Bottom Line Garry Bartecki
Merry Christmas and Happy New Year Santa will hopefully be good to you and provide you with an unexpected taxable income along with a few tax strategies to minimize the Federal and State tax bites. I suspect that if you find yourself in this situation you are at the head of your class this year. So, good for you! Is a repeat in the offing? Based on what I have been reading I would not count on it. On October 28 I heard a report that 97% of CEO are planning for a recession. I guess that would include all of you. The Duke Q3 CFO survey indicates: • Growth expectations for the next 4 Quarter are lower than the 22 results • Inflation cited as the most pressing concern • Firms well below prior-year level, but holding steady • Expect elevated price pressures with a slight reduction in 23 • Expect price pressures to continue for more than 12 months. • Most passing some % of increases through to customers. • Hard to find and keep high-skilled employees. • Expect hiring conditions to stay the same Being we are in “that” time of the year; I would suggest you schedule a meeting with your banker and tax folks to find out where you stand with your financial arrangements and tax position. I came across three articles that I am going to ask Dean to put on the website, so you determine if you need to follow up on anything as it pertains to your situation. Two are BDO Tax Strategist pieces. One discusses the use of accounting methods to defer tax. The second is on planning for NOLs in the current environment. Good stuff, both of them. The third piece titled 5 TAX ISSUES TO KEEP YOUR EYES ON (https://www.aicpa.org/resources/article/ 10
www.MHWmag.com
December 2022
dont-fall-into-a-lull-five-tax-issues-to-keepyour-eyes-on?utm_medium=email&utm_ source=SFMC_RAVE&utm_campaign=&utm_ content=501416&AdditionalEmailAttribute2) is an AICPA piece. If there ever was a year to make your tax bill decrease and as a result keep more cash flow, this is the year to do it. As far as your banker goes, they are only interested in two things. Collateral Value and Debt Service Coverage. Be prepared. If you have recent equipment valuation stats, be ready to provide them. If your internal statement book value is less than the appraisal value (OLV) point it out as “hidden equity.” If you also provide a report on your used equipment sales to show this spread is real …that will help as well. And if you are or should be one of the 97% expecting a recession, explain how you plan to deal with that issue. The CFO survey results (above) make good talking points. To get a better handle on all these economic issues facing you and us I am going to suggest you buy yourself a book to read over the holidays that will help you understand where we are at currently and what is going to happen as globalization is reversed in the coming years (not at long as you think). Absolutely readable, understandable, and fascinating. I CAN NOT PUT IT DOWN. The good old USA made this globalization work which made goods and service providers SMARTER, BETTER, AND FASTER which in turn lowered pricing and raised the world's standard of living. Now that the USA may no longer be interested in this economic concept things are going to change. I will say no more. Read it yourself and give a copy to high school and college students. They will find it useful as well. What did you think about last month’s article that mentioned the OEM direct sales potential? I can see it happening and wonder why it has taken so long. Be more of a build-to-order program which would reduce inventory levels as well as absorption costs you now have to cover to offset new equipment sales costs.
