2010 CPA Report Fourth Edition

Four th Edition 2 0 1 0

CPA Report South Carolina Association of Certified Public Accountants

SCACPA Celebrates 95 Years! n Reflecting Back -- Looking Forward n Member Profiles: Our Oldest and Youngest CPAs

Also, don’t miss South Carolina Tax Changes!

Reflecting Back, Looking Forward 1915 - 2010

Charleston

2430 Mall Drive, Suite 360

Greenville

843-884-3912

Charleston, SC 29406

864-245-8788

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South Carolina CPA Report

www.american-pensions.com

(888) 557-4814 | www.scacpa.org

CPA Report South Carolina Association of CPAs

South Carolina Association of Certified Public Accountants Magazine Volume 40, Fourth Edition 2010 Officers Charles E. “Eddie” Brown, CPA, President Timothy L. Baker, CPA, President Elect Michael R. Putich, CPA, Vice President Sharon E. Mann, CPA, Secretary-Treasurer

Reflecting Back, Looking Forward 1915 - 2010

Charles M. Redfern III, CPA, Past President BOARD OF DIRECTORS Clarence Coleman Jr., CPA, Ph.D. Alys Anne Dennis, CPA J. Bratton Fennell, CPA Malynda M. Grimsley, CPA Penny A. Lewis, CPA A. D. “Dave” Masters, CPA J. Patrick McDermott, CPA James W. McIlrath, CPA William C. Robinson, CPA L. Kent Satterfield, CPA Philip R. Snipes, CPA Michael J. Targia, CPA, CFA Robert M. Tilton, CPA Jada C. McAbee, CPA Beth T. Zamorski, CPA EXECUTIVE DIRECTOR Erin P. Hardwick, CAE MANAGING EDITOR Allison K. Caldwell GRAPHIC DESIGNER Lisa S. McGee Contributing writers Reva Brennan, MPA, CAE, IOM Allison Caldwell K. Todd Dailey, CPA, CVA William M. Grooms, PhD, CPA Erin P. Hardwick, CAE Mark T. Hobbs, CPA James M. Holloway, Jr., CPA Amanda W. Koehler, CPA Mark Riley Jason Sweatt, CPA 2010 Editorial Board Margaret L. Lattimore, CPA, Chair Ellen K. Adkins, CPA, MBA Charles E. Alvis, CPA, MPA, MBA John B. Brantley, CPA Jackie F. Breland, CPA Neil A. Brown, CPA, MAcc, CFP Amanda S. Colgate, CPA Lisa S. Cooke, CPA Malynda M. Grimsley, CPA Karen A. Hursey, CPA Lesley H. Kelly, CPA Marsha G. LePhew, CPA A. D. “Dave” Masters, CPA Derrick B. Stark, CPA Catherine B. Stoddard, CPA Victor C. Webster, CPA, MBA

(888) 557-4814 | www.scacpa.org

SCACPA Celebrates 95 Years 11 14

Reflecting Back -- Looking Forward Member Profiles: Oldest and Youngest

In This Issue 16 18 22 24 26 28 36

CPA-PAC Report and Contributors List South Carolina Tax Changes 2010-2011 Health Care Reform Health Care Reform Act LLR News: Positive Enforcement Programs Emerging Leaders Conference Review A&A Conference Preview

In Every Issue 5 6 8 27 31 32 33 34 38

From the President Association News On Your Behalf Board of Accountancy News Chapter Connections Member News Welcome New Members Upcoming CPE Classifieds/Advertiser Index

Statements of fact and opinion are made by the authors alone and do not imply an opinion on the part of the officers or members of the SCACPA. Advertising rates will be furnished on request to SCACPA, 570 Chris Drive, West Columbia, SC 29169, (803) 791-4181. Publication of an advertisement in The CPA Report does not constitute an endorsement of the product or service by The CPA Report or the SCACPA. South Carolina CPA Report

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From the President

Reflections on the CPA profession, life, love and just about anything else that captures the interest of SCACPA’s 2010 President Eddie Brown

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s I write my last column as president of SCACPA, it’s hard to believe this exciting year will soon come to an end. Many of my fellow CPAs and the SCACPA staff superstars have and continue to achieve the “WOWs” that I challenged them to in January, with the goal of establishing ourselves as an emerging leader in the profession.

My WOW challenges were not clearly defined, but left to the imagination and industrious forethought of a great team that works hard to polish and maintain the reputation of all CPAs in South Carolina.

Although I’ll probably be in trouble for missing some of them (to which I offer sincere apologies in advance), here’s an attempt to recognize our 2010 milestones:

C.E. “Eddie” Brown, CPA SCACPA member since 1976 As shareholder of Swaim Brown, PA, Eddie practices in the areas of corporate and individual tax planning and strategy, international tax, business consulting, estate planning, business planning, M&A, succession planning; manufacturing, real estate and construction.

Eddie is actively in involved with AICPA; SCACPA; Estate Planning Council of Spartanburg and serves as trustee of the South Carolina Baptist Foundation.

Follow Eddie Brown as he blogs weekly. http://scacpa.org.wordpress.com

• Broadcasted the first SCACPA-generated web cast: Professional Issues Update (October 1).

• The Central Chapter increased its scholarship endowment by $20,000.

• Started and maintained our first blog, Keeping Balanced. I hope you have taken time to read it occasionally.

• Our Executive Director was named Executive of the Year by the S.C. Association of Association Executives and was also elected by her peers to serve as secretary-treasurer of the CPA Society Executives Association, representing 54 CPA societies nationwide.

• The IT Committee and finance director worked diligently to ensure SCACPA’s credit card process is PCI compliant.

• Our inaugural Sustainability Task Force established and developed information and programming that became our first concerted effort on behalf of South Carolina CPAs and their employers.

• A South Carolina CPA was interviewed and videotaped by the Journal of Accountancy relative to setting up an international tax niche. The video is posted on the JOA’s website.

• Approximately 25 percent of SCACPA members (800) attended one of nine Professional Issues Updates around the state.

• Our Peer Review Committee transitioned to a paperless process for the Report Acceptance Bodies.

• Three new conferences held this year: Nonprofit, Emerging Leaders and Women in Leadership.

• Federal-state tax conformity legislation successfully passed on March 31, setting the stage for even earlier passage in the future.

• The Board created a Rapid Response Team to respond quickly to advocacy requests from the AICPA. • More firms than ever contributed to the CPAPAC, raising $15,000 this year.

• We celebrated our first South Carolina CPA Report magazine with all locally generated content.

These are just a few of the WOWs we’ve accomplished this year, for the benefit of SCACPA members and the profession as a whole. It has been my privilege and honor to serve, and I look forward to continued momentum and progress as we move forward together. n

(888) 557-4814 | www.scacpa.org

South Carolina CPA Report

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Association News

SCACPA Welcomes April Blake

Happy Birthday to SCACPA

As Office and Member Services Coordinator, April Blake is the first point of contact for SCACPA members, non-members, vendors and guests in the office. She processes member information and renewals, assists staff members with special projects and oversees office operations. April is a 2008 graduate of the University of South Carolina School of Journalism with a degree in Public Relations. Outside of work, she is involved with the Cayce-West Columbia Jaycees chapter and enjoys cooking, bicycling around town with her husband and reading.

SCACPA celebrates its 95th anniversary in 2010. Founded in 1915 by a small group of visionary CPAs, SCACPA has a proud history of providing advocacy, member services and continuing education to the growing pool of CPAs in the state. To celebrate this milestone, please consider a generous donation to the Educational Fund at your membership renewal time. Whether you donate $10 or $100, your gift will be greatly appreciated and is tax-deductible.

What better way to help strengthen the future of the profession in South Carolina?

Staff Contact: Glenna Minor

Let Us Hear From You The South Carolina CPA Report and the SCACPA Editorial Board welcomes letters from readers in response to articles published in the magazine as well as those concerning issues of general interest to the accounting profession. All letters receive consideration. The editors reserve the right to edit letters for clarity and length. Writers should include their contact information, including a daytime telephone number and e-mail address, if possible. Letters may be addressed to: Letters to the Editor; The South Carolina CPA Report; 570 Chris Drive; West Columbia, SC 29169 or via e-mail to ehardwick@scacpa.org.

Staff Contact: Erin Hardwick

Going Green In our continued efforts to increase sustainability and do right by the environment, SCACPA headquarters recently fulfilled Lexington County Council’s Green Business Certification requirements. For more information on sustainability and to learn how your firm can go green, visit www.scacpa.org/sustainability.

PIU Replay

2010 Professional Issues Update Series YOUR ROAD TO SUCCESS

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South Carolina CPA Report

Miss the Professional Issues Update in Columbia on October 1, 2010? Watch a re-broadcast of the webcast. For more information and to register, visit www.scacpa.org/PIU.

(888) 557-4814 | www.scacpa.org

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Educational Fund Announcements

The Central Chapter of SCACPA announces a second contribution of $20,000 to establish an additional endowed scholarship to SCACPA’s Educational Fund.

The Central Chapter currently funds a $2,500 Investing in the Future scholarship to be awarded to a student whose permanent address is within the chapter area and who is attending a college or university in the chapter area, preferably both. The second scholarship will go to a graduate student who meets specified criteria.

The Sea Island Chapter of SCACPA has contributed $6,500 to the Educational Fund, allowing the chapter to reach a total contribution goal of $10,000— creating an endowed, named scholarship for the chapter.

These new scholarship funds established by chapters show leadership and vision for the profession and its future! The 2011-2012 scholarship application will be available online in January. The deadline to apply is June 1, 2011.

Staff contact: Glenna Minor

New Peer Reviewers & E-mailed Forms The SCACPA Peer Review Committee is pleased to announce the following new peer reviewers: Brandon Hoffman Hoffman & Hoffman CPA PA, Charleston To save time and money, peer review scheduling forms will now be sent via e-mail. Please be sure to update your firm’s peer review contact and e-mail address with the AICPA or SCACPA. Visit www. scacpa.org for a list of current peer reviewers.

Staff contact: Glenna Minor

Tom Childers Elliott Davis, LLC, Greenville Michael Boliek Elliott Davis, LLC, Greenville Joseph Beck Jones, Pounder & Associates, P.C., Charleston John Horton John C. Horton, CPA, PC, Conway Lynn Medlin Lowery & Medlin, P.A., CPAs, Surfside Beach Foster McKinney Hamilton Moss & McKinney, Columbia

The Peer Review Program is in need of team members in a number of specialty areas. If you are interested in being a consultant but not necessarily performing peer reviews, we need you! Staff Contact: Glenna Minor

(888) 557-4814 | www.scacpa.org

SOUTH CAROLINA ASSOCIATION OF CPAs 570 Chris Drive, West Columbia, South Carolina 29169 (803) 791-4181 or Toll-free (888) 557-4814 Fax (803) 791-4196 | www.SCACPA.org

OUR MISSION To support all CPAs – whether in public practice, industry, government or education – with lifelong learning opportunities necessary for their success and to promote high ethical standards and legislative advocacy for both the public good and the profession. We accomplish this mission through the following activities: n Advocacy n Certification &

Licensing n Communications

n Recruiting & Education n Standards &

Performance

SCACPA STAFF Erin P. Hardwick, CAE, Executive Director Ext. 104, ehardwick@scacpa.org Reva E. Brennan, MPA, CAE, IOM, Associate Director Ext. 103, rbrennan@scacpa.org Karen M. Hancock, CPA, Finance Director Ext. 108, khancock@scacpa.org Glenna P. Minor, Peer Review & Member Services Manager Ext. 107, gminor@scacpa.org April C. Cox, Education Manager Ext. 110, acox@scacpa.org Emily M. Allen, Communications Coordinator Ext. 106, eallen@scacpa.org Sandra P. Oxner, CMP, CMMM, Chapter & Special Events Coordinator Ext. 112, soxner@scacpa.org April Blake, Office and Member Services Coordinator Ext. 100, ablake@scacpa.org

South Carolina CPA Report

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For the profession, by the profession—that’s what the South Carolina Association of CPAs is all about. SCACPA’s board of directors, committees and task forces and Young CPAs Leadership Cabinet are hard at work making decisions, providing guidance and embarking on projects and programs that strengthen the profession and enable members to improve their knowledge, network and technical skills.

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Association Governance

2010 BOARD PLANNING RETREAT PARTICIPANTS

Every August the SCACPA Board of Directors gathers for a two-day planning retreat to discuss challenges and issues facing members, the profession and the Association, ending with goals and priorities identified for the future.

This year some 27 association leaders, including representatives from the eight chapters and the Young CPA Leadership Cabinet, joined the SCACPA Board in the planning session.

Eddie Brown, SCACPA president

Suzanne Merritt, Catawba Chapter President

Tim Baker, SCACPA president-elect

Michael Putich, SCACPA vice-president

Amy Cain, Central Chapter president

Bryan Rabon, Pee Dee Chapter president

Pat Carey, Sea Island Chapter president

Charlie Redfern, SCACPA past-president

Clarence Coleman, SCACPA board member

Bill Robinson, SCACPA board member

Alys Anne Dennis, SCACPA board member

Kent Satterfield, SCACPA board member

Rick Ett, Coastal Chapter President

Leigh Schaefers, chair, Young CPA Leaders Cabinet

Malynda Grimsley, SCACPA board member

Kara Shealy, Foothills Chapter President

President-elect Tim Baker organized the planning retreat and chose Maryland Association of CPAs CEO Tom Hood to facilitate the meeting.

In preparation, Tom asked planning retreat participants to read an article called Building Your Company’s Vision by Jim Collins and to complete a related worksheet. At the planning session, participants contributed to a review of profession issues and trends, an environmental scan, an evaluation of strengths and challenges of the Association and ultimately identified five goals for 2011-2016. The goals, which will drive SCACPA’s focus and resources, are:

Mandy Hallman, Grand Strand Chapter president Mike Targia, SCACPA board member Melanie Hill, Piedmont Chapter president

William Thiem, Young CPA Leadership Cabinet

Penny Lewis, SCACPA board member

Beth Zamorski, SCACPA board member

Dave Masters, SCACPA board member Pat McDermott, SCACPA board member

1. Study and generate innovation around continuing professional education; 2. Enhance advocacy efforts for the profession and increase the effectiveness of our collective voice; 3. Grow and support the role of young CPAs as leaders in the Association; 4. Increase the value of membership through communication; and 5. Restructure the Association’s governance structure to enhance member involvement and member service.

Task forces are being formed around each goal to define action steps for the next 18 months and beyond. Look for more detail on the work of these task forces in the months to come.

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South Carolina CPA Report

(888) 557-4814 | www.scacpa.org

Board of Directors Meeting

CPA-PAC Makes Candidate Contributions

The SCACPA Board of Directors met August 6 immediately following the planning retreat. Among several items of business, the board received and approved a favorable 2009 audit report from its auditor Elliott Davis.

The CPA-PAC has made a total of $17,500 in contributions to state candidates for governor and certain House seats.

Contributions to candidates help SCACPA and the profession make vital connections with key policy makers. It’s part of crucial relationship-building for a time when those relationships may be needed to protect and advance the CPA profession. A sincere thank you goes to the many CPAs who serve as “Key Person Contacts” and hand-delivered contribution checks to their local legislator.

General Election Contribution Recipients Both gubernatorial candidates: Rep. Nikki Haley and Sen. Vincent Sheheen

The two-year project of updating the SCACPA bylaws has been completed, and the final draft was reviewed and approved.

For complete congruence throughout the organization, chapter bylaws will soon be conformed to these changes.

The Nominating Committee presented its recommendations for the 2011 board slate, and the slate was approved. This slate was also presented to SCACPA members in the third edition (August) of the South Carolina CPA Report. Members will have the opportunity to vote on this slate at the annual business meeting at the 2010 CPA Summit, November 11.

The board heard a report on efforts to review CPE operations of SCACPA and chapters. After discussion the board commissioned a new task force to examine the full spectrum of member services offered by the state Association as well as its chapters.

(888) 557-4814 | www.scacpa.org

Representatives: Liston Barfield (Conway), Eric Bedingfield (Mauldin), Don Bowen (Anderson), Joan Brady (Columbia), Robert L. Brown (Hollywood), Gilda Cobb-Hunter (Orangeburg), Daniel Cooper (Anderson), Tracy Edge (North Myrtle Beach), Bobby Harrell (Charleston), Chip Huggins (Columbia), Herb Kirsh (Clover), Deborah Long (Indian Land), Phillip Lowe (Florence), Vida Miller (Pawleys Island) Harry Ott, (St. Matthews), Steve Parker (Boiling Springs), Gene Pinson (Greenwood), Bill Sandifer (Oconee), Gary Simrill (Rock Hill).

Generous donations given by individual members as well as CPA firms are the sole means by which the Association can show its support of certain legislators by supporting their campaigns. Some 240 (or 7 percent) of SCACPA members have donated over $13,000 to the CPA-PAC in 2010.

Firms which have donated or pledged a total of $10,000 in 2010 include: Derrick Stubbs & Stith, Dixon Hughes, Elliott Davis, McAbee Talbert Halliday, the Schmoyer Company, Scott McElveen, WebsterRogers, Ernst & Young, Grant Thornton, PriceWaterhouseCoopers, KPMG. Thank you to each and every member and firm who acknowledges and supports this important process! n

Candidates: Todd Atwater for House Seat 87 (Lexington), Tommy Pope for House Seat 47 (York County), Rick Quinn for House Seat 69 (Lexington)

Professional Issues Update Report SCACPA completed its third annual PIU series with nine regional meetings this fall. Each meeting carried a potential of four hours of free CPE (a value of $140) and featured an overview of issues impacting the profession, a primer on the issue of corporate sustainability and a local legislative panel. Attendance was outstanding and the comments from participants favorable.

Erin P. Hardwick, CAE has served as SCACPA’s executive director since 2005. She has more than 25 years of experience in association and non-profit executive leadership and is one of 18 Certified Association Executives in South Carolina, the highest credential in the association management profession. She currently serves on the SC Secretary of State’s Nonprofit Advisory Council, the Saluda Shoals Park Foundation Board of Directors and the SC Council on Economic Education Board of Directors.

2010 PIU Attendance Anderson 34 Charleston 153 Columbia

147 Florence 38 Greenville 141 Myrtle Beach 65 Rock Hill 50 Sea Island (Hilton Head) 61 Spartanburg 65 Total Attendance 754

South Carolina CPA Report

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Reflecting Back, Looking Forward

As we reflect back and look forward to the future, we will strive as always to uphold the high standards of quality, excellence and ethics established by our founders some 95 years ago.

1915 - 2010

Reflecting Back --Looking Forward SCACPA Celebrates 95 Years

by Allison Caldwell

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t all began with a six-member meeting in Columbia on September 2, 1915, where a constitution and by-laws were adopted and the first officers elected. A recess was taken until September 16, when Secretary Louis A. Searson, CPA presented an official charter and seal.

That second meeting was considered the first regular annual meeting, and the South Carolina Association of Certified Public Accountants was born.

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For our 95th anniversary, SCACPA asked several “outstanding” members to share their unique membership experiences and messages to fellow members. Scattered throughout are a few timeline highlights to whet your appetite for SCACPA’s centennial celebration in 2015. As we reflect back and look forward to the future, we will strive as always to uphold the high standards of quality, excellence and ethics established by our founders some 95 years ago.

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Today SCACPA is a statewide professional organization representing more than 3,850 CPAs and accounting professionals, governed by a 20-member voluntary Board of Directors and facilitated by an 10-member professional staff. Although the profession and SCACPA itself has seen many changes since 1915, many are still reaping the benefits of those humble beginnings.

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Its establishment marked the emergence of accountancy as a profession in South Carolina (New York passed the first CPA law in 1896, followed by Pennsylvania and 33 other states by 1914).

According to a 50-year history compiled in 1965 by member and former President Noah E. Derrick, CPA, WWI hindered any real growth in membership until 1921, when an invitation was sent to all South Carolina CPAs. The first membership certificate was issued to Searson, who first initiated the plan for a state association.

SCACPA Milestones 1915

1927

1958

1927

1945

1959

South Carolina passes CPA law SCACPA chartered with 6 members

Columbia Chapter first organized (888) 557-4814 | www.scacpa.org

First Association scholarship awarded ($50)

S.C. Certificate #100 issued

Central and Piedmont Chapters organized

Coastal Chapter organized South Carolina CPA Report

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FORMER PRESIDENT (1959) AND SON OF A FORMER PRESIDENT (1922) Crawford Clarkson, CPA SCACPA member since 1948 Your father received the first CPA certificate awarded in South Carolina. In choosing your own profession, what made you want to follow in his footsteps?

He had a very successful business. I worked for him every summer in high school, but then WWII came along and I spent six years in the Navy before joining him at A.C. Clarkson Company.

What have been some of your proudest accomplishments as a CPA and a member of SCACPA? There are several. From my father, I inherited a firm with one CPA, an assistant and myself—and we went on to have as many as 75 people working all over the southeast and internationally. When I first began serving with the AICPA, there were no rules regarding auditing. I served on the AICPA committee that produced the first rules of auditing and Procedure No. 1.

As part of the Security Tax Commission, I was also part of the group instrumental in revamping the state tax code. And as president of SCACPA, I started a four or five page newsletter that was the forerunner of the magazine you now hold in your hands. I’m very proud of this publication and what it has become.

What’s your message to today’s CPAs regarding the future of the profession?

Two things: 1) Be very flexible. Things are changing rapidly, and if you’re going to succeed you must be willing to change and grow as well. 2) Do not forget ethics.

All of us sometimes run roughshod over the rules, but now more than ever we need

to remember and uphold the strong sense of ethics our profession was built upon. It’s just one man’s viewpoint, but I see ours and other professions drifting away from what we once had.

LONGEST CONSECUTIVE RECORD OF SCACPA ANNUAL MEETING ATTENDANCE Bob Cooper, CPA SCACPA member since 1965 How many consecutive annual meetings have you attended?

This coming November, I will be attending my 45th consecutive annual meeting. I received my South Carolina CPA Certificate (#394) in September 1965. I became a member of SCACPA in December of that year and attended my first annual meeting in 1966.

What do you enjoy most about SCACPA’s annual meetings?

I always enjoy seeing my CPA friends and the SCACPA staff every year, and I especially look forward to the CPE sessions.

What’s your message to new members or those who have never attended an annual meeting?

Hopefully, if you will make it a point to attend one of our annual meetings, I believe you will really enjoy and benefit from the experience. You might even get hooked like I did after attending my first meeting!

“The time you spend getting involved in SCACPA has a great return on investment.”

LONG-TIME KEY PERSON CONTACT Harry Gregory, CPA SCACPA member since 1967 When and how did you first become involved in the SCACPA’s Key Person Contact program?

No one knows exactly when SCACPA’s program got started, but I was involved.

I spent more than 26 years as the Federal Key Person Coordinator for the AICPA and served more than 35 years on the Legislative Committee, which led to the creation of SCACPA’s KPC program.

Can you share a KPC success story?

The success is in building lasting, one-onone relationships with these legislators.

They are people, just like us. One of my favorite stories is an experience with the Federal Key Person program. The “big six” had their own organization back then that met and discussed issues on state and national levels—what was happening in Washington. When things started to come up in South Carolina, I somehow got invited to join these big boys even though I came from a small firm. They never looked down on me and listened to my comments. When the vote for tort reform came through in the U.S. Congress, I knew the minute it passed.

I called Arthur Anderson’s office and spoke with an Executive Assistant—who was elated, but didn’t believe me and called Washington to find out what I already knew was true. There are other stories where legislators have broken with their party and voted opposite their President because of a meeting in somebody’s living room. That’s when these relationships really make a difference.

What’s your message to others on the importance of Key Person Contacts?

Personal advocacy is critical to helping SCACPA promote or oppose legislation that

SCACPA Milestones 1964

First $500 scholarship awarded

Membership reaches 600

1969

1979

Pee Dee Chapter organized

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1975

South Carolina CPA Report

Catawba Chapter organized

1980

South Carolina

Membership reaches 1100

1982

CPA

Foothills and Sea Island Chapters organized

(888) 557-4814 | www.scacpa.org

affects our profession. My hope is that many others will get involved. Serving as a KPC shouldn’t be just a resume-builder. Whether you agree or disagree with their vote, it’s about building a friendship where you can call and say, “This is our position—see what you can do.”

SCACPA’S FIRST FEMALE PRESIDENT (1991) Anne Ross SCACPA member since 1975 What year did you first become a member of SCACPA, and how long after that did you serve as president?

I joined in August 1975 and worked my way through the Central Chapter offices—I was pregnant the year I was [chapter] president, so that would have been 1983. As chapter president, I served on the SCACPA Board and became president in 1991.

What were the most challenging AND the most rewarding experiences during your tenure?

The most challenging was being considered just a CPA, and not a female CPA. The most rewarding were all the contacts I had the chance to make within the state, nationwide and a couple of international ones as well.

All were the results of my getting involved.

What would you say to other women members with aspirations of leadership?

I had excellent mentors—J. W. Hunt, Sr. and Will Hunt in audit and tax, and Austin Sheheen and Lollie Coward Harper in affairs of the association and the profession. Get involved early in your career. Listen and learn at first, and don’t hesitate to take an active role in the profession.

2001

Membership reaches 3000

2007

Peer review became mandatory by the state for all firms providing attest services (888) 557-4814 | www.scacpa.org

BOARD MEMBER AND ACTIVE CHAPTER MEMBER J. Bratton Fennell, CPA SCACPA member since 1989

state; continuing education that keeps you up to date; and the ability to actively protect the CPA profession so it will continue to adequately protect the public, provide sound advice to clients and be a source of good jobs for the next generation.

What year did you become a member of SCACPA, and how has your service actively increased over the years?

I first joined SCACPA in 1989 and participated in regular CPE and other functions. I increased my activity significantly in 2003 by participating with the Technical Standards Committee, teaching CPE at the A&A conference in Charleston. Since that date, I’ve been actively involved as a Chapter Officer in the Coastal Chapter and the Board Representative from the Grand Strand Chapter.

FIRST CHAIR OF SCACPA’S YOUNG CPA LEADERSHIP CABINET

What have you learned about SCACPA and the benefits/challenges of active membership that perhaps you didn’t realize before?

We need to take an active role politically to protect our profession and our members.

Without SCACPA’s active involvement, legislation could be passed (or not passed) that could impact our members in a very negative way. Active membership has allowed me to better network with other CPAs in our state, and these relationships have been helpful to me in business over the last few years. As an active member, I am not only aware of events that may impact our profession, I am also able to impact events that may impact our profession.

What excites you most about leading the Young CPA Leadership Cabinet?

As chair of the Young CPA Cabinet, I enjoy getting to know other young CPAs from around the state and developing my professional network. It has been great to see so many energetic young CPAs wanting to be involved in SCACPA through the Cabinet and developing the skills to become leaders of the profession.

What’s your message to new, young or long-time members who have yet to get involved?

The time you spend getting involved in SCACPA has a great return on investment.

Benefits include expansion of your professional and political contacts in the

2008

CPA mobility legislation passed the state legislature

Amanda Colgate, CPA SCACPA member since 2006 What year did you become a member? Any other leadership roles/SCACPA involvement of note?

I became a member of SCACPA in 2006 and am currently a member of the Editorial Board.

What’s your message to young CPAs who have yet to get involved?

Just do it! Being involved in SCACPA is a vital component of building your professional network and staying informed about issues impacting the profession and your career. n

2010

Membership reaches 3875

2009

The SCACPA Young CPA Leadership Cabinet was created South Carolina CPA Report

13

Member Profiles EVAN M. HOBBS, CPA Member since 2009 Hometown: Columbia College: Wofford College, University of South Carolina (Masters of Accountancy) Current firm/employer: The Hobbs Group, PA, Staff Accountant

DAN MCKNIGHT, CPA Member since 1948

SCACPA’s Oldest &

Youngest Members Compiled by Allison Caldwell

SCACPA is comprised of nearly 4,000 members, each valued for their own unique perspective, areas of expertise and capacity for service to the Association and fellow members. To commemorate

(member no. 88; CPA certificate no. 129)

our 95th anniversary, we decided to profile some of our oldest and

Hometown: Charleston College: The Citadel 1st employer: George G. McKnight, CPA Most recent employer: McKnight, Frampton & Co., P.A. , Retired managing partner SCACPA involvement: Former president and “a little bit of everything.”

youngest members (by birth date). Following are interviews with five

AMY GRAYBILL, CPA Member since 2008 Hometown: Hilton Head Island College: Clemson University Current employer: Robinson Grant & Co., P.A. SCACPA involvement: Member of the Sea Island Chapter

Erica Nanke, MaCC Member since 2007 Hometown: Marion, SC College: Charleston Southern University, University of South Carolina (Masters of Accountancy) Current employer: Dixon-Hughes, PLLC (Charleston office), Tax Associate

Warren “Dusty” Schulze, CPA

Member Since 1951 (Member no. 115) Hometown: Mason, TX College: Texas A&M University 1st employer: Peat, Marvick, Mitchell & Co. (now known as KPMG) Most recent employer: Elliott, Davis & Co., (Greenville), Retired SCACPA involvement: Secretary/ treasurer; active member of the Piedmont Chapter

14

Focus On Membership

South Carolina CPA Report

members—ranging in age from 24 to 89—on what they enjoy most about being a CPA. Evan M. Hobbs, CPA Why did you become a CPA, and when did you receive your license?

I became a CPA because I enjoy accounting and the complexities and challenges it brings on a daily basis. I received my license in March of this year at the age of 23. I joined SCACPA in 2009 and have enjoyed the ability to network with other professionals.

What are you looking forward to the most about the CPA profession?

I am looking forward to the continuing technological changes that will affect our profession. Technology always changes, and it will add value to the services we perform.

“Technology always changes, and it will add value to the services we perform.”

To date, what has been your most rewarding experience as a CPA? It’s rewarding to help provide clients with reliable information to help them make current and future business decisions.

Personally or work-related: what motivates and inspires you?

Getting things done when you tell people they will be done in a timely manner.

Dan McKnight, CPA Why did you become a CPA, and when did you receive your license?

I always wanted to become a CPA, and my uncle may have had a little bit of influence in that choice. I became a CPA in 1948 at the age of 27 and joined SCACPA that same year.

In your opinion, what has changed the most about the CPA profession?

Technology. In my day, everything was done by hand.

To date, what has been your most rewarding experience as a CPA? Becoming one in the first place, and then becoming managing partner and owning my own firm.

Personally or work-related: what motivates and inspires you?

The simple satisfaction of getting the job done.

“I always wanted to become a CPA.” (888) 557-4814 | www.scacpa.org

Member Profiles Amy Graybill, CPA

“It was very rewarding to see the result of all of the effort that I had put into attaining the CPA designation ...”

Why did you become a CPA, and when did you receive your license?

I chose to become a CPA because it is a designation that conveys credibility and a commitment to competence. As such, it provides a lot of opportunities in diverse fields. I received my license in June of this year when I was 23. I joined SCACPA in 2008 and have enjoyed the opportunity to attend numerous CPE and networking events as well as access to various professional resources.

What are you looking forward to the most about the CPA profession?

I grew up with computers and cannot imagine accounting without them. I am looking forward to seeing how technology will continue to advance and affect the way things are done in the profession.

To date, what has been your most rewarding experience as a CPA? It was very rewarding to see the result of all of the effort that I had put into attaining the CPA designation when I finally received my license in the mail this year.

Personally or work-related: what motivates and inspires you?

I have a wonderful family. Their support has always motivated and inspired me to achieve my goals.

Editor’s Note: In addition to those featured here, an interview was also planned with Irving T. “Buck” Welling, who passed away in October while we were planning this issue. All of us at SCACPA extend sincere condolences to the Welling family. Please see Buck’s obituary in Member News (page 32).

(888) 557-4814 | www.scacpa.org

Focus On Membership Erica Nanke, MaCC

“I always strive to help and be of service to others.”

Why did you become a CPA, and when did you receive your license?

I officially passed all four parts of the CPA exam in February 2010, and will become licensed in January 2011 after meeting my yearly requirement—I will be 24. I joined SCACPA after applying for a scholarship during my senior year at Charleston Southern University. I was so grateful to be chosen as a recipient of the Past Presidents Scholarship. It made me realize that other people believed in my chosen career path as much as I did.

What are you looking forward to the most about the CPA profession?

Whether it’s new client situations to research or the government passing new laws, the profession is always changing. I look forward to learning about new changes and being able to educate others around me on the tax law implications of each change.

Warren C. “Dusty” Schulze, CPA Why did you become a CPA and when did you receive your license?

As a freshman in college, I chose a career in public accounting and intended to obtain a CPA certificate. The day after graduation, I was called up and commissioned as a second lieutenant in infantry and served nearly four years in WWII. Upon completion of that service in March 1946, I began my accounting career and later received my CPA certificate (no. 164) in March 1951.

In your opinion, what has changed the most about the CPA profession?

The most significant changes I have observed (and there are many) are the rapid growth in the public accounting sector in South Carolina (evidenced by [the number of] my CPA certificate when compared to those issued now), the number of women now serving in this field, the impact of high-tech procedures and the ever-increasing oversight imposed upon the profession.

To date, what has been your most rewarding experience as a CPA? The first and greatest experience of my career will always be passing the CPA exam. Like many others before me, we can all remember the number of activities and special events we gave up to accomplish passing the exam. Another close second has been the awesome people I get to work with in my office. I have been able to learn from other CPAs who have been in the profession for many years, and hope to become a valuable asset in the specialty areas I have been working.

Personally or work-related: what motivates and inspires you?

Whether it is in my personal or work life, I always strive to help and be of service to others. In my work life, I enjoy providing the people I work with a valuable product which is beneficial to our clients.

“I have recently found renewed interest in the firm that has meant so much to me for many years.”

To date, what has been your most rewarding experience as a CPA? The opportunity to work with the entire spectrum of the business world.

Personally or work-related: what motivates and inspires you?

Although now retired, I have recently found renewed interest in the firm that has meant so much to me for many years. In recent years, volumes of records were found supporting the organization of the firm Elliott, Davis & Company in Boston, MA in 1921. These records, found in the basement of the Greenville founder’s office (Merrill C. Patten, now deceased), reveal much information not previously known and is now being compiled.

South Carolina CPA Report

15

feature

2010 CPA-PAC Donors

S

and Recipients

CACPA has one of the strongest grassroots networks in South Carolina, and the CPA Political Action Committee (CPA-PAC) is an important part of that effort.

A non-partisan committee comprised of five South Carolina CPAs who serve as trustees, the CPA-PAC works to combine financial resources for greater involvement, impact and results. Formed in 1993, the CPA-PAC invests in state political leadership by contributing funds to state legislators and candidates who support the interests of CPAs and the business community. The profession has enjoyed a long list of legislative victories, but none of those successes would have been accomplished without legislators who listen to and support our position. They do so because of the personal relationships formed through our Key Person Contact program, and because of donations made through the CPA-PAC. On behalf of all members and the profession at large, SCACPA offers sincere thanks to these individuals and firms who contributed to the CPA-PAC in 2010.

PAC - BACKERS, Contributions Up to $99 William E. Abernethy Jr., CPA Claudia W. Adams, CPA Paul K. Aikman, CPA T. D. Ainsworth, CPA Travonte Aldrich Judy P. Alexander, CPA Michael G. Barb, CPA Joseph H. Barber, CPA Robert W. Bass, CPA Patrick L. Beasley S. C. Beckwith, CPA Amy T. Bennett, CPA Nat B. Benson III, CPA, MSA Jennifer M. Bernard, CPA Robert F. Berry, CPA Lois R. Blanco, CPA Karl D. Bohnstedt, CPA Allan G. Bolden, CPA Joseph A. Boyle, CPA Gerald D. Broome, CPA Christopher A. Brown, CPA William W. Brown, CPA Thomas J. Bryson, CPA David S. Buch, CPA Orvis B. Buie, CPA John C. Butler, CPA Kevin H. Cain, CPA John F. Camp, CPA Anne M. Campbell, CPA Patrick P. Carey Jr., CPA L. B. Carson Jr., CPA Christine E. Cassidy, CPA JD, LLM

16

South Carolina CPA Report

Douglas P. Clark, CPA Tonia J. Clemmons Clarence Coleman Jr., CPA, Ph.D. Vickie M. Cox, CPA R. D. Crowley, CPA, CVA Robert A. Curtis, CPA, PFS, MST0 John A. Davis, CPA J. William Davis Jeffrey L. Deason, CPA, CFE Alys Anne Dennis, CPA Wanda J. Diggs, MBA, MAFM-CPA R. K. Dooley, CPA, PFS Rodney Dooley Jr., CPA Donald L. Ellis, CPA MBA Amy S. Ely, CPA Barry A. Emerson, CPA Mary L. Enright, CPA Alleen S. Ernst, CPA Barbara J. Evans, CPA MBA Michael R. Evans, CPA A. L. Fee, CPA Ryan F. Finklea, CPA Larry J. Finney, CPA Charles R. Fliflet, CPA Donald A. Floyd, CPA Jennifer S. Floyd, CPA Brian E. Ford Ronald E. Franks, CPA Jennifer N. Gahl, CPA John F. Georger Jr, CPA, CIA Ransom H. Gibson III, CPA

Ben M. Goldson, CPA Dennis L. Gore, CPA Richard L. Gray, CPA William M. Grooms, CPA Angela W. Hamilton, CPA Cara T. Hamilton, CPA John F. Hamilton, CPA David J. Haney, CPA Martha M. Hartley, CPA J. Harry Haslam Jr., CPA Alice B. Hazel, CPA Robert M. Heil, CPA Linda H. Helms, CPA Douglas W. Henderson, CPA Ronald I. Hendrix, CPA Dan B. Herrinton, CPA Melanie C. Hill, CPA J. C. Hincher, CPA, MA Katherine W. Holmes, CPA Samuel G. Holtzclaw, CPA Leonard A. Hoogenboom, CPA John C. Horton, CPA Cynthia L. Howle, CPA M. Timothy Hucks, CPA Donna K. Hudson, CPA Donald L. Hunter, CPA Richard A. Hutto, CPA Steven L. Hyatt, CPA Leona L. Hydrick, CPA Arthur L. Jayroe Jr., CPA Gary J. Johnson, CPA

G. Michael Johnston, CPA W. Kelly Jones, CPA Robert P. Jordan, CPA Channing S. Joye, CPA Kevin C. Kern, CPA Michael J. Kerscher, CPA James D. Kidd, CPA Dick W. King, CPA W. J. Kitchens Jr., CPA Joycelynn S. Knight, CPA David M. Knoble, CPA MAC Joseph J. LaNunziata, MBA Carol C. Lawlor, CPA Paula J. Lawrence, CPA Robert A. Leichtle II Elizabeth I. Leitner, CPA Harold E. LeMaster, CPA Marchant L. Lesley, CPA Paul V. Lewis, CPA Carol M. Libby, CPA Gregory M. Lipe, CPA Daniel E. Livengood, CPA Patrick M. Luciano, CPA Roger F. Luttrell, CPA, MBA Larry B. Mack, CPA Glenn G. MacNeil, CPA, BBA, CA, CMA Leon W. Maginnis, CPA CFE, CFF Bobby T. Mardis, CPA Glenn J. Matthews, CPA Travis L. Matthews, CPA Renee O. McCall, CPA

Christine A. McCarty, CPA Gordon L. McCay, CPA MBA Dustin L. McCoy Chris A. McCraw, CPA C. Stephen McDonald, CPA Ann A. McDuff, CPA Henry A. McFaddin, CPA Sheila C. McKinney, CPA Daniel L. McKnight Mark A. Milnac, CPA David H. Mims, CPA John W. Molony, CPA Thomas P. Monahan, CPA Donald S. Moody, CPA C. Clarke Moore III, CPA Connie G. Morris, CPA Edward W. Muller, CPA Albert A. Munn IV, CPA Robert J. Nagy, CPA Adam Neely William S. Nelson, CPA James R. Newell, CPA Carla M. Nicholson, CPA Gina S. Noble, CPA James M. O'Cain, CPA, CFP,CLU,ChFC Sherry N. Ouzts, CPA Renita M. Owens, CPA Gregory D. Padgett, CPA Philip G. Palmer, CPA James A. Parrish, CPA Margaret J. Passailaigue, CPA

(888) 557-4814 | www.scacpa.org

feature

GENERAL ELECTION CONTRIBUTIONS (Challengers noted in blue, incumbents in black) CANDIDATE

DONATION

DELIVERED BY

CANDIDATE

DONATION

DELIVERED BY

Nikki Haley (Governor)

$3,500

Erin Hardwick

Gilda Cobb-Hunter (Dist. 66)

$500

Doug Snyder

Vincent Sheheen (Governor)

$3,500

Doug Snyder

Joan Brady (District 78)

$500

Harry Gregory

Don Bowen (District 8)

$500

Nancy Upton

Chip Huggins (District 85)

$1,000

Sharon Mann

Daniel Cooper (District 10)

$500

Nancy Upton

Harry Ott (District 93)

$500

Don Rickenbaker

Gene Pinson (District 13)

$500

Denise Ogletree

Tracy Edge (District 104)

$500

Bratton Fennell

Eric Bedingfield (District 28)

$500

Gary Wheeler

Vida Miller (District 108)

$500

Jeff Kinard

Steve Parker (District 37)

$500

Chuck Talbert

Bobby Harrell (District 114)

$1,000

Pat McDermott

Deborah Long (District 45)

$500

Farris Cauthen

Robert L. Brown (District 116) $500

Caprice Atterbury

Gary Simrill (District 46)

$500

Suzanne Merritt

Todd Atwater (District 87)

$500

Erin Hardwick

Herb Kirsh (District 47)

$500

Bernie Ackerman

Bill Bowers (District 120)

$250

Bratton Fennell

Tommy Pope (District 47)

$500

Charlie Redfern

Rick Quinn (District 69)

$500

Steve Mann

Liston Barfield (District 58)

$500

John Horton

Bill Sandifer (District 2)

$500

Mike Stancil

Phillip Lowe (District 60)

$500

Arden Gatchell

INVESTORS, Contributions $100 to $249 Bernadette C. Phelps, CPA Barbara G. Pierce, CPA Lloyd E. Pitts, CPA Samuel H. Plexico III, CPA Jeffery S. Powell, CPA Charles C. Prevost William R. Price, CPA Robert B. Privette, CPA MBA Joseph E. Pruitt, CPA Michael P. Ravan, CPA Monica E. Richardson, CPA G. Randy Rish, CPA Alan M. Robinson, CPA Deborah M. Rose, CPA Annette H. Ross, CPA W. T. Rubenstein, CPA James N. Ruff, CPA Charissa D. Saunders, CPA Marc L. Saunders, CPA Michael W. Saunders, CPA Douglas P. Schmieding, CPA Ernest M. Sewell III, CPA Jennifer E. Shechter-Liss, CPA Austin M. Sheheen, Jr., CPA David W. Siddons, CPA Helen Z. Sieger, CPA, JD Teodor D. Simeonov, CPA Nancy F. Simonetti, CPA Clifford C. Simunek, CPA Robert M. Sisk, CPA George P. Smith III, CPA

Lisa N. Smith, CPA William R. Smoak, CPA Philip R. Snipes, CPA James B. Snoddy, CPA Douglas A. Sparacino, CPA Gregory W. Stephan, CPA MPAcc Curtis C. Stewart, CPA, JD Tammera Stewart, CPA Eugene F. Svatek, CPA Clayton E. Tapp Jr. Michael J. Targia, CPA, CFA George F. Taylor Jr., CPA Robert T. Theodore, CPA Hartwell H. Traylor Sr., CPA O. L. Turner, CPA Michael S. Upton, CPA Edgar A. Vaughn, CPA David R. Veldman, CPA Thomas J. Way, CPA Mark W. Webster, CPA Susan O. Weesner, CPA Irvine T. Welling, III, CPA Gary L. Wheeler, CPA Darrell E. Whitaker, CPA Maurice A. White, CPA David L. Whitehead, CPA John R. Wilson, CPA Jacqueline C. Wirszyla, CPA Amy L. Wood, CPA Yulien Yuan, CPA

(888) 557-4814 | www.scacpa.org

LEADERS, CPA Firms $500 and up

Timothy L. Baker, CPA

Sharon E. Mann, CPA

$500 - $1,000

Brian J. Brady, CPA, CFF CFE CIA

Steven M. Mann, CPA

Derrick Stubbs and Stith, LLP

Charles E. Brown, CPA

Linda L. May, CPA

Schmoyer and Company, PC

William L. Byrd, CPA

Leigh A. Marks, CPA

Scott & Company, LLP

Charles G. Carpenter, Ph.D., MS

Sheryl G. McAlister, CPA, CFP

McAbee Talbert Halliday & Company

The Honorable Converse A. Chellis III J. P. McDermott, CPA James W. McIlrath, CPA Deanna L. Cochran, CPA

Elliott Davis, LLC Ernst & Young, LLP

Bobby R. Creech Jr., CPA

Sara B. Penn, CPA

Zoe M. Davis, CPA

Michael R. Putich, CPA

Richard H. Ett, CPA, CFM, CFP

Charles M. Redfern III, CPA

John B. Fennell, CPA

William C. Robinson, CPA

$2500 and up

Tammy M. Flowers, CPA

Amy H. Rubin, CPA

WebsterRogers, LLP

Sherri L. Freudiger, CPA

Douglas A. Snyder, CPA

Dixon Hughes, PLLC

Harry B. Gregory Sr., CPA

Jason C. Sweatt, CPA

Malynda M. Grimsley, CPA

William A. Thiem, CPA

Amanda T. Hallman, CPA

Robert M. Tilton, CPA

Erin P. Hardwick, CAE

Victor C. Webster, CPA, MBA

Kathryn G. Heeney, CPA MBA

Walda C. Wildman, CPA

Mark T. Hobbs, CPA

Beth T. Zamorski, CPA

Allen A. Hodges, CPA Amanda B. Koehler, CPA Rebecca M. Lee, CPA

PricewaterhouseCoopers, LLP

VISIONARY, CPA Firms

PARTNER, Contributions $250 to $499

Robert C. Cooper, CPA

Penny A. Lewis, CPA

South Carolina CPA Report

17

feature

South Carolina Tax Changes: DON’T BE CAUGHT UNAWARE

by K . Todd Dailey, CPA, C VA and Jason Sweatt, CPA SC ACPA memb ers since 1993 and 1997

A

s we approach the close of the 2009 tax return filing seasons, it is time to begin preparing for year-end planning and the 2010 seasons. As usual we have many changes to contend with, some small and some very significant. It’s important to know these changes and how they affect your client-base. SCACPA recently received a letter of complaint about a CPA who did not inform a client about changes from 2003 that made maintenance services for tangible personal property taxable for sales tax in South Carolina. The taxpayer blames the CPA. Our clients expect CPAs to understand their business and be on the lookout for changes that would help them or cause them to have increased risk. Following is a summary of the changes that may impact many of our clients, as reported in the S.C. Legislative update.

INTERNAL REVENUE CODE SECTIONS NOT ADOPTED Four new provisions have been added to Code Section 12-6-50, which lists specific Internal Revenue Code sections not adopted

by South Carolina. Code Sections 12-6-50(4) and (16) have been amended to specifically not adopt Internal Revenue Code Sections 85(c) and 6654(d)(1)(D). Code Sections 12-6-50(5A) and (5B) have been added to specifically not adopt Internal Revenue Code Sections 108(i) and 163(e)(5)(F). Internal Revenue Code sections enacted as part of the American Recovery and Reinvestment Act of 2009, Public Law 111-5, but not adopted

by South Carolina, provide the following for federal income tax purposes: 1. Internal Revenue Code Section 85(c) excludes $2,400 of unemployment compensation from gross income for 2009.

2. Internal Revenue Code Section 6654(d) (1)(D) decreases required estimated tax payments for 2009 by allowing quarterly estimated tax payments based on 90 percent (rather than 100 percent) of the tax due on the 2008 individual income tax return for qualified individuals.

Note: See Proviso 81.8 (Act No. 291) summarized below for penalty waiver information for qualifying individuals

18

South Carolina CPA Report

who complied with Internal Revenue Code Section 6654(d)(1)(D).

3. Internal Revenue Code Section 108(i) relates to the deferral and ratable inclusion of income arising from business indebtedness discharged by the reacquisition of a debt instrument.

4. Internal Revenue Code Section 163(e) (5)(F) relates to original issue discount on certain high yield obligations.

Effective Date: March 31, 2010 PENALTY AND INTEREST WAIVER FOR QUALIFIED INDIVIDUALS FOR 2009 ESTIMATED TAX PAYMENTS Under this temporary proviso, the Department will waive interest and penalties for state estimated quarterly individual income tax payments for qualifying individuals who comply with Section 1212 of federal Public Law 111-5, codified as Internal Revenue Code Section 6654(d)(1) (D). An individual is considered a qualified individual for purposes of South Carolina penalty waiver if the individual meets the adjusted gross income requirement and the 50 percent of gross income from a small business requirement contained in Section 1212, Public Law 111-5 for South Carolina or federal purposes.

Effective Date: Effective for State fiscal year July 1, 2010 through June 30, 2011. It will expire June 30, 2011, unless reenacted by the General Assembly.

PENALTY WAIVER FOR FEDERAL CHANGES TO CORPORATE ESTIMATED TAX PAYMENTS 1. Code Section 12-6-3910(E) has been added to allow the Department to waive estimated tax penalties for corporations that calculate South Carolina estimated tax payments, based on a federal law that (a) increases estimated payments in one period and decreases estimated payments in another period or (b) changes the dates of estimated tax payments are due for not more than one month.

2. In related amendments, Section 49 of Act 110 of 2007 and Section 3 of Act 16 of 2009 are repealed. These sections provided for South Carolina estimated tax penalty waivers associated with changes in federal estimated tax penalties for large corporations. The federal laws were repealed before the changes were to take effect.

Effective Date: March 31, 2010

(888) 557-4814 | www.scacpa.org

MANUFACTURERS OF RENEWABLE ENERGY SYSTEMS AND COMPONENTS – NEW CREDIT Code Section 12-6-3588 has been added to provide an income tax credit to companies in the solar, wind, geothermal and other renewable energy industries who are expanding or locating in South Carolina. To qualify, a company must (1) manufacture renewable energy systems and components in South Carolina for solar, wind, geothermal or other renewable energy uses; (2) invest at least $500 million in new qualifying plant and equipment in the year the tax credit is claimed; and (3) create one and one-half full-time jobs for every $500,000 of qualifying capital investment that each pays at least 125 percent of the State’s average annual median wage as defined by the Department of Commerce. A taxpayer may separately qualify for new facilities in separate locations or for separate expansions at existing facilities in South Carolina.

Expenditures qualifying for this credit must be certified by the State Energy Office by January 31 for qualifying expenditures incurred in the previous calendar year. By March 1, the State Energy Office must notify the taxpayer of the qualifying expenditures and the allocated credit amount. The credit is claimed for the tax year which contains December 31 of the previous calendar year.

The credit is equal to 10 percent of the cost of the company’s total qualifying investment in plant and equipment in South Carolina for renewable energy operations. A taxpayer’s total credit for all expenditures allowed must not exceed $500,000 for any year and $5 million total for all years. Unused credits can be carried forward 15 years after the tax year in which a qualified expenditure was made.

This credit is in lieu of any other applicable income tax credits or abatements allowed by state law. In the event of an overlap or conflict in available credits or abatements, the taxpayer may select the credit or abatement desired in the manner prescribed by the Department.

Note Expiration: “The income tax credit program is for a five-year period beginning January 1, 2010 and ending December 31, 2015.”

(888) 557-4814 | www.scacpa.org

CAPITAL INVESTMENT TAX CREDIT – REPLACING ECONOMIC IMPACT ZONE INVESTMENT TAX CREDIT Repeal of Certain Code Sections in the Economic Impact Zone Act in Chapter 14 of Title 12 and Repeal of Credit for Hiring Displaced Workers in Code Section 126-3450 Chapter 14 of Title 12 contains the Economic Impact Zone Community Development Act of 1995. Chapter 14 has been substantially amended. Among the changes are the following: 1. Code Section 12-14-20, containing the purpose of the Economic Impact Zone Community Development Act of 1995, is amended to provide that the purpose of Chapter 14 is to establish a program of providing tax incentives for the creation of capital investment in order to revitalize capital investment in South Carolina, primarily by encouraging the formation of new businesses and the retention and expansion of existing businesses; and to promote meaningful employment.

2. Code Section 12-14-60, providing for the economic impact zone investment tax credit, has been amended to delete all references to “economic impact zone” and to provide for a capital investment tax credit as follows: 0.5 percent of total aggregate bases of all qualifying three-year manufacturing and productive equipment property; 1.0 percent of five-year property; 1.5 percent of seven-year property; 2.0 percent of 10-year property; and 2.5 percent of 15-year or greater property.

The definition of qualified manufacturing and productive equipment property in Code Section 12-14-60(B) was amended to replace references to “economic impact zone” with “this State.” Also, certain code sections that conflicted with the changes or were no longer needed were repealed.

Effective Date: January 1, 2011, except the repeal of Code Sections 12-14-30, 12-1440, 12-14-50, 12-14-70, and 12-6-3450 are effective June 23, 2010.

JOB TAX CREDIT – AMENDED Code Section 12-6-3360, dealing with the job tax credit, has been amended by this Act. Among the changes are the following: 1. The county rankings have been changed from five designations to four “tier” designations, based on a combination of unemployment rate and highest per capita income data.

2. The dollar amount of the basic job tax credit for each new job created based on the new county designations of Tier I, II, III, and IV are $1,500 per year for each new full time job created in a Tier I county; $2,750 in a Tier II county; $4,250 in a Tier III county; and $8,000 in a Tier IV county. The rules related to claiming 50 percent of the amount by small businesses claiming the small business credit for lower income employees still applies.

3. Several types of businesses qualifying for the credit have been added or changed as follows: a. A taxpayer that operates an “agribusiness operation” can now qualify for the job tax credit. Code Section 12-6-3360(A). b. A taxpayer that operates a retail facility or service-related industry can qualify for the job tax credit only in a Tier IV county. c. The definition of “processing facility” has been expanded to include “meat, poultry, and any other variety of food processing operations.” Processing facility continues to mean an establishment that prepares, treats or converts tangible personal property into finished goods or another form of tangible personal property.

The term includes a business engaged in processing agricultural, aquacultural or maricultural products and specifically includes meat, poultry, and any other variety

Continued next page

South Carolina CPA Report

19

feature of food processing operations. It does not include an establishment in which retail sales of tangible personal property are made to retail customers. Code Section 12-63360(M)(6).

4. Special provisions have been deleted that qualify certain areas and counties for an increased credit designation. The restriction that a county’s designation cannot be lowered in credit amount more than one tier in the following calendar year has also been deleted. Previously, rankings were done with equal weight given to unemployment rate and per capita income and then adjusted in accordance with special rules in Section 12-6-3360(B) and (L), as applicable.

Code Section 12-6- 3360(B) and former Code Section 12-6-3360(L).

5. Section 38 of the Act repealed Code Section 12-6-3450 concerning a tax credit for persons terminated as a result of closing or realignment of federal military installations. Code Section 126-3450(A)(1)(b) was referenced in Code Section 12-6- 3360(F)(2)(d) and Code Section 12-6-3360(M)(3). The general definition of “new job” in Code Section 12-6-3360(M)(3) continues to provide that “this exclusion of a new job created by an employee shifting does not extend to a job created at a new or expanded facility located in a county in which is located an ‘applicable federal facility’ as defined in Section 12-6-3450(A)(1)(b).”

Effective Date: January 1, 2011, except the repeal of Code Section 12-6-3450 is effective June 23, 2010.

JOB DEVELOPMENT CREDIT AMENDED Code Section 12-10-80 provides a credit against employee withholding taxes to new or expanding businesses making qualifying investments and creating a minimum number of new jobs in South Carolina and entering into a revitalization agreement with the Coordinating Council for Economic Development (“Council”). Code Section 1210-80 has been amended as follows:

20

South Carolina CPA Report

1. A provision has been added to provide that a company’s job development credits are suspended during any quarter the company fails to maintain 100 percent of the minimum job requirement set forth in the revitalization agreement.

A company can only claim credits on jobs, including a range of jobs approved by the Council, as set forth in the company’s final revitalization agreement. This codifies an existing guideline of the Council. Code Section 12-10-80(A)(6).

2. A provision has been added to clarify that credits may be claimed beginning with the withholding quarter after the Council’s approval of the company’s documentation that the minimum job and capital investment requirements have been met. This codifies an existing guideline of the Council. Code Section 12-10-80(A)(7).

3. Subsection (C)(3), which provides for the eligible expenditures that can be reimbursed from job development credits has been amended: (a) to clarify that real property acquired by capital or operating lease with at least a 5 year term, may qualify as an eligible expenditures if approved by the Council and (b) to provide only employee relocation expenses for those employees to whom the company is paying gross wages of at least twice the lower of the per capita income of the state or the county in which the project is located, qualify as eligible expenditures.

Effective Date: January 1, 2011 SINGLE FACTOR APPORTIONMENT – RELATED AMENDMENTS EFFECTIVE UPON FINAL PHASE IN OF SINGLE SALES FACTOR APPORTIONMENT METHOD Effective for tax years beginning after 2006, Act No. 384 of 2006 amended Code Section 12-6-2250 to enact a single factor apportionment factor for businesses dealing in tangible personal property using the three factor (with double weighted sales) apportionment method. The single factor apportionment factor is being phased in and

will replace the three factor (with double weighted sales) apportionment method for tax years beginning in 2011.

The following amendments, effective for tax years beginning after 2010, update cross references from Code Section 12-6-2250 (the 3 factor apportionment method with double weighted sales and phase in provisions of the single sales factor) to Code Section 12-62252 (the single sales factor apportionment method) for the following code sections: 1. Code Section 12-6-1130(6) dealing with computation of the depletion deduction; 2. Code Section 12-6-2240 dealing with apportionment of income; and 3. Code Section 12-6-2290 dealing with gross receipts factor.

The following code sections will be repealed once the sales factor is fully phased in effective for tax years beginning after 2010: 1. Code Section 12-6-2250 (the 3 factor apportionment method with double weighted sales and phase in provisions of the single sales factor); 2. Code Section 12-6-2260 (3 factor apportionment method property factor definition); 3. Code Section 12-6-2270 (3 factor apportionment method payroll factor definition).

Effective Date: Tax years beginning after 2010.

MANUFACTURERS’ REAL PROPERTY USED FOR WAREHOUSING AND WHOLESALE DISTRIBUTION - CHANGES TO REQUIREMENTS FOR ALTERNATIVE CLASSIFICATION Code Section 12-43220(a) concerns the classification of real and personal property owned by or leased to manufacturers and utilities and generally provides for an assessment ratio of 10.5 percent on property used in the conduct of the business. Item (4) has been amended to provide

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that real property owned by or leased to a manufacturer and used primarily for warehousing and wholesale distribution is not considered used in the conduct of the manufacturing business. Previously, this exception was available only for property used exclusively for warehousing and wholesale distribution. Real property that falls outside the manufacturers and utilities classification is generally taxed based on a six percent assessment ratio.

The amendment further clarifies that real property subject to this exclusion must not be physically attached to the manufacturing plant unless the warehousing and wholesale distribution area is separated by a permanent wall.

Effective Date: January 1, 2011 BOATS CLASSIFIED AS A PRIMARY OR SECONDARY RESIDENCE – REVISED Code Section 12-37-224, allowing certain boats or watercraft to be treated as a primary or secondary residence for property tax purposes, and assessed at a four or six percent assessment ratio, respectively, has been amended. The amendments pertaining to the assessment ratio and valuation of these boats and watercraft are as follows: 1. New subsection (B) was added to clarify that a boat or watercraft that qualifies for classification as a primary or secondary residence is one that contains (a) a cooking area with an onboard power source, (b) a sleeping quarter, and (c) a toilet with exterior evacuation. Previously, Code Section 12-37-224 provided for primary or secondary residence status if the boat or watercraft qualified for deduction of the interest expense on a qualified primary or secondary residence pursuant to the Internal Revenue Code.

2. New subsection (B) allows only an individual to claim one qualifying boat or watercraft that he owns as a primary residence (four percent assessment ratio). In addition, an individual may claim a second qualifying boat or watercraft that he owns as a secondary residence (six percent assessment (888) 557-4814 | www.scacpa.org

ratio). Finally, a person other than an individual may claim a qualifying boat or watercraft that the person owns as a secondary residence (six percent assessment ratio). A “person” is defined to include an individual, a sole proprietorship, a partnership, an S corporation, and a limited liability company taxed as a sole proprietorship, a partnership or an S corporation.

An individual claiming a boat as a primary residence must make the same certification required to obtain the four percent assessment ratio for any other legal residence under Code Section 1243-220(c)(2)(ii).

3. New item (B)(1) of Code Section 1237-224 provides that the fair market value of qualifying boats and watercraft must be determined in the manner that motor vehicles are valued for property tax purposes (i.e., by reference annually to nationally recognized publications, except that the value may not exceed 95 percent of the previous year’s value).

The amendment restated but did not change the method of valuation.

In a related amendment, Code Section 12-37-220(B)(38)(b), providing that, by ordinance, a local governing body of a county may exempt from property tax 42.75 percent of the fair market value of a watercraft and its motor, has been amended to clarify that the exemption does not apply to a boat or watercraft classified for property tax purposes as a primary or secondary residence under Code Section 12-37-224.

A corresponding amendment was made to Code Section 12-37-224.

Effective Date: June 16, 2010 ADDITIONAL 1% REDUCTION ON INTEREST RATE ON TAX REFUNDS This new temporary proviso decreases by one percent the interest rate for tax refunds paid during the current fiscal year, in addition to the two percent reduction reauthorized in temporary Proviso 72.17 (for a total three percent interest rate reduction).

Of the revenue resulting from this one percent reduction, $250,000 must be used by the Senate for operating expenses of the

Joint Citizens and Legislative Committee on Children. The remaining revenue must be used by the Department of Juvenile Justice for programs for mentoring or other alternatives to incarceration. The revenue resulting from the two percent reduction continues to be used for operations of the State’s Guardian ad Litem Program.

Effective Date: This temporary proviso is effective for State fiscal year July 1, 2010 through June 30, 2011.

We hope that you find these summaries helpful. If you have other items that you would like to see discussed in detail, please notify the SCACPA offices with suggestions for future articles or blogs. n

IRS Activates New PTIN System The IRS has recently launched a new preparer tax identification number (PTIN) system, a major step in its planned system of registration, qualification and oversight of all paid tax return preparers. To learn how this affects you, visit irs.gov/tax pros or call the IRS PTIN Helpline at 1-877-613-PTIN (7846).

K. Todd Dailey, CPA, CVA is partner of taxation and business valuation with Derrick, Stubbs & Stith, L.L.P. Todd received his B.S. degree in Accounting from the University of South Carolina and has been practicing public accounting since 1989. A member of the AICPA and past president of SCACPA’s Central Chapter, he currently serves on SCACPA’s Business Valuation Task Force, CPE Business Market Task Force, as chair of SCACPA’s State and Local Tax Committee and as an instructor for CPE courses in business valuations and tax issues.

Jason Sweatt, CPA is the Director of State and Local Tax (SALT) services for Elliott Davis, is the Chairman of the Firm’s Tax Committee, and leads tax quality control. He has 20 years of taxation experience in public accounting. Jason has a deep knowledge of tax advisory and tax compliance processes, tax quality controls and methodologies as well as extensive experience in federal, state and local tax planning, structuring, and IRS & state DOR representation. His focus is in transaction taxes (especially sales & use taxes) and tax incentives. He is a graduate of Berry College, serves on the SC Chamber of Commerce Tax Committee and chairs SCACPA’s Legislative and Advocacy Committee.

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he South Carolina CPA Report First Edition 2011 will feature a special section dedicated to healthcare reform legislation and its impact on CPAs and South Carolinians. Leading up to that issue, the Editorial Board is seeking contributions on little-known special provisions of the legislation and how they affect the CPA profession. Special thanks to Dr. Bill Grooms and Mark Riley for contributions to this issue.

2010-2011 HEALTHCARE REFORM: What to Expect

by M ar k R iley President, SC A sso ciation of Health Under writers Amer ican B enefit S er vices Mark formed American Benefit Services, LLC in 2003 after 10 years in the insurance industry. He serves as current president of the South Carolina Association of Health Underwriters and is one of 11 members nationwide serving on the National Legislative Council. Contact him at (803) 404-5970 or mriley@abstpa.com.

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A

s everyone is aware, back in March President Obama signed into law the Patient Protection and Affordable Care Act (PPACA). This extremely detailed and far-reaching law touches almost every aspect of Healthcare in America. This article provides details on portions of the law that take effect in 2010 and 2011, and that will have a direct impact on current benefit offerings. Those portions include Dependent Child coverage, Small Business Tax Credits, Medical Loss Ratio, Elimination of Lifetime Limits on Plans, Wellness Coverage enhancements, Grandfathering of Plans, Changes to HSAs, Changes to FSAs and new Employer reporting requirements.

GRANDFATHERING PROVISION The Grandfathering provision will have an effect on all other provisions depending on the status of each employer and their plan. It allows any plan that was in place on March 23, 2010 to remain in place going forward, and to be exempt from certain portions of the legislation. There are some advantages to being grandfathered, as well as some provisions that you must comply with to remain as a grandfathered plan. Each employer group and plan sponsor will be different, so the advantages may or may not benefit everyone.

Possible Advantages of Maintaining Grandfathered Status: • Ability to remain under IRS Code 105 (h), which allows plan to discriminate in favor of highly compensated employees (example: management carve out plan).

• Plan will not have to comply with certain mandated benefits such as those relating to providers, emergency services and clinical trials.

• Plan will not have to comply with provision requiring all preventive care benefits be covered with no cost sharing.

“The Grandfathering provision will have an effect on all other provisions depending on the status of each employer and their plan.”

Provisions Applying to Grandfathered and Non-Grandfathered Plans: • Limits on lifetime and annual dollar maximums on benefit plans.

• Dependent age coverage up to age 26.

• Rescissions of plans are prohibited except in the case of fraud.

• Plans must provide coverage to children under age 19 with no preexisting limitations clause.

Benefit Changes that cause the loss of Grandfathered Status: • Purchasing a product from a new carrier or exchange will result in the loss of grandfathered status, even if the benefits remain the same.

• Any changes that substantially reduce benefits will result in the loss of grandfathered status.

• Changes to fixed-dollar cost sharing such as deductibles, co-payments and out-of-pocket maximums will result in the loss of grandfathered status.

• Employers will be limited in their ability to decrease the employer contribution. Any substantial change in contribution will result in the loss of grandfathered status.

• Any plan that imposes a new annual or lifetime limit on non-essential benefits after March 23, 2010 will lose grandfathered status.

DEPENDENT CHILD COVERAGE There are two different items that change the way children are currently covered.

Beginning on each plan renewal after September 23, 2010, all dependent children must be allowed to remain

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on their parents’ plans up to age 26. This provision applies to all plans, including grandfathered plans, and does include a dependent child that is married. The spouse and/or children of that dependent child is not eligible for coverage, but the dependent child would be eligible. Also, this provision only applies to individuals who do not have access to coverage elsewhere. Most insurance carriers are not waiting until the September date to make this benefit available.

The other provision applying to children is that beginning on September 23, 2010 all children under the age of 19 must be covered with no pre-existing limitations being placed on that coverage. While the intention of this provision appears to have been to simply make the coverage available to the children with pre-existing conditions, the regulations being written by the Department of Health and Human Services (DHHS) clearly make this a product that must be offered as guarantee issue for children. This means that no child can be denied coverage, but it does still allow for rating for the risk until 2014.

This provision also applies to all plans, including grandfathered plans.

SMALL BUSINESS TAX CREDITS The Small Business Tax Credit is actually retro-active back to January 1, 2010. Eligible businesses are defined as employers with fewer than 25 employees and an average salary of less than $50,000 annually. The business must also pay at least 50 percent of the premium for employee-only coverage under the health plan. If a business meets these requirements, they are eligible to receive a maximum credit of 50 percent of premiums paid for up to two years if claimed by 2014. Businesses do not have to have a tax liability to be eligible, and non-profits are eligible for the credit. For more information, including a credit calculator, visit www.irs. gov.

ELIMINATING LIFETIME LIMITS This provision applies to all plans, including grandfathered plans, and makes health plans (888) 557-4814 | www.scacpa.org

do away with all lifetime dollar value limits on plans beginning with plan renewals after September 23, 2010. Plans will still be allowed to place annual limits on certain benefits not determined to be Essential Benefits, but those limits will also go away in 2014. The list of Essential Benefits should be released by DHHS later this summer.

“The landscape of our healthcare delivery and financing system is set to undergo major changes over the next few years.”

MINIMUM LOSS RATIO This provision, set to take effect on January 1, 2011, states that all insurers must spend at least 80 percent of the premium revenue on claims expenses for Individual and Small Group Plans, and at least 85 percent for large group plans (plans with over 100 employees). How does this affect you as an employer or consumer? The answer is one that is yet to be wholly determined.

A formula to be released by DHHS in the latter part of 2010 will determine exactly what is defined as a claims expense. The determination of these expenses will have a great deal to do with the services that insurance companies continue to offer. For example, is a Nurseline a claims expense?

Disease Management? What about Online Pre-Natal Care? The list can go on and on, so it is vital that this formula include the correct things in order for employers and consumers to continue to receive a lot of the extras that are currently available to them.

WELLNESS AND PREVENTATIVE CARE This provision applies to all plans with the exception of grandfathered plans, and is to also take effect beginning with renewals after September 23, 2010. This provision eliminates all cost sharing on a list of specified benefits that are determined to be for preventive or wellness purposes. This list is being developed by a National Wellness Coalition and will be released later this year through DHHS. The cost sharing included

in this section means that no co-payments, deductibles or out-of-pocket charges could apply to these services—they must be covered at 100 percent.

2011 CHANGES Once we get through 2010 changes do not come as rapidly again until 2014, but there are a few already in place for 2011.

First is the elimination of over-the-counter medications as an allowable expense under Section 213(d) of the Internal Revenue Code. These expenses, which are now being allowed for FSAs, HSAs and HRAs, will no longer be eligible beginning January 1, 2011 unless you have a prescription from your healthcare provider. For example, if you are currently buying a medication such as Claritin and using your FSA account to pay for it, you will not be allowed to do this starting next year. Another change beginning on January 1, 2011 has to do with HSAs. Starting next year, any ineligible expense paid out of your HSA account will come with a new tax penalty of 20 percent instead of the current 10 percent tax penalty.

The last thing to mention for 2011 is that there is a new employer reporting requirement that all groups should be aware of. Beginning with the W-2 forms that are produced in 2012 for the 2011 tax year, employers must begin providing the value of benefits they provide to employees.

While this is not a taxable benefit, it is to be reported for informational purposes. The benefit value is to be reported on benefits that the employer pays for and is to be done in an aggregate manner.

As you can see, the landscape of our healthcare delivery and financing system is set to undergo major changes over the next few years. To stay abreast of the changes and how they will affect you and your clients, continue to read the information made available by SCACPA, various governmental departments and the insurance industry. n

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I HEALTH CARE REFORM ACT: Changes for 2011-2013

by Dr. W.M. “Bill ” Grooms, CPA SC ACPA memb er since1967

William M. Grooms, CPA, PhD Bill Grooms is a sole practitioner in Columbia, South Carolina with more than 40 years experience in his field. He was previously a partner of Ernst & Young, LLP, and a CPA with Clarkson, Harden & Gantt, Arthur Young & Co., and the Internal Revenue Service. Mr. Grooms has been president of both the Central Chapter of SCACPA and the Columbia Estate Planning Council as well as past chairman of the SCACPAs Tax Committee and a past member of the AICPA Tax Division’s Executive Committee.

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n an earlier article, the ramifications of the Health Care Reform Act and the Patient Protection and Affordable Care Act (referred to as HCRA) were addressed through 2010.

This Act sets forth legal or statutory changes applicable to insurance companies, health care providers, and the Internal Revenue Code (IRC), with those changes taking effect in different years. This article moves forward to the changes effective in the years 2011, 2012 and 2013.

2011 CHANGES In 2011, there is a change with respect to the Health Reimbursement Act, Health Savings Accounts, Flexible Savings Accounts and Health Savings Accounts.

In these provisions, the term “medical expense” will then exclude the costs for over-the-counter drugs not prescribed by a doctor from being reimbursed through these plans, unless they were prescribed by a doctor.

In addition individuals who have HSAs or FSAs and get distributions from these plans before age 65, which are not used for medical costs, will see the penalty rise from 10 percent to 20 percent next year.

Part D of Medicare coverage (prescription drug plans) deduction by an employer will no longer be allowed.

Small business however, may adopt a “Simple Cafeteria Plan.” It could include a self-employed individual as a qualified employee. Should your accounting firm adopt a “simple cafeteria plan?”

This cafeteria plan could provide for retirement, health coverage, dependent care and other health-related needs.

2012 CHANGES In 2012, still more changes will take place. Even though it has nothing to do with medical issues, the new law states that any payment for services or merchandise made in the amount of $600

or more for services to an individual other than an employee or a corporation in the course of your trade or business will require the payer to issue a form 1099 to the recipient. Accordingly, payments to corporations, in addition to individuals and partnerships, will require the issuance of a form 1099. Thus, if you visit Best Buy three times in 2012 for three purchases at different times—for instance, once in January for ink for your business computer, then in April for your home/personal computer paper, again in November for your business to purchase supplies—if those business purchases total more than $600, you must send Best Buy a form 1099. However, be sure to exclude the April personal computer paper, since this purchase did not arise from your trade or business operation. Thus, you must secure the correct corporate name of the seller, their address, and FIN to send them and the IRS a form 1099.

This is where the provision stands today. However, the IRS has said that they do not believe this change is needed. Indeed, the Treasury Department's National Taxpayer Advocate, Nina Olson, says the costs will be “disproportionate as compared with any resulting improvements in tax compliance.” The American Chamber of Commerce has asked that this be repealed and Congress has also tried to repeal this change, but both Houses of the Congress have not addressed this provision. The majority of the House voted to repeal this feature and the Senate is set to vote on it on September 14. This measure may indeed be repealed before 2012, but it is there today. Should it become effective, our profession must be prepared to assist clients in changing their reporting requirements accordingly.

Also effective in 2012 will be a new provision in which the economic substance doctrine is clarified and enhanced by way of a new uniform (888) 557-4814 | www.scacpa.org

“In 2012, still more changes will take place. Even though it has nothing to do with medical issues, the new law states that any payment for services or merchandise made in the amount of $600 or more for services to an individual other than an employee or a corporation in the course of your trade or business will require the payer to issue a form 1099 to the recipient.” definition of economic substance. In short, if a business transaction is entered into which does not have “economic substance,” the taxpayer may face a penalty if the taxpayer owes additional tax because of the lack of the transaction having economic substance.

The penalty may range from 20-40 percent of the additional tax owed.

A transaction is treated as having economic substance only if—apart from Federal income tax effects—(1) the transaction changes in a meaningful way the taxpayer’s economic position and (2) the taxpayer has a substantial purpose for entering into such transaction. Many penalties may be waived if the taxpayer has “reasonable cause.” This penalty may not be waived for reasonable cause.

2013 CHANGES 2013 is the year in which tax law changes will hit many taxpayers and cause our profession to become familiar with a lot of new material (it’s also the first year after the next Presidential election). Some of the changes are as follows: • Medical expenses will only be deductible after they exceed 10 percent of AGI instead of 7.5 percent. However, for those age 65 or over it will remain at 7.5 percent through 2016.

• Married taxpayers filing jointly (MFJ) with wages in excess of $250,000 (singles $200,000) will pay an additional Medicare tax of .009 (.9 percent) for a total of 2.35 percent. The additional .9 percent only applies on the income over the threshold amount. The employee (888) 557-4814 | www.scacpa.org

•

•

•

•

•

pays all of this tax, the employer’s share is not increased, and it applies to the self-employed as well.

The IRS will issue regulations to handle the situation where neither husband nor wife makes over $250,000 but jointly they do.

The employer will have no withholding responsibility where the employee and spouse is jointly liable but not on their own wages.

No part of the additional .9 percent is deductible for income tax purposes, but half of the 2.9 percent remains deductible. This additional tax must be considered in determining estimated income tax declarations.

The threshold amounts will not be adjusted for inflation. Remember when

• •

•

•

AMT came in, only few paid it because of the “high” exemption? The exemption was not indexed for inflation and now we have a mess there. Will that happen here?

If an individual has MAGI over the threshold amounts, some of which comes from “investment income” (generally dividends, interest, net rents, capital gains, etc.), the excess over the MAGI will also be subject to an additional tax. The tax will be 3.8 percent of the excess or the net investment income, whichever is less.

This tax will not apply to income from a qualified retirement plan.

This additional tax is not a part of the 50 percent deduction, which applies to the basic self-employment tax.

Flexible Spending Accounts (FSAs) will be capped at $2500 beginning in 2013, but this number will be indexed for inflation.

The definition of medical expenses for employer coverage will be defined to exclude over the counter medicines unless prescribed by a doctor, with the exception of insulin. Thus, the definition for reimbursement will be the same as for itemized deductions. n

Auditor Malpractice Issues Litigation Consulting/ Representation

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John F. Hamilton, CMA, CPA Direct ( 803) 608-8066

Email Johnfh@aol .c o m South Carolina CPA Report

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LLR

Quality Counts: Positive Enforcement Programs of the South Carolina Board of Accountancy

by James M. Holloway, Jr., CPA SC ACPA memb er since 1985

T

he Board of Accountancy has two programs that monitor the quality of attest engagements of licensees in South Carolina. One is the local government quality assurance program, and the second is the review of selected financials submitted for licensure for the South Carolina Board of Contractors.

POSITIVE ENFORCEMENT PROGRAM Each May we assemble 15 to 20 experienced reviewers for the Positive Enforcement Program (PEP). Local government and other special purpose entities send their financial statements to the Board where they are sorted by type. We approach the project as a learning experience for the reviewers, who complete the applicable Financial Statement Disclosure Checklist, A133 supplemental checklist and others as appropriate. A supervisory review is performed on statements deemed as deficient or substandard. Letters are sent to firms with deficient reports and complaints are opened against firms with substandard reports.

In order to increase our coverage and to encourage greater participation by licensees, we are planning on a second review site in 2011. Sites between Spartanburg and Greenville are currently under consideration. We are currently seeking reviewers with at least four years experience auditing and preparing financial statements of governments and political subdivisions and contractors. One hour of CPE is given for each 50 minutes reviewing statements, and participants are also eligible for reimbursement for travel cost in accordance within agency guidelines.

CONTRACTOR’S FINANCIAL STATEMENTS SUBMITTED FOR LICENSURE As you probably know, the Contractors Board is located in the same umbrella agen-

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cy— Labor, Licensing and Regulation— as the S.C. Board of Accountancy. This provides an excellent opportunity for the Board to monitor compliance with licensees serving contractors. This year, 10 percent of the financial statements of contractors we reviewed did not comply with state law. Two financial statements submitted were deemed substandard and have been forwarded for further investigation.

A word about requirements: for levels of licensure 1-4, a contractor may self prepare financial statements for license renewal. At level 5, the information must always be prepared by licensed accountants; as must initial licensure applications at levels 3 and 4. The type of attest service varies by both level of license being applied for and whether the application is an initial application or renewal.

Exact requirements are printed in the S.C. Code, Section 4 -11-260, and a free download online.

The law requires that the financial statement (singular) be in accordance with Generally Accepted Accounting Principles (GAAP).

That means at a minimum, there is a balance sheet with footnotes. Financial statements prepared in accordance with income tax basis or cash basis are not in accordance with GAAP and represent financials prepared on an Other Comprehensive Basis of Accounting (OCBOA). A balance sheet that omits disclosure is not GAAP. If a complete set of financial statements are submitted to the Board, obviously the Board will accept them. But the financial information submitted above the minimum is subject to review for deficiencies and substandard reports.

The date of the balance sheet can be any day of the year. The Board will accept a date within the last year. The balance sheet

should include GAAP items including costs and estimated profits in excess of billings, billings in excess of costs and estimated profits and deferred income taxes. In many instances, the year end statement may be the most efficient from a reporting standpoint.

Please refer to the industry accounting and audit guide for construction contractors to assure that the financial statement or statements are in compliance with industry specific guidance. A contractor must have the required net worth on a GAAP basis. The reporting has been complicated by changes in GAAP (specifically Financial Accounting Interpretation 46) since the law was passed.

Contractors often have a separate company that owns the warehouse, which has debt that the contractor guarantees, and this condition results in consolidation. The Contractors Board is only interested in the net worth of the contractor. If you consolidate, then add a supplemental schedule of the consolidating amounts so the Board can see the net worth of the contractor component. As an alternative, the Board will accept an opinion qualified for not consolidating in accordance with GAAP. This year, letters were sent to contractors with non-compliant statements, and copies to the preparing licensee’s firm.

Hopefully this information will help you advise your contractor clients of the correct financial statement requirements related to licensure.n

Jim Holloway, CPA is an Investigator/Consultant for the South Carolina Board of Accountancy. Additional editorial commentary was provided by Mark T. Hobbs, CPA, Vice Chair and Communications Director of the Board of Accountancy. Contact him at JimHoll@aol.com or (803) 315-1991.

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Board of Accountancy

Board of Accountancy News

by M ar k T. Hobbs, CPA SC ACPA memb er since 1981

T

he historical business model for the traditional local CPA Firm is no longer a valid business model for licensees in the 21st Century. The old model is to concentrate on tax and compliance work from January to April, and then serve a few audit clients in the summer and fall to stay busy and cover overhead. This traditional model once served the profession well but is not acceptable today due to the following: • Public expectations of responsibilities for audit engagements and auditors to be the experts on internal control and to detect fraud.

• Additional professional standards that require auditors to be a full-time professional and not a part-time player.

Complexity of the business environment and expanding accounting and auditing standards require full-time devotion in order to deliver quality services to the public. Examples include fair value accounting, international standards, accounting for variable interest entities and derivatives.

Today’s environment forces licensees to practice in their area of expertise to mitigate the business risk of public practice and to best serve the public. Licensees should be quick to advise clients to seek legal consultation or other assistance if the client’s request is beyond the scope of service offered by the firm. Firms must focus on their strengths and refer client requests to the appropriate authority.

The Board has been busy over the past several months and will have a planning session in December to review the CPE regulation that has generated much discussion with respect to the 50 percent limit on self-study. We also plan to discuss a mandatory ethics CPE requirement and other operational aspects at the Board of Accountancy. The staff is back at full speed,

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“The AICPA recently completed their oversight of the administration of the Peer Review Program in South Carolina. The result was an excellent report from the AICPA stating that the program is in compliance with AICPA guidelines.” and we feel blessed to have Doris Cubitt, CPA, back in the saddle. Doris does an excellent job as our executive director at LLR. I am pleased to report that the General Assembly did not take any money from the Board of Accountancy due to the recent budget crisis in our state. I have been informed that some other licensing Boards were impacted, but the Board of Accountancy was not. As you recall, the umbrella agency for the Board, Labor Licensing and Regulation (LLR) was fighting to keep the legislators from raiding certain Boards within the LLR umbrella. The accountancy profession is indebted to the leadership of LLR for not allowing our funds to be used to shore up budget shortfalls.

These funds are license fees that you pay to assist in the regulation of our profession in South Carolina, and should not be used as general fund tax revenue to support unrelated programs of state government.

Please remember that the Board expects licensees to obtain 40 hours of CPE in each calendar year. This is true even though we have gone to a biennial renewal process.

The staff at the Board has been requested to grant leniency if a licensee failed to obtain 40 hours in 2009, but had 80 hours for 2009 and 2010 combined. This is a one-time

South Carolina Department of Labor, Licensing and Regulation www.llr.state.sc.us

Board of Accountancy (803) 896-4770, phone accthelp@llr.sc.gov, email

Administrator Doris Cubitt, CPA (803) 896-4770, phone cubittd@llrsc.gov, email transitional relief that should not be viewed to be a change from the 40-hour per year requirement.

I am also pleased to report that peer review is working to improve the practice of S.C. licensees. The AICPA recently completed their oversight of the Administration of the Peer Review Program in South Carolina.

The result was an excellent report from the AICPA stating that the program is in compliance with AICPA guidelines.

In addition to the AICPA oversight, Jim Holloway, CPA provides local oversight on behalf of the Board of Accountancy. Mr. Holloway submits an annual report to the Board and his previous reports have been very positive as it relates to the performance of SCACPA as a report acceptance body. n

Mark Hobbs, CPA is the managing partner of The Hobbs Group, PA in Columbia. A past president of SCACPA, Mark currently serves on SCACPA’s Nominating and Investment Committees as well as the Long Range Planning Task Force. He may be reached at mark@hobbscpa.com.

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Emerging Leaders Conference Review

by Amanda W. Koehler, CPA, YCPA’s Leadership Cabinet Vice Chair man SC ACPA memb er since 2007

“C

loud� Accounting and SaaS, Politics and CPAs, Excel Tips and Tricks, Financial Planning for Young Professionals, The Polished Professional—that’s not exactly the list of presentations you might expect from a traditional SCACPA seminar, but as the typical accountant changes, so do their expectations in continuing education. With the rising number of young accountants entering the profession, SCACPA has added conferences to meet the needs of tomorrow’s leaders.

“I left the Emerging Leaders Conference with a ton of new ideas and knowledge that I was excited to share with the rest of my firm. I will definitely attend this conference again next year,�

The inaugural Emerging Leaders Conference took place in Charleston on September 23-24, 2010, hosted by SCACPA’s Young CPAs Leadership Cabinet with 37 participants. The pace was fast and spirits were high as the conference started with a “new-age� accounting presentation by Jason Blumer. Joy Rollins, Controller with American Services, Inc., shared her thoughts about Blumer’s presentation. “I like this guy. He really makes me think!�

The conference had its traditional presentations including an Audit and - Amanda Colgate, CPA, Tax update, but most presentations allowed plenty of room for partner at Godshall & participation and idea sharing. “I left Colgate, LLC the Emerging Leaders Conference with a ton of new ideas and knowledge that I was excited to share with the rest of my firm. I will definitely attend this conference again next year,� said Amanda Colgate, CPA, partner at Godshall & Colgate, LLC. During downtime, young professionals had a “Not So Taxing� trivia night. With thought-provoking challenges such as, “Name all of the Golden Girls and the actress who played each� and “Name the only major tournament Arnold Palmer has not won,� everyone gained some trivial non-accounting knowledge.

Also included in the conference was a class taught by Cynthia Grosso, of Charleston School of Protocol and Etiquette, Inc. , on business etiquette while dining. Young professionals were taught everything from the importance of posture to which fork they should use and how not to offend visiting diplomats. Jennifer Floyd, Tax Manager at WebsterRogers, LLP reflects, “It was personally

28

South Carolina CPA Report

beneficial for me, and I know next time I sit down to eat with clients or other business associates, I will have more confidence because of that class.�

Even though it may have not been your run-of-the-mill conference, the young professionals learned a great deal from the seminar. “It wasn’t your typical CPE, but it was probably the one that I got the most out of as far as personal development,� added Floyd. n

ABOUT THE YOUNG CPAs The South Carolina Association of Certified Public Accountants (SCACPA) created the Young CPAs Leadership Cabinet to prepare young professionals for positions of leadership in the profession, the association, the community and the world.

As young staff embark on their CPA career path, the Leadership Cabinet offers an enriching environment where participants learn new skills, access resources and shape ideas for the future. This unique two-year program combines in-person meetings, the opportunity to interact with CPAs across the state, and online shared experiences. For more information on becoming a member of the Young CPA Leadership Cabinet contact Communications Coordinator Emily Allen at eallen@scacpa.org or visit our web site at www.scacpa.org.

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The AICPA-endorsed Premier Plan can provide your firm with broad coverage and a comprehensive risk control program designed to help your firm reduce its risk of claims. Our plan offers insureds: • A risk control hotline with specialists who provide advice • Training in three convenient formats: live seminar, webcast or online self-study • Online policyholder resource center, which offers engagement letter guides, 14 sample engagement letter templates, case studies and other useful tools to assist your firm In the event that you do incur a claim, the Program provides insureds experienced claims management. CNA, the Plan underwriter, insures over 25,000 firms and has handled more than 14,000 accountants malpractice claims and potential claims over the past 10 years.

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One or more of the CNA companies provide the products and/or services described. The information is intended to present a general overview for illustrative purposes only. It is not intended to constitute a binding contract. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice. CNA is a registered trademark of CNA Financial Corporation.

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E-5929-0910 SC

We’re All In!

SCACPA 100% Membership Program Show your firm’s support of SCACPA, the only association in South Carolina representing the interests of CPAs! WHO IS ELIGIBLE? Firms with at least 10 CPAs on staff, all of whom are SCACPA members. 100 percent membership applies to CPAs only, although membership is available to CPA candidates, students and other professionals on staff.

BENEFITS n 10% discount on annual dues for all employees. n Firm name recognition the The South Carolina CPA Report, on SCACPA’s web site and other publications and at SCACPA events like the Annual Summit. n Registration discounts on CPE seminars and other SCACPA events (when registering five or more employees for one event).

HOW TO ENROLL Send your staff roster to ablake@scacpa.org. We’ll verify membership for your staff and send applications for those employees who are not members. Firms may enroll anytime for this program, but won’t receive dues benefits until the dues billing cycle following their enrollment.

New CPAs joining after the enrollment may take

QUESTIONS OR COMMENTS? April Blake Office and Member Services Coordinator (888) 557-4814, toll free in SC (803) 791-4181, ext. 100 ablake@scacpa.org, email

South Carolina

CPA

www.scacpa.org

advantage of the 10 percent discount.

Serving South Carolina CPAs since 1915.

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South Carolina CPA Report

(888) 557-4814 | www.scacpa.org

CHAPTER EVENTS

CHAPTER SPOTLIGHT AMY CAIN, CPA 2010 President of the Central Chapter of SCACPA SCACPA member since 1988 What have you learned—about our association, fellow members or yourself—by serving as a chapter leader?

I have learned that my Central Chapter Board members and the SCACPA staff are my most trusted advisors. We have had a very full and productive year with still more CPE and social events remaining on the calendar. I would have never been able to arrange a fraction of the events without my dedicated and ever-present Board members and the untiring support of SCACPA staff. It is hard to realize or explain all the discussion and research that goes on behind the scenes to make sure every detail of every event is carefully planned to be sure Central Chapter is well represented and prudent in its choices. I have learned my own limitations are numerous, and this year would not have been possible without the assistance of many.

What has been your proudest accomplishment during your tenure?

A

th

rolina Assoc Ca ia t

So

n io

2010

u

The funding of a new fully-endowed scholarship of $2,500 for a graduate student.

To know that the Central Chapter will be able to give support to a student every year

South Carolina

CPA

tifi

an ts

QUALITY CHAPTER AWARD r Ce

a

Chapter Connections

ed nt Public Accou

CENTRAL, COASTAL, FOOTHILLS, GRAND STRAND, SEA ISLAND

(888) 557-4814 | www.scacpa.org

from now to eternity is an awesome feeling.

With the ever increasing costs of school, I feel deeply gratified that we were able to create this legacy for the continued support of students new to our profession.

What advice do you have for those considering getting involved and engaged in SCACPA and their local chapter?

I believe people who are more involved get more out of life than those who sit on the sidelines. I cannot even begin to tell you how much it has meant to me to be a chapter officer. Being a chapter officer has been a commitment of five years, of which I have completed the first four. The jobs rotate at the end of each year, so in Central Chapter we start as CPE Coordinator, then move to Treasurer, Vice President and President. I am looking forward to next year, but have to admit it will be bittersweet to come to the end of my term as President. I have grown in ways I never dreamed of before these last few years. I challenge others to do the same. Get involved. Leave the TV remote on the couch. Become a leader. You will be surprised how far it takes you. n

Amy works in the Property Management Division of Russell & Jeffcoat Realtors, Inc., one of the largest residential real estate firms in the Southeast and the number one real estate company in the Midlands.

Originally from Sumter and a graduate of the University of South Carolina, she also serves as Properties Committee Chair at Forest Lake Presbyterian Church and is president-elect of the Forest Acres Rotary Club.

2010 CHAPTER PRESIDENTS Suzanne Merritt, CPA, Catawba Amy Cain, CPA, Central Richard Ett, CPA, CFM, CFP, Coastal Kara Shealy, CPA, Foothills Amanda Hallman, CPA, Grand Strand Bryan Rabon, CPA, Pee Dee Melanie Hill, MPA, CPA, CMI, FLMI, Piedmont Patrick Carey Jr., CPA, Sea Island

CATAWBA

November 19: Annual Tax Update (8 hours, CA111910) Winter 2010: Family/Networking Event

CENTRAL

December 1: Annual Tax Update (8 hours, CE120110) February 10: Professional Night May 21: Annual BBQ at the Zoo

COASTAL

January 14: CPA (4 hours) January 20: Student Night

FOOTHILLS

November 18: Annual Tax Update (8 hours, FO111810) December: Social Event (Charity)

GRAND STRAND

December: Holiday Dinner/Social Event

PEE DEE

November: Chapter/Student Bowling Night

PIEDMONT

December 6: BPEN: 1099, Employer Tax and Federal Income Tax Update for Small Business December 9: A&A Update and Review (8 hours, Anderson University) December 16: Annual Holiday Charity Luncheon

SEA ISLAND

December 14: Federal Tax Update with Walter Nunnallee (8 hours, 60110FH).

Sea Island Chapter members receive a $50 discount, email soxner@scacpa.org for details.

Staff Contact: Sandra Oxner Chapter members please note: Register on or before the early bird discount deadline (three weeks prior to each event) to receive free or discounted registration fees.

South Carolina CPA Report

31

Member News IN THE NEWS

SCACPA’s Educational Fund Trustees announced in the Gaffney Ledger that Anna Millwood of Blacksburg, a rising senior at Limestone College, was awarded the Burkett, Burkett and Burkett, CPA, PA Scholarship.

Carroll Webster, CPA, has been elected to serve on the 2010-2011 AICPA Nomination Committee

AWARDS AND CERTIFICATIONS

Amanda Colgate, CPA, Godshall & Colgate, LLC, was selected from more than 120 applicants to participate in the AICPA’s second annual Leadership Academy, comprised of 30 young CPAs from around the country.

Toby Eskew, CPA, Elliott Davis, LLC, has earned the Certified in Financial Forensics (CFF) credential from the AICPA. Erin E. Gilbert, CPA, Moore Beauston & Woodham LLP, received her CPA license for South Carolina.

Stephen Kirkland, CPA and W. Dale Dyches, CPA and financial forensic experts with Kirkland, Thomas, Watson & Dyches, LLC, have earned the Certified in Financial Forensics (CFF) credential from the AICPA. Jim Manley, CPA, Elliott Davis, LLC, was named among Greenwood’s Under 40 Stars and honored at an awards ceremony at Greenwood Country Club.

Robert Tilton, CPA, WebsterRogers LLP, received the Bold Steps in Leadership Award at the SCACPA YCPA’s Emerging Leaders Conference in Charleston.

PROMOTIONS

Stephen K. Keene, CPA, Moore Beauston & Woodham LLP, was promoted to Senior Accountant in the audit and assurance practice in the firm’s West Columbia office.

Christopher E. Mauney, CPA, Moore Beauston & Woodham LLP, was promoted to Senior Accountant in the audit and assurance practice in the firm’s West Columbia office.

Elliott Davis, LLC proudly announces the following promotions in its Columbia, Greenwood and Greenville offices:

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South Carolina CPA Report

Focus On Membership • Brittany Owen, CPA, has been promoted to manager in the firm’s tax practice.

• Matt Clark, CPA, has been promoted to manager in the firm’s assurance practice.

• Josh Garvin, CPA, has been promoted to senior manager in the firm’s assurance practice.

• Howie Houston, CPA, has been promoted to senior manager in the firm’s assurance practice.

• Drew Rogers, CPA, PFS, has been promoted to manager in the firm’s tax practice.

FIRM NEWS

Elliott Davis, LLC, was ranked No. 7 in North America in the 2011 edition of the Vault Guide to the Top 50 Accounting Firms. The firm also recently celebrated four consecutive years of being named among the “Best Places to Work in S.C.” by the S.C. Chamber of Commerce, S.C. Society for Human Resource Management and SC BIZ. Scott and Company LLP opened a new office at 702 Pettigru Street in downtown Greenville, the first expansion beyond Columbia for the 15-year-old firm which recently expanded to seven partners and was renamed from Scott McElveen, LLP.

CONDOLENCES

George O. Short, III, CPA, died August 15, 2010 after an extended illness. Born February 19, 1957 in Montgomery, Alabama, he was a graduate of Wade Hampton High School and The University of South Carolina. George was a Certified Public Accountant for 27 years, serving as Shareholder and CEO of George O. Short and Associates, PC (2007-2009), partner in George O. Short and Associates (19801996) and CFO of Community Labor Administrative Services (1996-2006).

Most recently, he was associated with his successor firm, Renita Owens CPA, LLC. George was a page in the South Carolina State Senate (1976-1980) and an intern in the United States Senate (1977). He and was honored as an Outstanding Young Man of America in 1988. George was a member of the AICPA and SCACPA. He was a graduate of Leadership Greenville (1987), Member of the Board of Directors Access, Inc. (19921996), Greenville American Cancer Society, Big Brothers/Big Sisters, and many other civic groups. Memorials may be made to the First Presbyterian Church Visitation Ministry

at 200 West Washington Street, Greenville, SC 29601 or to the charity of one’s choice.

Irvine Twitty (Buck) Welling, Jr., CPA, died October 5, 2010 at his home. Born in Darlington, S.C. on June 9, 1918, he was the son of the late Lyl LaGrone and Irvine T. Welling. He attended St. Johns High School where he played football and was salutatorian of his class. He graduated summa cum laude from the University of South Carolina in 1939. During World War II, Buck served as a naval officer aboard the USS Electra in the south Pacific. He was a partner with Elliott Davis, LLC and was associated with the firm for 61 years.

He was a close advisor to industrialist John D. Hollingsworth for over 35 years, and was instrumental in the establishment of The Hollingsworth Funds. Upon Mr. Hollingsworth’s death, Buck became its first Chairman and served until his retirement in February 2010.

Buck loved his family, beginning with his wife, Margaret, who died in April 2010 after 68 years of marriage. Buck is survived by three children: Irv and Eleanor (Lankford) Welling of Greenville; Bob and Elizabeth (Wooten) Welling of Columbia; Lyl W. and Bill Parker of Montgomery; eight grandchildren and five great-grandchildren.

Buck loved his church, First Baptist Greenville, where he served for many years as a Senior Deacon and as chairman of the Finance Committee. He also enjoyed meeting with the young Hollingsworth Scholars at Furman and visiting with many of the agencies funded by Hollingsworth Funds. Recent awards include an honorary Doctor of Humanities degree from Furman University and the 2009 Distinguished Citizen Award from the Boy Scouts of America. The March of Dimes had also chosen Buck as one of its honorees for its upcoming Real Estate breakfast on November 3. Buck served as past president of SCACPA and the American Business Club. He was a former member of the Council of the AICPA and also a member of the Poinsett Club.

Memorials may be made to the Faith Fund of First Baptist Greenville, 847 Cleveland Street, Greenville, 29601; United Ministries program Our Eyes Were Opened, 606 Pendleton Street, Greenville, 29601; or The Community Foundation of Greenville, 27 Cleveland Street, Greenville, 29601. n

(888) 557-4814 | www.scacpa.org

Welcome New Members ACADEMIC AFFILIATE

William R. Koprowski, PhD, J.D., CM College of Charleston School of Business and Economics Charleston, SC Philip L. Little, CPA, DBA Conway, SC Linda B. McKee, CPA, MS, PhD College of Charleston School of Business and Economics Charleston, SC

AFFILIATE (non-CPA)

Kenneth G. Everham Spartanburg, SC

ASSOCIATE

Stacey L. Barber Sherman Capital Markets, LLC Charleston, SC Kimberly Brody Lexington, SC

Focus On Membership Joshua T. Nexsen Columbia, SC Meagan M. Richards Lexington, SC John Vann Myrtle Beach, SC

Mitzi H. McCall, CPA Greenville, SC Valerie K. Mitchell, CPA Irmo, SC

CPA CANDIDATE Michelle L. Carl Mt. Pleasant, SC

Bradford Hammack J.W. Hunt & Company, LLP Columbia, SC Marie W. Hefner Bonneau, SC Stephen C. Hetherington Scott & Company, LLP Columbia, SC

Katherine C. Vinson J.W. Hunt & Company, LLP Columbia, SC

Rachel A. Cheney WebsterRogers LLP Summerville, SC Charles R. Cserny, CPA Hartsville, SC Jessica T. Cummins, CPA Lexington, SC Colleen E. Daniel, CPA Charleston, SC

FELLOW

Miriam M. Delamar, CPA Johns Island, SC

North Charleston, SC

Amy E. Edwards, CPA Taylors, SC

Susan E. Bailey, CPA

Christian P. Bassily, CPA Mount Pleasant, SC Jesse M. Carleton, CPA, MACC Augusta, GA Christopher S. Cauley, CPA Anderson, SC

Susie F. Edwards MUSC Controllers Office Charleston, SC Susan R. Egerdahl, CPA Taylors, SC Carla D. Gentry, CPA Easley, SC Kimberly R. Getz, CPA Hilton Head Island, SC Stephen A. Gimbel, CPA Columbia, SC Lindsay A. Gosnell Inman, SC Allyson B. Hancock, CPA Greer, SC Lisa M. Heise, CPA Pacolet Milliken Enterprises, Inc. Spartanburg, SC R. H. Hunnings II, CPA Island Management Services Hilton Head Island, SC

At MG&C, our experienced professionals are committed to excellent service and innovative solutions for diverse legal and business challenges.

Experience. Service. Results.

David M. Knoble, CPA MAC Charlotte, NC William K. McKinney, CPA Greenville, SC Adam R. McKnight, CPA Greer, SC Kathleen H. Oliver, CPA UCI Medical Affiliates Columbia, SC

mgclaw.com Columbia

Charlotte

Charleston

(888) 557-4814 | www.scacpa.org

Greenville

Raleigh

Myrtle Beach

LEAVE OF ABSENCE

Lora W. Prevatte, MSA Mount Pleasant, SC

Lauri L. Klugh, CPA Anderson, SC

James B. Reese, CPA Columbia, SC Benjamin A. Riggins, CPA Lancaster, SC

STUDENT

Jeanne G. Seckinger, CPA Hampton, SC

Jacob D. Clary Columbia, SC

Opeyemi J. Akele Jersey City, NJ

Ashleigh M. Sutter, CPA Simpsonville, SC Jeremy E. Tibbs, CPA Grant Thornton, LLP Columbia, SC

Kelly A. Damiano Columbia, SC Bridget M. Dolinar Columbia, SC Jessica A. Dupee Myrtle Beach, SC

Judann M. Tine, CPA Fort Mill, SC

David C. Erickson II, CPA Greer, SC

Herbert J. Walker, CPA, MA Columbia, SC

James D. Guffey Anderson, SC

Jack L. Waters, CPA Spartanburg, SC

Huei-Jyan Jhang Columbia, SC

Dara S. Williams, CPA Columbia, SC

Jason C. Kneese Greenville, SC

Kathleen A. Williams, CPA Charleston, SC

J A. McDermott Charleston, SC

FIRM ADMINSTRATOR Judy M. Allen Ernest W. Rabon, CPA, PA Myrtle Beach, SC

Mark E. Menezes Isle of Palms, SC Harrison J. Miller Irmo, SC Michelle M. Nugent Columbia, SC

Catherine L. Brooks SC Department of Transportation Columbia, SC

Arnold K. Owino Central, SC

Michelle Graham J.W. Hunt & Company, LLP Columbia, SC Steve Kelly Cherry Bekaert & Holland, LLP* Greenville, SC Diana Wood Charleston, SC

Dee Batlis Masters Florence, SC

Kimberley S. Parker Myrtle Beach, SC Wesley M. Paul Greenville, SC Summer D. Rippy Columbia, SC Cynthia M. Striegel Fort Mill, SC Marla A. Womack Columbia, SC *100% Membership Firm

South Carolina CPA Report

33

Upcoming CPE

Focus On CPE

2010 Federal Tax Update with Walter Nunnallee

Sponsored by CAMICO

With an array of new tax breaks, expiring tax benefits, looming tax increases, new Roth IRA conversion opportunities, repeal of the estate tax (2010 only) and a modified carry-over basis rule for deaths occurring in 2010, it’s more important than ever to be upto-date on the latest tax developments.

Attend this seminar and learn how to maneuver the maze of taxes.

December 2010 | Four Locations Across the State SEMINAR LOCATIONS December 13 (Florence) – Southeastern Institute of Manufacturing & Technology (60110FF) December 14 (Bluffton) – USC Beaufort at Bluffton (60110FH) December 15 (Columbia) – Embassy Suites (60110FC) December 16 (Greenville) – Embassy Suites (60110FG)

ABOUT THIS EVENT CPE Credit: 8 hours Area: Tax

CLE Credit: 6.67 hours Level: Intermediate to Advance

For details or to register visit www.scacpa.org.

Last Chance CPE Frenzy!

DECEMBER 29, 2010

DECEMBER 30, 2010

Recent Compilation and Review Issues (60510AM) SSARS 19 effectively rewrote and codified most of the compilation and review standards. This is an entirely new program designed to address the new standards.

Field of Study: Accounting (2 hrs)

NEW! Fair Value Accounting in the 21st Century (60610AM) Fair value accounting has become a frequent topic of discussion for accountants, users and government regulators during the past few years. ASC Topic 820 (previously FASB 157), Fair Value Measurements and FSP FASB 157-4 (Determining Fair Value When Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly) have caused confusion, frustration and anger among many. This program will address this new fair value reality as it applies to frequently encountered situations in financial reporting.

Field of Study: Accounting (4 hrs)

What’s New with Quality Control and Peer Review (60510N) Beginning in 2009, firms were expected to revamp their quality control systems in order to comply with the Statement on Quality Control Standards No. 7, A Firm’s System of Quality Control.

In addition, peer reviews will undergo dramatic changes. This program will keep participants on top of the latest changes to quality control policies and procedures and the peer review process. Field of Study: Auditing (2 hrs) NEW! Case Studies in Compliance Auditing (60510PM) The AICPA has responded to the criticism leveled at it and other organizations (GAO and OMB) in the PCIE’s Report on the Statistical Sample of Compliance Audits. As a result, additional guidance is being provided on many of the deficiencies found during the study. This four-hour module will take a look at the changes the new SAS No. 117 and audit guide will make to compliance auditing, as well as other puzzling aspects of compliance auditing using a case study format. The course will also address issues arising as a result of the nearly $300 billion in funding from the American Recovery and Reinvestment Act (ARRA). Field of Study: Auditing (4 hrs)

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South Carolina CPA Report

December 29-30, 2010 | Columbia, SC

NEW! International Accounting Standards – Differences with U.S. GAAP (60610N) With the increasing use of International Accounting Standards in the U.S. by both public and private companies, many accountants find they have to develop an understanding of the International Financial Reporting Standards (IFRS) and how they differ from U.S. GAAP. Field of Study: Accounting (2 hrs) NEW! Accounting Standards Update (60610PM) This session will provide an overview of changes made to pronouncements since the FASB Codification was adopted. Only pronouncements which are relevant to local accounting firms or privately-held companies will be covered in detail. For other issues, a quick synopsis will be provided. Note: This is a two-hour version of our full-day program, Loscalzo’s Annual FASB and AICPA Update. Field of Study: Accounting (2 hrs)

For details or to register visit www.scacpa.org.

(888) 557-4814 | www.scacpa.org

Upcoming CPE

Focus On CPE

Tax Season Survival Guide

December 2010 & January 2011 | West Columbia, SC

DECEMBER 2010

Event Facility: SCACPA Office 570 Chris Drive West Columbia, SC 29169 (803) 791-4181 Hotel Accommodations: Hampton Inn - I26 1094 Chris Drive West Columbia, SC 29169 (803) 791-8940 Room Rate: $79 For details or to register visit www.scacpa.org.

12/02 - Effectively and Efficiently Reviewing Tax Returns in the Busy Season (69610) Credits: 8 Leader: Susan Smith

12/15 - Advanced Technical Tax Forms Training: Form 1040 Issues (69710) Credits: 8 Leader: James Vastarelli

12/21 - Preparing C Corporation Tax Returns for New Staff and Para- Professionals (61610) Credits: 8 Leader: Anne Wilkins

12/03 - The Complete Guide to Payroll Taxes and 1099 Issues (69810) Credits: 8 Leader: Susan Smith

12/16 - Advanced Technical Tax Forms Training: LLCs, S Corporations and Partnerships (69910) Credits: 8 Leader: James Vastarelli

12/22 - The Complete Guide to Preparing LLC Partnership and S Corp. Federal Income Tax Returns (61710) Credits: 8 Leader: Anne Wilkins

12/07 - 2010 Individual Tax Review Series: Beyond the Basics (60310A) Credits: 8 Leader: Wendy Kravit

12/20 - Preparing Individual Tax Returns for New Staff and ParaProfessionals (61510) Credits: 8 Leader: Anne Wilkins

JANUARY 2011

01/04 - Sales & Use Tax Update (70511PM) Credits: 4 Leaders: Ryan Johnson &

Anthony Masino

01/05 - State Corporate 01/18 - 1040 Tax Season Survival Income Tax Update (70611PM) Guide (70311) Credits: 4 Leaders: Ryan Johnson & Credits: 8 Leader: Bill Grooms

Anthony Masino 01/19 - Advanced Individual 01/11- Limited Liability Company & Income Tax Return Issues (70411) Partnership Tax Return Preparation Credits: 8 Leader: Bill Grooms Workshop (70111) Credits: 8 Leader: Bart Carson

01/05 - State Individual Income Tax Update (70611AM) Credits: 4 Leaders: Ryan Johnson &

Anthony Masino

01/12 - Guide to Understanding the Key Issues in Preparing S Corporation Tax Returns (70211) Credits: 8 Leaders: Bart Carson

01/04 - South Carolina Tax Overview (70511AM) Credits: 4 Leaders: Ryan Johnson &

Anthony Masino

2011 MULTI-STATE CPE & SKI CONFERENCE • JANUARY 11-12, 2011 Lion Square Lodge & Conference Center in Vail, CO

Supported by 21 state CPA societies, this annual event offers six four-hour CPE sessions at the number one snow ski resort in the U.S., with instructors that rank among the top in the nation. Courses titles include: Lean, Clean and All Things Google; Excel Pivot Tables; Federal Tax Update; Accounting and Auditing Update; Tech Update; and Ten Things You May Have Missed in Excel. To receive an information packet with detailed course descriptions, instructor biographies, full-color facilities brochures and information about Vail, please call K2 Enterprises at (888) 542-9390 or visit www.k2e.com/co.ski.htm.

(888) 557-4814 | www.scacpa.org

South Carolina CPA Report

35

Upcoming CPE

Focus On CPE

A&A Conference Preview

Changes on the Horizon

by R eva Brennan, MPA, C AE, IOM S er ving SC ACPA since 2001

What accounting and auditing changes are on the horizon? Attend this conference and find out. This conference is an ideal opportunity for you to keep abreast of the fast-paced changes in accounting and auditing. The conference will cover topics varying from budgeting, compilation and review, fair value, financial reporting, and more. Register today to secure your spot!

Register for the 2010 A&A Conference at www.scacpa.org.

R

egistration is now open for the 2010 Accounting and Auditing Conference, December 9-10 in beautiful downtown Charleston at the Francis Marion Hotel. SCACPA members save $125 when registering by November 18.

Our conference features several dynamic speakers that will discuss Changes on the Horizon in the areas of accounting and auditing in a format that allows you the flexibility to choose the sessions that best meet your needs. The A&A Conference spans two days with 16 CPE credits, two tracks and ten concurrent sessions.

The kick-off general session is an A&A Update from past conference favorite Bradley Newkirk, CPA. This session will review newly issued accounting principles and other activities of the Financial Accounting Standards Board (FASB), including emerging issues in revenue recognition, lease accounting and contingencies. Also, discussion and review will be held on the activities of the Accounting and Review Services Standards (SSARs) and the Auditing Standards Board (ASB), including the clarity project and the move toward global auditing standards.

Technology guru Carlton Collins, CPA of AdvisorCPE will offer two sessions: Excel Data Analysis & Financial Reporting and Budgeting & Financial Reporting with Excel.

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South Carolina CPA Report

South Carolina favorite Mark Hobbs, CPA will explore a New Framework to Document and Evaluate Internal Controls at an Entity, and provide a 2010 Fraud Update.

Fair Value Accounting continues to evolve in the U.S. Leah Donti, CPA will present how fair value accounting has brought challenges to the accounting profession, and in a second session present Business Combinations FAS 141R and the Related FAS 160.

Governmental Accounting Standards Board expert Dean Mead, CPA will cover GASB pronouncements that are now being implemented and the GASB’s current standards-setting activities.

Joseph Beck, CPA will provide a Comp & Review session centered on SSARS 19.

By December 2010, many large 403(b) plans will have undergone their first audits. Robert Lavenberg, CPA, JD, LLM will conduct an open forum in which the presenter and participants will share their observations from this challenging audit season.

The conference will wrap up with a Q&A session with an all-star panel of experts. We are pleased to announce Robert Half as a sponsor of this event, and look forward to seeing you in Charleston on December 9-10! n Book your reservation at the Francis Marion Hotel today! SCACPA group rate of $136 expires 11/12/2010.

Please visit www.francismarioncharleston.com to make your reservation. SCACPA group code is SC CPA.

(888) 557-4814 | www.scacpa.org

Special Offer for State Society Members*.

ADP gives you the choice of doing business the way that best fits your firm. Whether you want to refer payroll or process it yourself, ADP provides world-class payroll and beyond payroll services, so you can focus on what matters most: growing your business and helping your clients be successful. In addition, your state society membership means that you will be rewarded with the following special benefits when you partner with ADP: ■

Payroll for your firm — FREE for up to 50 employees with discounted solutions to meet the needs of larger businesses

■

Special discounts for your firm’s clients

■

Free access to our Accountant HR Helpdesk

■

Free Master Tax Guides from CCH, a Wolters Kluwer business

■

30% discount on all CCH tax and accounting publications

Contact your local ADP representative today. *Discount/free payroll applies to companies with 1 to 49 employees that sign complete ADP sales order and to all features of standard payroll processing invoiced on client’s regular processing cycle and does not include additional non-payroll services; excludes pass through costs, courier and other delivery fees, including off cycle fees, hardware, or penalty and interest fees. Only available to new ADP Clients using EasyPaysm or RUN Powered by ADP® in the continental U.S. Must be set-up for direct debit of fees (“DDF”) as the payment method. © 2010 ADP, Inc. The ADP Logo is a registered trademark of ADP. EasyPay is a service mark and RUN Powered by ADP is a registered service mark of ADP, Inc. All other trademarks are the property of their respective owners.

Classifieds

ADVERTISER INDEX

Office Space Available ACCOUNTING PRACTICE SALES

Buyers: registration is free and simple on our Web site! Selling? We can help you: maximize the value of your practice; experience a smooth process; and achieve confidence that your clients will be in good hands. See our available listings below! If interested contact Brannon Poe at poe@knology.net or call (888) 246-0974. Please see our multi-state listings at www.accountingpracticesales.com.

Charleston - $220,000 Hilton Head/Bluffton - $145,000 Midlands Area - $195,000 Greenville Area - $210,000 Hartsville - $125,000 Spartanburg - $375,000

EXECUTIVE CPA OFFICE. York County - Fort Mill/Rock Hill/Charlotte, excellent up-scale area to start/relocate practice, New Class AAA Building, professionally designed interiors, furnishings/cubicles available, 2,000 to 4,000 square feet, $15 per square foot, $3.25 NNN, 6 months free. E-mail TheClebourneBuilding@ hotmail.com for information/pictures or call 803-322-1583.

JoB OPPORTUNITIES TIRED OF PUBLIC ACCOUNTING? Join our manufacturing/corporate network.

Contact Ryan Nelson 800.525.7828 or Ryan.

Nelson@FinancialSearchGroup.com

ONSITE TRAINING AVAILABLE Get quality CPE in your office at your convenience.

You choose the location, topic and date and we take care of the rest. Visit www.scacpa.org for more information. Staff contact: Reva Brennan

PROFESSIONAL ACCOUNTING SALES

BUY-SELL-MERGE-FINANCE your practice with USA’s No. 1 Accounting Brokerage Firm. Let our 27 years of CPA firm merger-acquisition experience work for you! We offer complete consulting assistance package to our clients including 100% bank financing so you can cash the seller out at closing.

Current Carolina practices include: Asheville $1,600,000+; Myrtle Beach $125,000 to $300,000; Winston-Salem $175,000; Charlotte $350,000+; ATLANTA $350,000 to $850,000; Many others!

Contact Leon Faris CPA Professional Accounting Sales 800-729-9031 Visit our Web site: www.cpasales.com

SCACPA encourages you to recycle when you are finished reading.

Seeking Ads for Future Editions Reach more than 3,900 CPAs and accounting professionals in the South Carolina CPA Report!

Rates are $1 per word for members; $2 per word for non-members. Staff contact: Emily Allen

Accounting Practice Sales www.accountingpracticesales.com Inside Back Cover ADP www.adp.com/accountant.aspx Page 37 American Pensions http://www.ampen.com/ Inside Front Cover Aon/BB&T Insurance Services/ AICPA Professional Liability Insurance Program www.cpai.com Page 29 Blytheco www.blytheco.com Back Cover Eddsa, Inc. www.eddsa.com Page 28 John F. Hamilton, CPA JOHNFH@aol.com Page 25 Haynsworth Sinkler Boyd, PA www.hsblawfirm.com Page 10 McAngus Goudelock & Courie, LLC www.mgclaw.com Page 33 Southeastern Insurance Consultants http://siconsultants.com/ Page 4

To learn more visit www.recycleplease.org.

To find recycling centers near you visit www.earth911.com or www.wm.com.

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South Carolina CPA Report

(888) 557-4814 | www.scacpa.org

Picture this... next tax season, a chair ...no desk Go with the leader. We provide excellent service and get the best results.

We have qualified buyers waiting. See detailed articles about the process on our website!

AVAILABLE PRACTICES Charleston – $220,000 Bluffton/Hilton Head – $145,000 Midlands Area – $195,000 Greenville Area – $210,000 Hartsville – $125,000 Spartanburg – $375,000

Buyers – Registration is free and simple B r annon Poe, CPA 1. 888. 246. 0974 p oe@ knol og y. net

W W W. A C C O U N T I N G P R A C T I C E S A L E S . C O M

South Carolina Association of CPAs

PRSRT STD US POSTAGE PAID PERMIT NO. 1146 Columbia, SC

570 Chris Drive, West Columbia, SC 29169 10%

Mixed Sources

Product group from well-managed forests, controlle d sources and recycled wood or fibre Cert no. SW-COC-002946 www.fsc.org Š 1996 Forest Stewardship Council

LLC

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