerbach, Arthur | 2 TX

SUB13 SSARS 25 is Live!

Thursday, February 17, 2022 12:00 PM – 1:15 PM Martin, Jim D. | 1.5 AA

November / December

SELF-STUDY CPE SCHEDULE BUNDLE40 ASCPA’s Build Your Own 40-Hour Bundle

FVA09 ASCPA’s Fair Value Accounting 2020

AAAE ASCPA’s Ethics

ASCPA | Self Study | AA: 4

ASCPA & NASBA Self Study | Ethics: 2

BUNDLE20 ASCPA’s Build Your Own 20-Hour Bundle

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

ANAR-JM ASCPA’s SSAE 19 – What a Relief for Agreed-Upon Procedures Engagements

PEAAE-OL ASCPA’s Understanding the Independence Guidelines of the Accounting Profession

ASUT-BE ASCPA’s Sales and Use Tax Highlights for AL CPA’s

ASCPA | Self Study | Other: 40

ASCPA | Self Study | Other: 20

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

ASCPA | Self Study | AA: 4

SSARS-JM ASCPA’s SSARS Update (Preparation, Compilation and Review)

ASCPA | Self Study | AA: 2

ASCPA | Self Study | TX: 2

CHCOV-SS COVID-19 Economic Stimulus Webinar with Karen Miller & Lisa McKinney ASCPA | Self Study | TX: 2

ASCPA | Self Study | AA: 4

MCCP-MG ASCPA’S Managing Change in WGASB-MG ASCPA’s What’s Going on at the GASB an Ever-Changing Profession ASCPA | Self Study | AA: 4

ASCPA | Self Study | AA: 4

AEIS-JM ASU-OL ASCPA’s Auditing Standards Update ASCPA’s Ethics for CPAs in Industry or Searching ASCPA | Self Study | AA: 4

AAGE-MG ASCPA’s What’s Changing in A&A for Governmental Entities

NFPAA-MG ASCPA’s Not-for-Profit Accounting Update

AUGN-MG ASCPA’s Annual Update for Governmental and Not-for-Profits

ECPP-JM Ethics For Public Practice

ASCPA | Self Study | AA: 4

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 Individuals & 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

ASCPA | Self Study | AA: 2

BCNI08 ASCPA’s Business Combinations & Non-Controlling Interests

ASCPA | Self Study | AA: 4

EUPC-KD ASCPA’s Economic Update, Post COVID-19

ASCPA | Self Study | Ethics: 2

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

ASCPA | Self Study | Ethics: 2

ASCPA | Self Study | AA: 4

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ASCPA Connections

ASCPA EDUCATOR CONFERENCE 11.12.21 I 10AM-2:15PM Free 4-hour CPE with lunch provided Attend in-person at the ASCPA office or via Zoom Plan to discuss CPA Evolution, Future of the Accounting Profession, Lessons Learned from the Pandemic, and more! For more information or to register visit: www.ascpa.org/edc

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Connections - November/December 2021

Articles inside

Is Someone Spying on Your Business?

Tax Planning for 2022

3 Ways the Pandemic Affected Peer Reviews

5 Reasons CPAs Should Implement QR Code Payments

Where Are We On the New Elective PTE Tax Regime?

There’s More Than Enough