November 2014 co web

A publication of the Utility Contractors’ Association of New England, Inc.

NOVEMBER, 2014

2014 Contractor of the Year

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IN THIS ISSUE

OFFICERS President AL MORTEO FED. CORP. President Elect TONY BORRELLI Celco Construction Corp.

Treasurer JOHN OUR Robert B. Our Co., Inc. Secretary PAUL SCENNA Albanese D&S, Inc.

BOARD OF DIRECTORS MARCELLA ALBANESE Albanese Bros., Inc. JEFF BARDELL Daniel O’Connell’s Sons, Inc. VINCENT BARLETTA Barletta Heavy Division NICK BIELLO J. D’Amico, Inc. KEVIN COLE J. F. White Contracting Co. STEVE COMOLETTI P. Caliacco Corp.

STEPHEN J. CONNOLLY ATS Equipment, Inc. MAUREEN DAGLE Dagle Electrical Const., Corp.

THOMAS DESCOTEAUX R. H. White Const. Co., Inc. ALEX DUNN Travelers JERRY GAGLIARDUCCI Gagliarducci Construction, Inc. MARCO GIOIOSO P. Gioioso & Sons, Inc. BILL IRWIN C.J.P. & Sons Const. Co., Inc. PHIL JASSET Honorary Board Member RICHARD PACELLA, JR. R. M. Pacella, Inc. BRIAN RAWSTON Jay Cashman, Inc. KENNETH STEVENS A. H. Harris & Sons, Inc. DAVID ZOPPO R. Zoppo Corp.

KLAYMAN ANNE Executive Director

3 President’s Message:

UCANE’s 60th Anniversary Banquet: A Night I Will Never Forget

5 Legislative Update:

• Massachusetts 2014 General Election: Baker-Polito, Healey, Goldberg, and Galvin Claim Constitutional Offices • Ballot Questions 1 and 4 Prevail; Questions 2 and 3 Fail • Boston Mayor Issues Executive Order to Curb Wage Theft • Miscellaneous Items of Interest

14 City of Boston’s New Truck Safety Ordinance 25 Towns Must Unite for Clean Water 28 UCANE’s 60th Anniversary Banquet 38 UCANE’s Past Presidents 48 UCANE’s Banquet Sponsors 50 Contractor Member of the Year: Al Morteo, FED. CORP.

52 Associate Member of the Year: John Macaione, EJ

55 MWRA’s Fred Laskey Receives Environment Award 57 UCANE’s Annual Christmas Party & Scholarship Auction 59 Financial Management: • • • • • • •

A Tale of Two Couples Year-End Investment Tax Planning Year-End Charitable Tax Planning Year-End Family Tax Planning Year-End Retirement Tax Planning Year-End Estate Tax Planning Year-End Business Tax Planning

Editor: Anne Klayman, Associate Editor: Suzanne Savage, Graphic Designer: Sherri Klayman Construction Outlook Chairman: Al Morteo Editorial Board: Al Morteo, Tony Borrelli, John Our, and Paul Scenna CONSTRUCTION OUTLOOK published monthly by the Utility Contractors’ Association of New England, Inc., 300 Congress Street, Suite 101, Quincy, MA 02169; Tel: 617.471.9955; Fax: 617.471.8939; E-mail: aklayman@ucane.com; Website: www.ucane.com. Statements of fact and opinion are those of the authors alone and not necessarily those of UCANE and the Construction Outlook editorial board and staff.

Subscriptions are included in dues payments for UCANE members. Presorted Standard postage paid at Abington, MA. POSTMASTER, please send form #3579 to Construction Outlook, Crown Colony Office Park, 300 Congress Street, Suite 101, Quincy, MA 02169.

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UCANE’s 60th Anniversary Banquet A Night I Will Never Forget Our 2014 Annual Banquet was a very special event with over 600 members and guests in attendance to help celebrate UCANE’s 60th Anniversary. A special tribute was given to the 13 Past Presidents who were in attendance, and who helped lead our Association over the years. In recognition of these leaders, Executive Director Anne Klayman stated, “All of these men who stand before you can take credit for helping raise the stature of UCANE from a small group of nine independent utility contractors who started this Association, to where it is today…one of the strongest, most dedicated, and most respected groups in the construction industry.”

W

hile we recognize their dedicated leadership, much of our success must also be attributed to our members—contractors and suppliers alike—who so generously and faithfully supported UCANE’s mission and goals throughout the years, including our Annual Banquets.

Unequivocally, this year’s Banquet was one of the best parties I’ve ever attended, and as usual, this event was a great evening of music and dancing, fine dining, entertainment, and most of all…spending time with other UCANE members and their guests.

In addition to recognizing our Past Presidents, our Banquet traditionally affords us the opportunity to present our Contractor and Associate Member of the Year Awards to deserving members. While the names of both recipients are usually kept secret until the presentation, this year there was a departure from the norm. Our Associate Member of the Year Award recipient knew of his award because he was not able to attend, and we wanted him and his family to at least listen to his presentation. And little did I know, because it was kept a secret by my wife and the UCANE staff who I speak with every day, that I would be receiving the Contractor of the Year Award. It was a total surprise to me.

In a “turn-about is fair play” action, our Executive Director, who is so good at keeping a secret, was surprised when I opened the evening’s program by announcing that she would be receiving a Recognition Award for her years of dedication and commitment to our Association.

All of our Banquets are great, but this one was very special and memorable for me because I was so honored to receive UCANE’s 2014 Contractor of the Year Award, which was voted on by my peers. I can’t begin to tell you what it

NOVEMBER, 2014

means to me. Also, having my children come to share this moment with me was another surprise that capped off a great night for the Morteo family.

I also want to congratulate my good friend, John Macaione from EJ, formerly LeBaron Foundry, for being recognized as UCANE’s 2014 Associate Member of the Year. This is a well-deserved award for John. Not only is he one of the most dedicated and honest sales reps in our business, he is a pillar of strength and perseverance in the face of hardship that few of us could ever match.

And there is one more thank you that is due. I’d like to thank my brother-in-law Joey Federico, President of FED. CORP., for believing in the benefits of joining UCANE and for supporting my involvement over the years in this fabulous Association. Like so many other contracting companies, FED. CORP. is a small family owned business with everyone working “hands-on” in the field every day. We try to give an honest day’s work for an honest day’s pay, and we work hard trying to navigate the regulatory landscape and bidding maze of requirements to keep our employees educated and to also keep them safe. All of us at FED. CORP. realize just how much being a UCANE member has helped our company succeed. We are proud to be able to give back to the industry that provides us our livelihood through our involvement in UCANE.

So, UCANE’s 60th Anniversary Banquet is now behind us. It will always be very special to me and I’m certain special to those who attended. By the looks of all the smiling faces that I saw all night long, I’m certain most are already looking forward to next year’s Banquet. n

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Mark Molloy, Esq., Lynch Associates, Inc.

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Massachusetts 2014 General Election: Baker-Polito, Healey, Goldberg, and Galvin Claim Constitutional Offices

n one of the closest races in years, Republicans Charlie Baker and Karyn Polito defeated Democrats Martha Coakley and Steve Kerrigan by approximately 40,000 votes on November 4. With slightly over 2.1 million votes cast, Governor-Elect Baker received 1,040,734 votes. His success is largely attributed to his standing with unenrolled voters, enthusiasm within his own party for his candidacy, his ability to make in-roads in urban areas, (i.e., reducing the vote spread by which he lost in 2010) and the appeal presented by a bipartisan counterbalance to the traditionally Democratic legislature. Governor-Elect Baker will be sworn into office in January 2015. As reported by the Boston Globe, Governor-Elect Baker has already begun outreach to Governor Deval Patrick for purposes of transition.

In the race for the Office of Attorney General being vacated by Martha Coakley, Democrat Maura Healey easily defeated Republican John Miller. As anticipated, the Attorney General-Elect brought enthusiasm for her campaign to grab 1,274,458 votes and 62 percent of the total vote. Her race was of particular interest because it was (a) a high profile race and (b) she is considered the bright new face of the Democratic Party. She considers the role of the Office of the Attorney General as more of the “enforcer of the laws” as opposed to the office that makes law through its policies.

In the race for Treasurer, Democrat Deb Goldberg defeated Republican Michael Heffernan with 55 percent of the vote (i.e., 1,113,969). Treasurer-Elect Goldberg, who has been a longtime Democratic advocate, is a former Selectman from the Town of Brookline. Current Democratic Auditor Suzanne Bump defeated Republican Patricia Saint Aubin with 1,141,075 votes, equaling 58 percent. The race was of note for the fact that the Boston Globe endorsed St. Aubin for essentially not being the incumbent office-holder. Finally, incumbent Secretary of State, Democrat Bill Galvin, handily disposed of his opponent, Republican David D’Arcangelo.

The race was most notable for the negative tone it took despite the campaign receiving little media coverage.

NOVEMBER, 2014

In the legislative races for State Representative and State Senator, Republicans picked up two State Senate seats and a handful of State Representative seats. Of particular note, two current Republican Massachusetts House members grabbed Senate seats currently held by Senate President Therese Murray and Senate President Pro Tempore Richard Moore. (Note: Murray is vacating her seat; she was not seeking re-election). Democrat Senator Moore lost to Representative Ryan Fattman, while former Representative Matt Patrick was beaten by Representative Vinny deMacedo. The loss of Senator Moore, whose district overwhelmingly supported Charlie Baker, represents a significant loss of institutional knowledge in the Senate. Other competitive races where Democrats prevailed found Senator Jason Lewis winning re-election over Republican Monica Medeiros, while former Representative Barbara L'Italien kept outgoing Senator Barry Finegold's seat Democratic by beating out Selectman Alex Vispoli. Democratic Senators Kathleen O'Connor Ives and Jennifer Flanagan also won re-election. Democrat Eric Lesser, a former Obama White House aide, defeated Republican Debra Boronski in the race to replace Senator Gale Candaras. Finally, Democrat continued on page 7

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Legislative Update continued from page 5

nor-Elect Baker. Likewise, with new leadership in the Massachusetts Senate (i.e., Senator Stan Rosenberg as the presumptive Senate President) and new faces in the Massachusetts House, there will be change on the legislative front as well. UCANE will continue to keep you apprised of the changes as they occur. continued on page 9

Anne Gobi narrowly captured the seat left open when the Senate Ways and Means Chairman Stephen Brewer elected to retire.

On the House side of the ledger, Minority Leader Brad Jones saw his party pick up at least five additional seats. While most pick-ups were open seats, two particular races stood out. Democratic Representative Denise Andrews was defeated in a rematch with Republican Susannah Whipps-Lee. Call Your Nearest GENALCO Warehouse The race, whose tenor was vitriolic For These Supplies HYDRAULIC at most times, was of note only in GRADE 8 STROBE LIGHTS OIL NUTS & BOLTS the sense it involved the defeat of a WEATHER CAPS sitting House representative. IncumAIR CLEANERS GREASE FITTINGS BUCKET TEETH bent Democrat Rhonda Nyman also HYDRAULIC HOSE lost her seat to Republican David BUCKET LIPS DeCoste. The other seats picked EQUIPMENT PAINT BUCKETS up by Republicans were open seats vacated by incumbents of both parCUTTING EDGES CHAIN ties. The Republican total in the SLINGS House for the 2015-2016 legislative BACKUP BELLS AIR, OIL & FUEL session will be 32 members out of AND ALARMS FILTERS EXTREME ROTARY 160; the Massachusetts Senate will PRESSURE GREASE ASPHALT CUTTERS have 6 members out of 40.

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Legislative Update continued from page 7

Ballot Questions   1 and 4 Prevail;      Â

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 he Commonwealth voted on a number of key     ballot questions November 4. Question 1, a    vote to repeal the indexing of the gas tax to the consumer price index narrowly passed. This presents   an interesting funding question next legislative cycle    as many infrastructure projects, which depended on   st st New Â

 Source  Elite  Marketer  of   Source  Elite  Marketer  of  that funding, may be cut. Question 2, expanding the New Â

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st stst  Source  Elite  Marketer  of  Chevron  Quality  Lubricants  New Â

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 Source  Elite  Marketer  of  so-called “bottle billâ€? to include water containers, was Chevron  Quality  Lubricants  Chevron  Quality  Lubricants  Complete  line  of  lubricants  for  all  industries:                 Chevron  Quality  Lubricants  Complete  line  of  lubricants  for  all  industries:                 soundly defeated. Question 3, repealing the Com Off  Highway  and  Construction,  On  Highway  Fleets,  Complete  line  of  lubricants  for  all  industries:                 Complete  line  of  lubricants  for  all  industries:                Â

Complete  line  of  lubricants  for  all  industries:                 Off  Highway  and  Construction,  On  Highway  Fleets,  monwealth’s recently passed gaming law, was also Off  Highway  and  Construction,  On  Highway  Fleets,  Off  Highway  and  Construction,  On  Highway  Fleets,  Automotive,  Marine,  Railroad  and  Industrial  Plants  Off  Highway  and  Construction,  On  Highway  Fleets,  Automotive,  Marine,  Railroad  and  Industrial  Plants  soundly defeated. Question 4, of note to employAutomotive,  Marine,  Railroad  and  Industrial  Plants  Automotive,  Marine,  Railroad  and  Industrial  Plants  On  and  Off  road  diesel  fuel  ,  propane  and  heating  oil  Automotive,  Marine,  Railroad  and  Industrial  Plants  ers throughout the Commonwealth, was passed by On  and  Off  road  diesel  fuel  ,  propane  and  heating  oil  On  and  Off  road  diesel  fuel  ,  propane  and  heating  oil  On  and  Off  road  diesel  fuel  ,  propane  and  heating  oil  available  in  select  markets  of  our  service  area Â

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NOVEMBER, 2014

Legislative Update continued from page 9

A

Boston Mayor Issues Executive Order to Curb Wage Theft

ccording to a press release issued by the City of Boston, Mayor Martin J. Walsh signed an Executive Order establishing payment certification requirements for vendors with city contracts. The measure seeks to prevent wage theft, which is the improper withholding of payment from employees and the failure to pay employees according to required schedules.

Under the Executive Order, vendors who have a contract with the City of Boston will be required to certify their compliance with federal and state wage law with the City, or if the vendors have previous violations, disclose them, and provide a wage bond for the duration of the contract. The Executive Order also prohibits City departments from contracting with vendors debarred by the Commonwealth for the period of their debarment.

Under the Executive Order, the Boston Licensing Board can take into consideration whether a

licensee has been found to have violated state fair labor laws or the Fair Labor Standards Act, as the Board is determining whether to re-issue, modify, suspend, or revoke a license. Licensees that are subject to debarment for violating these laws, or that have been prohibited from contracting with the Commonwealth, will also be prohibited from holding licenses issued by the Boston Licensing Board for the same time period.

The Executive Order is effective for any request for proposals, invitation for bids, or request for qualifications as of January 1, 2015. continued on page 13

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NOVEMBER, 2014

Legislative Update continued from page 11

Miscellaneous Items of Interest • The Massachusetts Department of Environmental Protection (MassDEP) continues its work to implement Section 277 of the Fiscal Year 2015 budget. The section, which requires the MassDEP to establish policies, guidance, or regulations governing the transportation and disposal of soils not otherwise governed previously by the agency, has led to a variety of public meetings. It is anticipated that the MassDEP will issue interim guidance on this matter before the end of the year. For more information about this initiative, please visit: www.reclamationsoil.org.

• The City of Boston recently passed an ordinance governing the use of “side guard” technology and various mirror systems by large trucks used by vendors contracting with the City. The ordinance requires vehicles over 10,000 pounds (for tractor-trailers a combined weight over 26,000 pounds) and awarded a contract with the City of Boston to have side guards, convex mirrors, crossover mirrors, and blind-spot awareness decals. The ordinance goes into effect in the first quarter of 2015. See page 15 for the complete ordinance document.

• The Massachusetts Executive Office of Environmental Affairs and Energy recently announced that it has begun to assemble the Water Infrastructure Advisory Committee as required under Chapter 259 of the Acts of 2014.

The Underground Utility Coordination Commission, passed into law in the same act, has yet to be appointed.

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• The Patrick Administration will present a plan to trim $325 million in spending from the $36.5 billion state budget before it leaves office. The budget gap is forming in part due to the likelihood of a legally required reduction in the income tax rate in January from 5.2 percent to 5.15 percent. Additionally, the loss of revenue was attributed to the assumed loss of $70 million in income taxes, the projected $175 million shortfall in non-tax revenues, and $80 million in costs associated with an economic development law approved over the summer. n NOVEMBER, 2014

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City of Boston’s New Truck Safety Ordinance

O

n November 5, 2014, Mayor Marty Walsh signed a new city ordinance that will require companies with city contracts to install side guards, safety mirrors, and decals on their commercial trucks in excess of 10,000 pounds. This ordinance is intended as a safety measure that will provide better visibility to the truck driver, and provide a physical barrier to prevent bicyclists from driving under large spaces between front and rear truck wheels. Boston is the first city to pass such an ordinance.

Decals will be provided by the City for a fee through the City Inspectional Services Department, who will oversee the imple-

mentations along with the Boston Police Department. The target date to begin enforcement of the ordinance is May 1, 2015.

Details on exactly what types of guards and mirrors will be accepted by the City are still being worked out. The City has stated that their estimated cost to provide the new safety equipment is about $1,800 per vehicle. Snow plowing equipment is exempt from the ordinance.

UCANE will attempt to get further information from the City on the implementation of this new ordinance, and will pass it along to our members as it is received. continued on page 15

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NOVEMBER, 2014

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TOWNS MUST UNITE FOR CLEAN WATER

By Alan McClennen and Elliot Carr

Cape Cod is one of the best places on earth to live, work and play.

Beyond its natural beauty, the Cape has some of the world's greatest beaches, possesses incredible light, views and vistas, and stores abundant fresh and salt water filled with fish and shellfish. These basic tenets of Cape Cod life are being challenged because of human pollution of our bays, sounds and ponds, primarily from poorly planned development.

T

he Cape Cod Commission recently released a draft Clean Water Act Section 208 plan for all of Cape Cod. This is a plan to examine how best to minimize the impacts of human wastewater on our environment. Because Cape Cod has a sole-source aquifer, we discharge our wastewater into the same groundwater from which we draw our drinking water.

Our groundwater, with the nutrients produced by human waste, flows into bays and estuaries, where it mixes with salt water.

The yearlong planning process of both public and expert engagement has already provided a number of lessons learned. If we don't pay attention to these lessons, our children and grandchildren will end up paying for our shortsightedness.

Lesson 1: Our bays, estuaries and ponds are degraded. While no two watersheds are alike, the 208 planning process pointed the seriously degraded condition of the majority our water bodies from excess nutrients. While there are many sources of nutrients, the single biggest culprit is human waste, primarily from septic systems.

NOVEMBER, 2014

Lesson 2: Watershed-based planning makes sense for Cape Cod. The 208 process taught us the value of planning along watershed boundaries instead of municipal boundaries. Watersheds cross town boundaries, and wastewater discharges from as many as four towns can affect a particular watershed on the Cape. Because watersheds are not alike and the menu of options is long and often site-specific, the most cost-advantageous method is to plan and manage wastewater by watershed.

This means that towns must cooperate and plan jointly. While more intermunicipal cooperation has been occurring, this approach remains the exception.

According to the 208 plan, savings are potentially in the billions of dollars if we plan and implement solutions by watershed.

Lesson 3: Acting as a region brings in money from federal and state sources. The 208 plan was paid for in full through a grant given to the Cape Cod Commission by the Massachusetts Clean Water Trust. No single municipality could have successfully continued on page 27

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Cape Cod continued from page 25 competed for this multimillion-dollar grant on its own.

The transfer of information will easily flow to municipalities, avoiding waste and duplication. The region is simply in a better position to compete for outside funding.

Cape Cod is larger, has more clout and has national recognition.

Lesson 4: Regional planning saves taxpayers money. The 208 plan has identified potentially billions of dollars in savings from earlier estimates by the towns. If some of the innovative technologies screened during the 208 process work as expected, those savings could actually be even greater.

Lesson 5: Cape Cod is now a national leader in developing alternative strategies. The 208 planning process allowed Cape Codders to vet alternative solutions and quantify their effectiveness at reducing nutrient pollution. Some strategies like effective fertilizer management actually save us money and improve water quality. We need to marshal this expertise that was assembled during the 208 process and use it to full advantage.

The Cape Cod Business Roundtable urges everyone to learn about the 208 plan

(www.cape2o.org), attend one of the public hearings to learn more, and stay engaged in keeping Cape Cod the great place it is to live and visit. We will prosper from a regional vision with local engagement.

Alan McClennen and Elliott Carr are cochairmen of the Cape Cod Business Roundtable. This piece was adopted and endorsed by the full business roundtable. n

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NOVEMBER, 2014

If as they say, “diamonds are a girl’s best friend”, then at least half of the more than 600 members and guests attending UCANE’s Diamond Anniversary Banquet were keeping good company. And if they say “Diamonds are Forever”, then the memory of this event will forever be remembered and talked about because this was a very special evening.

The Ballroom of the Newton Marriott Hotel was decorated with the opulent trappings of a bygone era with crystals hanging from the ceiling. With this banquet sold-out at least a month in advance, it was an “invitation only” members’ affair.

On this night UCANE members joined together to celebrate UCANE’s 60th Anniversary, but it was so much more than just that. Past Presidents were introduced and recognized for their guidance and leadership during their term in office. Executive Director Anne Klayman was presented with a plaque recognizing her for her dedicated years of service to building our Association into a potent force in the construction industry. And, keeping with tradition, two members were recognized by being named continued on page 30 UCANE’s Contractor and Associate Members of the Year.

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Banquet continued from page 29

The

evening kicked off with a Social Hour in the Commonwealth Ballroom, featuring the group, North Shore Acappella who entertained the crowd. The drinks flowed freely and the hot and cold hors d’oeuvres were plentiful as guests mingled. Many of our guests had the opportunity to meet with the then Massachusetts Lt. Governor candidate Karen Polito and take “selfies” with her.

As guests entered the Grand Ballroom the beauty of the cascading crystals hanging above the dance floor were breathtaking. The purple, silver, and black color scheme was highlighted by the magnificent combination of skirted table cloths and eye-catching centerpieces of Casablanca lilies, purple hydrangeas, and ostrich plumes which adorned each table. To further commemorate the occasion, the stage backdrop featured silver, purple, and black fabric accented by a giant number “60” adorned with crystal brooches.

UCANE’s Officers & Board Members (L-R): Jerry Gagliarducci, Gagliarducci Const., Inc.; Stephen J. Connolly, ATS Equipment, Inc.; Maureen Dagle, Dagle Electrical Const., Corp.; Phil Jasset; Nick Biello, J. D’Amico, Inc.; Kevin Cole, J. F. White Contracting Co.; Steve Comoletti, P. Caliacco Corp.; Thomas Descoteaux, R. H. White Const. Co., Inc.; Vincent Barletta, Barletta Heavy Division; Bill Irwin, C.J.P. & Sons Construction Co., Inc.; Kenneth Stevens, A. H. Harris & Sons, Inc.; David Zoppo, R. Zoppo Corp.; Richard Pacella, Jr., R. M. Pacella, Inc.; Paul Scenna, Albanese D&S, Inc.; Tony Borrelli, Celco Const. Corp.; and Al Morteo, FED. CORP. 30

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UCANE’s Past Presidents (L-R): Al Morteo, FED. CORP.; Vincent Barletta, Barletta Heavy Division; Dale Pyatt, Jay Cashman, Inc.; Jon D’Allessandro, D’Allessandro Corp.; David Zoppo, R. Zoppo Corp.; Joseph Biotti, III, J. Biotti, Inc.; Robert Berry, Modern Continental Const. Co., Inc.; Mike Lenihan, J. D’Amico, Inc.; Steven Comoletti, P. Caliacco Corp.; Ronald J. Cincotta, R. J. Cincotta Co., Inc.; Dominic Frangioso, Jr., D. F. Frangioso & Co., Inc.; Leon Asadoorian, Methuen Construction Co., Inc.; and Thomas Descoteaux, R. H. White Const. Co., Inc.

UCANE

President Al Morteo officially opened the evening’s program by welcoming everyone to our Banquet. He then diverted from his prepared opening remarks by surprising UCANE’s Executive Director Anne Klayman by presenting her with a plaque which recognized her many years of dedicated service and leading UCANE with honor, commitment, and integrity. He further stated, “When someone mentions the New England Patriots, we immediately think of Tom Brady; mention the Boston Red Sox and we think of Big Papi; and mention UCANE, and we immediately think of Anne Klayman because she has become the face of this great organization.”

Anne then thanked members for recognizing her service. She went on to say what an honor it was to work with each of them and to help build an effective association that has become the respected and sole voice of underground utility contractors. After her brief remarks, Anne introduced UCANE’s Officers and Board Members who were in attendance.

Before the party could get into full swing, Anne’s last official business for the evening was identifying our members who would be presented with the highly coveted 2014 Contractor and Associate Member of the Year Awards.

She began by saying that traditionally our award winners have no idea that they are receiving these awards, but, this year we made an exception. John Macaione (EJ), who was named Associate Member of the Year, could not attend the event, but he and his family were listening to the presentation via cell phone. The 2014 Contractor of the Year Award went to Al Morteo, Vice-President of FED. CORP., and he was definitely surprised when his name was mentioned, and further surprised when his three children joined him to help celebrate his well-deserved award.

This being UCANE’s 60th Anniversary, Anne then recognized and honored UCANE’s Past Presidents who were in attendance and presented each of them with the latest iPad mini compliments of Scrap-It, Inc./ Minichiello Bros., Inc. continued on page 33

NOVEMBER, 2014

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Banquet continued from page 31

Anne

also recognized the more than 125 companies that sponsored various segments of our Banquet. Specifically, two of the companies, C. N. Wood Company, Inc. and Komatsu, whom she said exemplify the generosity and commitment of our members, have been UCANE’s Banquet Hosts for the past 15 years. Anne then asked Bob and Paula Benard of C. N. Wood Co., Inc. and Greg Fiori, Komatsu’s regional manager to join her on the stage. She presented Greg with a plaque on behalf of our entire membership for the company’s unwavering support of our banquet over the years. She then presented Bob and Paula Benard with a special gift to thank them for all that they have done for UCANE.

Anne then went on to acknowledged some of our major contributors who continue to sponsor segments of our banquet year after year…Jay Cashman, Inc. (Hot Seafood Bar); Concrete Systems, Inc. (Cold Seafood Bar); Past Presidents’ Gifts (Scrap-It, Inc./Minichiello Bros., Inc.); HD Supply Waterworks and the Lockton Companies (Martini Bar); Barletta Heavy Division (Entertainment); Eastern States Insurance Agency, Inc. (Candy Buffet); Eastern Insurance Group, LLC, Hinckley Allen, LLP, McCourt Construction Company, Shea Concrete Products, and J. F. White Contracting Co. (Band), Aggregate Industries-N.E. Region, Dagle Electrical Construction, Corp., and Daniel O’Connell’s Sons, Inc. (Invited Guests); American Shoring Inc., Gagliarducci Construction, Inc., Garrity Asphalt Reclaiming, Inc., Robert B. Our Co., Inc., Taylor Oil Company, USI Insurance Services, LLC, and Zurich Surety (Sundae Bar). A complete list of our sponsors can be found on pages 48-49.

With the ceremonies completed Anne officially kicked off the party by reminding everyone that there would be drawings throughout the evening for seven fantastic prizes. She then clarified the rules, by saying that to be eligible to win one of the prizes you must be on the dance floor when your name is called, no exceptions. The amazing prizes included: a sapphire bracelet, a six carat navy and white sapphire heart necklace, a 14 carat gold mesh necklace, an iPad mini, a sterling silver and black onyx toggle bracelet, a chance to win $10 million dollars with more than $150 in lottery tickets, and a 42-inch Sanyo LED TV. continued on page 35

NOVEMBER, 2014

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Banquet continued from page 33

In

keeping with our tradition of doing something to kick off the festivities, Anne asked everyone to stand and sing along to “Build Me Up Buttercup”, with alternating verses for just the men to sing, and the others for the women, challenging each group to sing as loud as they could to win a prize for their group, with our band leader as judge.

Well they all did such a great job that everyone received a scratch ticket as a prize. Now everyone was really in the mood to party!

UCANE’s President-Elect Tony Borrelli of Celco Construction Corp. then gave the invocation and we embarked on a night of fine dining, music, entertainment, and camaraderie. continued on page 37

NOVEMBER, 2014

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NOVEMBER, 2014

Banquet continued from page 35

Whether

it was the music by our amazing band “Mystique,” the tribute to Cher, the fabulous food served throughout the evening, finished off with our Gourmet Sundae Bar and Coffee Carts, the huge hit of the Sweet Endings Candy Buffet, the ladies gifts of elegant scarves, or the hundreds of light up giveaways, UCANE’s 60th Diamond Anniversary Banquet was spectacular. What will long be remembered about our Banquet is that for a few hours we honored our own and celebrated with family, friends, and business associates in a way that was 60 years in the making.

This amazing evening was only made possible by the generosity of our members. Therefore, UCANE would like to thank the more than 125 companies that sponsored various segments of our Banquet. In the words of one of our guests, “I don’t know how you topped last year’s banquet, but you did.” We look forward to seeing all of you next year!

Photos by Winston Macdonald

NOVEMBER, 2014

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UCANE Presidents 1954-2014

(L-R) Carmen Jiustino ('63-'64), John Crognale ('65), Peter Bagarella ('57), John Buccella ('58-'59), and Frank DiCenso ('54-'56)

John Pacella ('66-'67 &'72-'75)

James Hannon ('70-'71)

Joseph D'Amico ('76-'77)

Frank Federico ('78-'79)

Leon Asadoorian ('80)

Joseph Biotti, Jr. ('81)

Paul Fantoni ('82)

Peter J. Martin ('83-'84)

Ronald Pacella ('85-'86)

Photos not available: Joseph Cucci, Jr. ('60), Oliver Volpe ('61-'62), and John Botti ('68-'69)

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As UCANE celebrates its Diamond Anniversary, we commemorate this milestone by paying tribute to those who have guided our Association over the past six decades.

John G. Walsh, Sr. ('87)

Dominic Frangioso, Jr. ('88)

Ronald Cincotta ('89-'90)

Phil Pittorino ('91)

Sreven Comoletti ('92)

Michael Lenihan ('93-'94 & '04)

Robert Berry ('95-'96)

Joseph Biotti, III ('97)

David Zoppo ('98-'99)

John D'Allessandro ('00-'01)

Dale Pyatt ('02-'03)

Thomas Descoteaux ('05-'06)

Vincent Barletta ('07-'08)

Joseph Pacella ('09-'10)

Marco Gioioso ('11-'12)

Al Morteo ('13-'14)

NOVEMBER, 2014

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Hot Seafood Bar Jay Cashman, Inc. Cold Seafood Bar Concrete Systems, Inc. Past Presidents' Gifts Scrap-It, Inc./ Minichiello Bros., Inc. Martini Bar HD Supply Waterworks Lockton Companies Entertainment Barletta Heavy Division Candy Buffet Eastern States Ins. Agency, Inc. Band Eastern Insurance Group, LLC Hinckley Allen, LLP McCourt Construction Company Shea Concrete Products J. F. White Contracting Co. Invited Guests Aggregate Industries-N.E. Region Dagle Electrical Construction, Corp.

Daniel O'Connell's Sons, Inc. Sundae Bar American Shoring Inc. Gagliarducci Construction, Inc. Garrity Asphalt Reclaiming, Inc. Robert B. Our Co., Inc. 48

Taylor Oil Company USI Insurance Services, LLC Zurich Surety Decorations A. F. Amorello & Sons, Inc. P. J. Keating Company Palmer Paving Corporation The Vellano Corporation White Cap Construction Supply Program Book Advertisers American Shoring Inc. Jay Cashman, Inc. P. Gioioso & Sons, Inc. G. Lopes Construction Inc. Milton CAT Northeast Traffic Control Svc., Inc. E. J. Prescott, Inc. Rodman Ford Sales, Inc. SB General Contracting, Inc. Starkweather & Shepley Insurance Brokerage, Inc. United Concrete Products, Inc. C. N. Wood Co., Inc. & Komatsu Program Book Sponsor Albert J. Tonry & Co., Inc. Ladies' Jewelry The Vellano Corporation All Signage RoadSafe Traffic Systems, Inc.

“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

NOVEMBER, 2014

Centerpieces Atlantic States Pipe CleanBasins, Inc. J. D’Amico, Inc. DeSanctis Insurance Agency, Inc. Ferguson Waterworks Godwin a Xylem Brand Griffin Dewatering New England, Inc. Lorusso Heavy Equipment, LLC Ludlow Construction Co., Inc. SPS New England, Inc. Starkweather & Shepley Ins. Brokerage, Inc. TrenchTech Inc. Triumph Modular WES Construction Corp.

White Cap Construction Supply Ladies’ Gifts Albanese Brothers, Inc. Albanese D&S, Inc. A. F. Amorello & Sons, Inc. Aon Construction Services Group Celco Construction Corp.

FED. CORP. Harris Rebar A. H. Harris & Sons, Inc. LM Heavy Civil Const., LLC S. M. Lorusso & Sons, Inc. White Cap Construction Supply R. H. White Const. Co., Inc. Prizes & Surprises A. F. Amorello & Sons, Inc. Benevento Companies James J. Dowd & Sons Insurance GVC Construction, Inc. K & K Excavation Co., Inc. Lorusso Heavy Equipment, LLC McCourt Construction Company Putnam Pipe Corp.

TrenchTech Inc. United Concrete Products, Inc. United Rentals Trench Safety Social Hour A. R. Belli, Inc. NOVEMBER, 2014

Darmody, Merlino & Co., LLP EJ Gencorp Insurance Group HUB Int’l New England, LLC IUOE-Local 4 S. M. Lorusso & Sons, Inc. McCourt Construction Company Ocean State Oil Qualified Pension Services, Inc. White Cap Construction Supply World Diamond Source Party Favors ATS Equipment, Inc. P. Caliacco Corp.

DeSanctis Insurance Agency, Inc. Eastpoint Lasers, LLC I. W. Harding Const. Co., Inc. Lorusso Corporation M&P Pipe Jacking Corp.

Marois Brothers, Inc. McGladry Milton CAT Minuteman Trucks, Inc. R. M. Pacella, Inc. J. A. Polito & Sons Co., Inc. Sunbelt Rentals/Pump & Power Svcs.

Vacuum Excavation, Inc. Vianini Pipe, Inc. R. Zoppo Corp.

Plaques Biszko Contracting Corp.

Lawrence-Lynch Corp.

Milton CAT Northeast Traffic Control Services, Inc. Podgurski Corp.

Schmidt Equipment, Inc. Umbro & Sons Const. Corp.

Presentation Bouquets C.J.P. & Sons Const. Co., Inc. L. Guerini Group Inc. P. A. Landers, Inc. RJV Construction Corp.

Ti-SALES, Inc. Tim Zanelli Excavating

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Al and Rosemary Morteo

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T

he highest honor UCANE bestows on a contractor member is our Contractor Member of the Year Award. Previous recipients were some of the most respected and successful men and women in our industry who, continue year after year, to work for the betterment of our industry. They each represent the high standard of business excellence that our Association has come to expect, and this year’s recipient fits this high standard perfectly.

UCANE’s 2014 Contractor of the Year, Al Morteo blends family tradition and work ethic along with a deep commitment to charitable fundraising in his position as Vice President at FED. CORP. Al was born in the North End and at the age of eight moved to Hyde Park, where he attended St. Anne’s School in Readville. Al’s strong work ethic was instilled in him from an early age. He worked at his family’s North End restaurant while attending Catholic Memorial High School and college, and he was able to pay for his entire education.

After graduating from Catholic Memorial Al attended Boston College School of Management, where he earned a bachelor’s degree in Accounting. He continued his education at Suffolk University graduating with a master’s degree in Business.

Al met his wife Rosemary in 1979 and they were married in 1982. Upon graduating from Suffolk, he helped his father-in-law, Joe Federico and his brotherin-law, Joey set up FED. CORP. He worked during the day at a full time job while helping them at night. Two years later he joined Joe and Joey full time at FED. CORP., where he currently serves as Vice-President.

FED. CORP. has been a UCANE member for almost 25 years, and during that time Al devoted as much time as possible to our Association. He first

NOVEMBER, 2014

served on our Board of Directors, and worked his way up the ladder to his current position as President.

In 2004 Al’s younger brother was diagnosed with leukemia, and in 2006 his cousin was also diagnosed with leukemia. Al and Rosemary made it their mission to become involved in the Leukemia and Lymphoma Society of Massachusetts. Together they helped raise funds to support local doctors and researchers at Dana Farber Cancer Institute to try to find a cure for these dreaded diseases. Sadly, in April of 2008 Al’s cousin passed away, and then in September of the same year his brother Albert also lost his battle with leukemia. This only solidified Al and Rosemary’s commitment to fundraising, and since 2008 they have raised millions of dollars for research. Everyone in the industry will tell you that Al is one of the most thoughtful, intelligent, compassionate, generous, and kind people you could ever have the pleasure of meeting or working with.

As if his winning this award was not enough, Al was further surprised when he saw his children, son Nicholas and daughter-in-law Julia, son Michael, and daughter Alexandra, who flew in from Washington to surprise him and help celebrate this prestigious and well deserved honor with him.

It was a great pleasure to present UCANE’s 2014 Contractor of the Year Award to Al Morteo and we look forward to his continued dedication and support of our Association. n

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John Macaione with his daughter Lynn, granddaughter Ava, and wife Carolyn UCANE’s Associate members are the businessmen and women who supply and service the machinery and materials…and also finance, bond, insure, litigate, and support our contracting companies. We are very fortunate in that we attract the very best companies in the industry. This award is bestowed on the member recognized by their peers for their involvement in our Association, and their support of our industry.

John Macaione has a long history of support for UCANE and our industry. It all began in 1970 when he started a six-month work program at E.L. LeBaron Foundry Company where he was hired to work with their sales manager Dick Burt. John said, “I didn’t know it then, but it was the start of the next 38 years of my life.”

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NOVEMBER, 2014

J

ohn was raised in Wrentham, MA and attended said that Lynn gave them the greatest gift in the world King Philip Regional High School. Following when she gave birth to their granddaughter Ava. graduation he attended Northeastern University Typically, our recipients have no idea that they where he earned a degree in Business Management. will be receiving this award, but this year Anne made He chose Northeastern because it had a 5-year coan exception. When she went to speak with John to op program, which allowed him to work six months a see if there was anyway he and Carolyn could attend year to help pay his tuition and expenses. our 60th Anniversary Banquet to receive his award, After graduating from Northeastern, he was hired he said it was just too emotionally and physically difby LeBaron as an outside salesman and worked in ficult for him. He tried to convince Anne that there had that capacity for the next seven years. It was durto be so many other members who were more worthy ing that time that he began representing LeBaron at than he to receive this award. Anne told him he was UCANE’s monthly dinner meetings. John said that our member’s choice and that it was not negotiable. those meetings were a great opportunity for him beJohn truly has no idea what an impact he has made cause he began to build business relationships with on contractors all over New England. the likes of Charlie Capone, Paul Fantoni, Joe DiPiAlthough John and his family were unable to atetro, Tony Andreassi, Mike Lenihan, Jack Walsh, and tend our event, they were listening in via cell phone Frank Gioioso to name just a few. He felt that his cato the presentation. What could not be seen through reer was progressing in the right direction. the phone was the standing ovation that was given in But then, in the summer of 1980, when he was John’s honor. just 30 years old, John’s world instantly changed when he dove into a swimming pool, striking his head on the bottom of the pool. He sustained a spinal cord injury that paralyzed him from the chest down and left him with limited use of his arms and hands.

John spent a total of 61/2 months in Boston Medical Center and then at home recovering from his injury and learning how to adjust to life as a quadriplegic.

He told us that during this entire period LeBaron continued to pay his salary and assured him that there would be a position with the company when he was ready to “roll” into it.

According to John, without the support of Dick Burt, Jim Troup, and Larry Gasse at LeBaron, he would not be where he is today. They and the company made all the necessary modifications to the inside and outside of their office building, which enabled John to return to work, mid-1981.

In 1985 a group of six management employees, including John, bought E.L. LeBaron Foundry. They later sold the business to East Jordan Iron Works. In 2012, East Jordan consolidated its various companies around On November 6, eight members of the UCANE Board the world under a single company named EJ. Through all these changes, John has re- of Directors and Government Relations Committee mained a valuable employee of the company. went to the EJ office and met with John and his famJohn met his wife Carolyn while he was in ily to formally present the award to him. It was a wonseventh grade. They went together all through derful opportunity for our members, who have done junior and senior high school, and they later married. They are the proud parents of two chil- business with John for years, to actually meet facedren, their daughter Lynn and son Todd. John to-face, enjoy lunch together, and reminisce.

Anne stated, “My dear friend, it is my distinct honor and privilege to present you with UCANE’s 2014 Associate Member of the Year Award.”

NOVEMBER, 2014

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John E. Merchant, CPA SPECIAL ISSUE:

Cullen, Murphy & Co., P.C.

2014 TAX PLANNING ROUNDUP • • • • • • •

A Tale of Two Couples Year-End Investment Tax Planning Year-End Charitable Tax Planning Year-End Family Tax Planning Year-End Retirement Tax Planning Year-End Estate Tax Planning Year-End Business Tax Planning

Smart Tax, Business & Planning

A Tale of Two Couples

A

A Tale of Two Couples

bracket qualifie qualifie well as Exam have co over $6 into the (That ra taxable loseAs some tax benefits from their exemptions and itemalways, savvy planning in the last As top ized deductions because their AGI is over $305,050 this Example 1: Wendy and Victor Taylor have $120,000 quarter of the canwill payowe off an in lower year.

Moreover, the year Palmers extra 0.9% inowe 20% of income this year, before any deductions. They are in payroll taxnext on earned incomeyou overfile $250,000. taxes year when your return. term ga the 25% federal income tax bracket, so tax deductions The income thresholdsiswill vary for single filers and The Some tax planning fundamental: most will save them 25 cents on the dollar and they’ll owe 25 for those who choose another filing status but the princicents per dollar on any additional income they’ll report, people will benefit by accelerating tax net inve ple is constant. High-income taxpayers have to deal with up to the top of the 25% tax bracket. The Taylors will owe deductions into 2014, more tax code provisions andwhile largerdeferring tax payments. Allsometim 15% tax on qualified dividends (most dividends are qualitaxpayers benefit from year-end fied) from stocks and stock funds as well as 15% on longincomecan into 2015.

Yet, there planning, is now but thosebecause who fall into any of the “high- income” categories in toterm capital gains. a distinct divide between taxpayers day’s tax law have the most to gain from timely actions. income Example 2: Sharon and Rick Palmer have combined reporting high and all other In 2014, many highincome income taxpayers were flabbergast-joint tax taxable income that runs over $600,000 per year, which puts them into the top 39.6% tax bracket this year. (That ed to see how much they owedspeaking, in tax on their Americans.

Generally as 2013 a returns,some ta rate applies to married couples with taxable income over versus their 2012 tax obligation.

The new wrinkles that haveand item result of recent legislation, if your annual $457,600 in 2014.) As top bracket taxpayers, the Palmers been added to the tax code have made a huge difference is over $200,000and youplanning must cope owe 20% on qualified dividends and long- term gains. for income many people.

Forethought could havetheir AG saved substantial amounts.

It’s too late now to save with far more tax complexity than otheron yourMoreov The Palmers also may owe a 3.8% net investment 2013 tax bill but you still havetime,until December 31, to take income tax (NIIT), sometimes called a Medicare surtax, taxpayers face.

0.9% in actions that will reduce the tax you’ll owe for 2014. because their modified adjusted gross income (MAGI) is Example 1: Wendy and Victor Taylor continued on page 61over $2 over $250,000 on a joint tax return. This couple also will have $120,000 of income this year, The before any deductions. They are in the single fi “BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK” 59 NOVEMBER, 2014 25% federal income tax bracket, so tax another deductions will save them 25 cents on s always, savvy planning in the last quarter of the year can pay off in lower taxes next year when you file your return. Some tax planning is fundamental: most people will benefit by accelerating tax deductions into 2014, while deferring income into 2015. Yet, there is now a distinct divide between taxpayers reporting high income and all other Americans. Generally speaking, as a result of recent legislation, if your annual income is over $200,000 you must cope with far more tax complexity than other taxpayers face.

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Financial Management continued from page 59

T

Year-End Investment Tax Planning

he good news, for many people, is that 2014 is shaping up as another positive year for stocks, as of this writing. Stocks have advanced substantially since their low point in early 2009, and many investors are now sitting on large paper gains.

The bad news? The grim tidings haven’t come yet, but many investors fear that they will. Stocks have come crashing down from previous bull markets in early 2000 and late 2008—that might happen again in 2015, 2016 or 2017. No one can accurately predict what tomorrow will bring, but many observers see the stock market as overvalued now, likely to fall back.

Thus, investors might want to take some stock gains now, as a precaution against possible future price declines.

In fact, some investors already may have taken gains as the market indexes reached record highs.

Taking gains in taxable accounts can trigger income tax, though. As noted previously in this issue in the article, “A Tale of Two Couples,” high-income taxpayers could owe 20% on long-term capital gains, plus a 3.8% surtax and any applicable state tax. What’s more, adding to your income might trigger other taxes elsewhere on your return.

Looking for Losses The traditional solution is to take capital losses as well as gains.

Example 1: Counting trades already made this year, trades he’d like to make by year-end and anticipated distributions from his stock funds, Nick Morton expects to have a total of $20,000 in long- term capital gains in 2014. If Nick has $25,000 worth of losses in his portfolio, he could take them by year- end and wind up with a $5,000 net capital loss for the year.

With a net capital loss, Nick would owe no tax on the gains he has taken and plans to take. He could deduct $3,000 of capital losses (the maximum allowed) from his income on his 2014 tax return, cutting his tax bill, and carry over the excess $2,000 capital loss for tax benefits in future years.

That is, Nick could do all this if he has $25,000 of losses in his portfolio. After a lengthy bull market, however, Nick might not have losses to take. Even if Nick had taken huge amounts of losses in 2008– 2009, when the market crashed, he might have used them all by now, offsetting gains and deducting losses in the intervening years.

What might Nick do if he has no old losses to use and no opportunity to take new losses? He might donate the stocks he plans to sell to charity (see the article,“Year-End Charitable Tax Planning” later in this issue). Nick also might give shares to family members in lower tax brackets (see the article,“YearEnd Family Tax Planning,” later in this issue).

If none of these various strategies are practical for dealing with Nick’s capital gains, he might simply postpone taking any more gains until January 2015. That approach won’t decrease his 2014 tax bill, but it will give Nick a full year to develop strategies to avoid tax on those gains. continued on page 62

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Financial Management continued from page 61

D

Year-End Charitable Tax Planning

notifying the school onating that she is appreciated fund company make the transfer by assetsto (includmaking her contributions for 2014 year-end, for a 2014 deduction. ing securities) can be a thoughtful and 2015.

Things would be different, though, tactic for people who can’t offset With this maneuver, Lynn if Lynn wanted to make a $1,000 capital gains with losses. receives a $20,000 charitable tax capital charitable contribution to 20 different Example 1: Lynn Knight invested $8,000 deduction for 2014 while avoiding charities. To use her appreciated fund in an aggressive stock fund 2009. tax on the disposition of the shares, she in would have The to deal with a appreciated shares shares. Meanwhile, amount ofthanks paperwork, are nowthe worthhuge $20,000, to getting $20,000 shesome would have sent to the information from each excellent selections, but Lynn be-charity and the college islieves still in Lynn’s bank to take forwarding it to theSelling fund company. Example 2: Intending to make multiple doit is time her gains. account, so she can use the money to In such a situation, you can use gainscompany tax and she’ll the shares would generate a $12,000 longnations, she’ll Lynnavoid hascapital the fund transfer her reinvest in assets she believes have a donor advised fund (DAF) to have cash in the bank to reinvest. $20,000 worth of shares to a DAF she has specified. term capital gain, costing Lynn thousands investment appeal now. handle multiple transfers with ease. the transfer, If she acts After by year-end, Lynnthe willDAF get can the $20,000 tax of dollars in tax.

Many financial firms and community sellfor the2014, sharesshe’ll and put thecapital $20,000 deduction avoid gains tax and In our scenario, Lynn hasoffer no a old Simple strategy foundations DAF.or intocash Lynn’ins account.

Lynn she’ll have the bankThen to reinvest. capital losses sheExample can use to offset The methodnew described here probably 2: Intending to make After(the can the advise the can fund sell to the shares thedonor) transfer, DAF her She does multiple have adonations, commitment will work well for gains. a single $20,000 Lynn has theand fundput send $1,000 to Charity A, $1,000 the $20,000 into Lynn’s account. Then Lynn donatesecurities, $10,000 each yeartransfer to her (the donor) can advise fund donation of to appreciated company heralma $20,000 worth to Charity B, and the so on.

Eventoifsend this $1,000 to Charity A, $1,000 to into Charity andfuture so on. Even if this as described.mater.

All LynnTherefore, has to do is she of shares to her a DAF she has specified. process runs 2015B,and donates $20,000 runs Lynn into 2015 years, Lynn won’t get the appropriate account number If she acts by year-end, Lynn willprocess get years, won’tand lose future her 2014 of fund shares in December 2014, notifylose her charitable 2014 charitable tax deduction. from her alma mater and notify the the $20,000 tax deduction for 2014, tax deduction. g ing the school that she is making her concontinued on page 63

tributions for 2014 and 2015.

With this maneuver, Lynn receives a $20,000 charitable tax deduction for 2014 while avoiding tax on the disposition of the appreciated shares.

Besides donating appreciated Grace Meanwhile, would have owed,the the Fulton she would have to out theahead. colsecurities to$20,000 charity, another familysent will come is still Lynn’s bank account, so she solution forlege avoiding highlyintaxed Real problems capital gainscan on these usesecurities the money to reinvest in assets This scenario can work in real life, is to transfershe the relevant assets believes have investment appeal now.

Year-End Family Tax Planning

would get favorable tax treatment, but the other $6,000 would be taxed at his mother Grace’s rate.

The key question, then, relates to which youngsters are considered kiddies. Generally, that includes children 18 or younger. Kiddie tax status persists until age 24 for full-time students who provide less than half of their own support.

but there are some issues to keep in to a family member in a lower tax Strategy mind. For one, gifts over $14,000 to bracket. The recipient might Simple be any oneprobably recipient in 2014 may trigger able to sell and pay or no described tax Thelittle method here will work of appreciated the requirement to file a segift tax on the sale. well for a single $20,000 donation as described. to do getbethe return.has There mayisnot any gift tax Example:curities, Grace Fulton invested All Lynn appropriate account number from alma million mater lifetime owed, dueher to a $5.34 $10,000 in ABC Corp. shares andshares notifyare the fund company make the transfer by can be gifttotax exemption, but there years ago. The now worth year-end, for a 2014 deduction. paperwork requirements and the $18,000; Grace fears the trading Things would though, Lynn wanted potential lossif of estate tax benefits. price of ABC will drop, so she’dbe different, n Italy, a high income family loses to shares. make aHowever, $1,000 charitable contribution toso-called 20 differ-kiddie tax Moreover, the like to sell the 49.4% of its earnings to taxes, entacharities. fund shares, limits the advantage of transferring Grace will face significantTo tax use bill her appreciated the most among the world’s leading she would have to deal with a huge amount of paperassets to youngsters before a sale. if she takes an $8,000 long-term economies. The next highest taxing work, getting the information from each charity and In 2014, “kiddies” are taxed at their capital gain. countries are India (44.1%), the forwarding it to the fund company. own tax rate on their first $2,000 of Therefore, Grace gives the U.K. (42.7%), France (41.9%), and such a situation, you can use a donor advised unearned income and generally owe shares to her sonInEric, who sells Canada (41.9%). The U.S. ranks 8th fund (DAF) to handle multiple transfers with ease. little or no tax on the income. Beyond them. Grace’s basis in the shares on this list, with a tax bite of 39.5%, Many financial firms and community foundations ofthat $2,000, though, unearned income ($10,000) and holding period fer her a DAF. assuming payment of New York is taxed at the parent’s rate. Thus, if (longer than a year) carry over to State income tax.

Eric Fulton has an $8,000 long-term Eric, so he reports an $8,000 gain from a stock sale andIN noCONSTRUCTION other long-term capital as FROM 62 gain. As long “BUY THE ADVERTISERS OUTLOOK” NOVEMBER, 2014 Source: bbc.com unearned income in 2014, $2,000 Eric will owe less tax on a sale than

Did You Know ?

I

Financial Management continued from page 62

B

Year-End Family Tax Planning

esides donating appreciated securities to charity, another solution for avoiding highly taxed capital gains on these securities is to transfer the relevant assets to a family member in a lower tax bracket. The recipient might be able to sell and pay little or no tax on the sale.

Example: Grace Fulton invested $10,000 in ABC Corp. shares years ago. The shares are now worth $18,000; Grace fears the trading price of ABC will drop, so she’d like to sell the shares. However, Grace will face a significant tax bill if she takes an $8,000 long-term capital gain.

Therefore, Grace gives the shares to her son Eric, who sells them. Grace’s basis in the shares ($10,000) and her holding period (longer than a year) car-

ry over to Eric, so he reports an $8,000 long-term capital gain. As long as Eric will owe less tax on a sale than Grace would have owed, the Fulton family will come out ahead.

Real Problems This scenario can work in real life, but there are some issues to keep in mind. For one, gifts over $14,000 to any one recipient in 2014 may trigger the requirement to file a gift tax return. There may not be any gift tax owed, due to a $5.34 million lifetime gift tax exemption, but there can be paperwork requirements and the potential loss of estate tax benefits.

Moreover, the so-called kiddie tax limits the advantage of transferring assets to youngsters before a sale. In 2014, “kiddies” are taxed at their own tax rate on their first $2,000 of unearned income and generally owe little or no tax on the income. Beyond that $2,000, though, unearned income is taxed at continued on page 65

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64 “BUY FROM ADVERTISERS IN CONSTRUCTION OUTLOOK” 2014 2014 56 “BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK” NOVEMBER, 2009 00 “BUY THE FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK” NOVEMBER, SEPTEMBER,

Financial Management continued from page 63 the parent’s rate. Thus, if Eric Fulton has an $8,000 long-term gain from a stock sale and no other unearned income in 2014, $2,000 would get favorable tax treatment, but the other $6,000 would be taxed at his mother Grace’s rate.

The key question, then, relates to which youngsters are considered kiddies. Generally, that includes children 18 or younger. Kiddie tax status persists until age 24 for full-time students who provide less than half of their own support. Consequently, the strategy described in example 1 would offer little benefit if Eric is a college student this year, age 23, living nearby and spending most of his time going to class or studying.

If Eric is age 24, though, going to graduate school, the story can have a happier ending. Instead of selling the stock and paying tax on the gain, Grace can give the shares to Eric, who can make the sale this year. In 2014, a single taxpayer can have taxable income (after deductions) up to $36,900 and owe 0% on long-term capital gains. (The 0% tax rate for such taxpayers also applies to most stock dividend income.) As a result, Eric could keep all $18,000 from the stock sale and use the untaxed dollars to pay his school bills.

Did You Know?

I

n Italy, a high income family loses 49.4% of its earnings to taxes, the most among the world’s leading economies. The next highest taxing countries are India (44.1%), the U.K. (42.7%), France (41.9%), and Canada (41.9%).

The U.S. ranks 8th on this list, with a tax bite of 39.5%, assuming payment of New York State income tax.

Source: bbc.com In 2014, the 0% rate on long-term capital gains also applies to married couples reporting up to $73,800 on a joint tax return. Therefore, transferring appreciated securities to family members with low to moderate income can be a substantial tax saver.

Such gifts might be made to a married son or daughter who is buying a home, for example, or to retired parents who need financial help. However, as with all financial decisions, you should think carefully about all possible outcomes before giving away assets. continued on page 66

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Financial Management continued from page 65

O

Year-End Retirement Ta

Year-End Retirement Tax Planning

ne reliable way to reduce the impact of higher tax rates, surtaxes, phaseouts and so on is to make tax deductible contributions to retirement plans. In 2014, the maximum salary (and tax) deferral for 401(k) and similar plans is $17,500, or $23,000 if you are 50 or older. If you are not maximizing such contributions already, consider increasing the amount by year-end.

Business owners, professionals, and self-employed individuals may be able to make even larger deductible contributions to retirement plans. Often, the deadline to create such a plan for the year is December 31, even though the actual contributions may be deferred for several months.

Refining

The end of time to con to a Roth IR distribution years, if you What’s mor starts on Jan year. Thus, conversion tributions are tax-free after five years, if you are at 1⁄2 least age 59 . What’s more, the five year clock starts2014, start on January 1 of the way conversion year. the Thus, a Decem-and reach th One reliable to reduce ber 2014 conversion will have a January 1, 2014, start of higher rates, surtaxes, dateimpact for this purpose andtax reach the five-year mark onJanuary 1, 2 January 1, 2019, and just over four from now. phaseouts so on isyears to make from now.

The downside of contributions a Roth IRA conversion is that The dow tax deductible to you must pay income tax on all pretax dollars you Refining Roth IRAs retirement plans. In 2014, the conversion move from your traditional IRA to a Roth IRA. Conmaximum salary (and tax) income tax The end of the year is often a good time to converting can be extremely taxing. vert a traditional IRA to a Roth IRA. All Roth IRA discontinued on page 67move from deferral for 401(k) and similar plans is $17,500, or $23,000 if to a Roth IR you are 50 or older. If you are not extremely ta maximizing such contributions Example already, consider increasing the single taxpa amount by year-end. taxable inco Business owners, professionals, Roth IRA c Ferguson offers a complete line of products to cover and self-employed individuals may converts he all your water, sewer and storm water management be our ablerelationships to make even contains $2 needs, and withlarger the waterworks industry’s top vendors give our customers deductible contributions to peace to a Roth IR of mind through unmatched customer service, retirement plans. Often, the $400,000 o on-time delivery, and industry leading fill rates. deadline to create such a plan for tax return. Th the year is December 31, even though taxed mostl the actual contributions may be will owe mo deferred for several months. Our the convers office can help you determine which In this ex DI PIPE & FITTINGS | PVC PIPE & FITTINGS | VALVES & HYDRANTS plan would be best |for you excellent ide HDPEtype PIPE of & FITTINGS | GEOTEXTILES BRASS your employees.

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NOVEMBER, 2014

Financial Management continued from page 66 Example 1: Diane Carson is a single taxpayer with $150,000 of taxable income in 2014, before any Roth IRA conversion. If Diane converts her traditional IRA, which contains $250,000 in pretax dollars, to a Roth IRA, she will report $400,000 of taxable income on her tax return. The added income will be taxed mostly at a 33% rate so Diane will owe more than $80,000 in tax on the conversion.

In this example, Diane has an excellent idea of what her taxable income will be for 2014. Her $150,000 of taxable income puts her in the 28% tax bracket, which goes up to $186,350 for single filers this year. Thus, Diane decides to convert $35,000 of her Roth IRA in 2014. She’ll owe $9,800 in tax on the conversion (28% of $35,000), which she can pay with non-IRA funds. Over time, a series of such partial conversions can build up Diane’s Roth IRA so that it can become a valuable source of tax-free retirement income.

Suppose, though, that Diane’s taxable income varies from year to year. In that case, she might do a much larger Roth IRA conversion. A conversion in 2014 can be recharacterized (reversed) back to a traditional IRA, in whole or in part, until October 15, 2015.

Example 2: Diane converts $100,000 of her traditional IRA to a Roth IRA in 2014. When she has her tax return prepared in April 2015, Diane learns that her taxable income would be $166,350, without any income from the Roth IRA conversion.

As mentioned, the 28% tax bracket for a single filer goes up to $186,350 in 2014. Therefore, Diane can add $20,000 to her taxable income for the year, still taxed at 28%. Diane recharacterizes enough of her Roth IRA conversion to leave her with a $20,000 Roth IRA conversion, in the 28% bracket. She can repeat this process every year, building up her Roth IRA at a relatively low tax cost. continued on page 69

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“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

NOVEMBER, 2014

Financial Management continued from page 67

E

Year-End Estate Tax Planning

state tax planning? With the federal estate tax exemption now at $5.34 million and likely to be even higher in 2015, few taxpayers need to plan for federal estate taxes. That’s especially true if you’re married because so-called exemption “portability” between spouses effectively gives couples the ability to bequeath up to $10.68 million to their loved ones in 2014, free of federal estate tax. Federal estate tax planning still can be extremely important for wealthy families, particularly those who control a closely held company they’d like to keep in the family, but such families probably need a fairly complex plan, one that might take many months to develop and approve.

Nevertheless, year-end estate tax planning can be helpful for many people, depending on where they live. Many states have estate or inheritance taxes, including some with exemption amounts far below $5.34 million. In such states, basic planning might save your heirs many thousands of dollars. Moreover, there is no guarantee that Congress won’t lower the federal estate tax exemption in the future, so steps you take now might protect your descendants in the future.

Tackling the Gift Tax Giving away assets you’re not likely to use is one straightforward method of trimming your taxable estate.

In 2014, the annual gift tax exclusion amount is $14,000.

That means you can give up to $14,000 worth of assets to any number of recipients, with no tax consequences.

Example 1: Eve Drake gives $14,000 to her son Craig, $14,000 to her daughter Brenda, and $14,000 to her old college roommate who has fallen on hard times. These gifts remove $42,000 from Eve’s estate yet she doesn’t even have to file a gift tax return, assuming she has made no other gifts to these individuals in 2014. Eve could make 10 such gifts, or 20 such gifts or even more, if she wished, tax-free.

To qualify for the 2014 gift tax exclusion, checks must be cashed before the end of the year. Therefore, it’s better to make such gifts well before December 31.

If you write a check to someone who deposits it next January, that will be covered by the 2015 gift tax exclusion and you won’t be able to make a different 2014 gift to that individual, covered by this year’s exclusion.

Paired Planning The $14,000 annual gift tax exclusion is per person, so a married couple effectively can give up to $28,000 to each recipient this year, free of gift tax.

Each spouse can make gifts up to $14,000 per recipient or one spouse can make the $28,000 gifts from a joint account. Even if only one spouse wants to make the double gift, that can be done with a process known as gift splitting.

Example 2: Eve Drake, who is married to her second husband Brett, would like to make gifts exceeding $14,000 to her children from her first marriage this year. Brett is not willing to contribute to the gifts but is willing to let Eve use his annual exclusion.

Therefore, Eve gives $28,000 of her own money to her son and $28,000 to her daughter. Eve can file a gift tax return (IRS Form 709), on which Brett gives his consent to split gifts, so Brett has made a $14,000 gift to each person for tax purposes, if not in reality.

This consent means that all gifts made by Eve or Brett during the calendar year will be split, for tax purposes. continued on page 70

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NOVEMBER, 2014

“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

69

Financial Management continued from page 69 Over the Limit What if Eve makes larger gifts—say, $30,000 to both of her children? Chances are that she won’t have to pay gift tax because there’s a $5.34 million lifetime gift tax exemption.

Example 3: Eve gives $30,000 to her son and $30,000 to her daughter in 2014. When Eve files a gift tax return, the first $14,000 of both gifts is covered by the annual exclusion, but the other $16,000 of both gifts—$32,000 altogether—is covered by her lifetime exemption. Assuming that Eve has not made over $5.34 million of such countable gifts, she won’t owe gift tax. However, at Eve’s death, all such countable gifts will be subtracted from that year’s estate tax exemption, so her estate may owe estate tax at a 40% tax rate on bequests over the exemption limit.

This example illustrates what might happen if appreciated assets are given to children or parents for sale in a lower tax bracket, as described in this issue’s article about family tax planning. Even if you give $50,000 or $100,000 worth of assets to a single individual, it’s unlikely you’ll owe gift tax. You’ll have to file a gift tax return and your lifetime gift/estate exemption will be reduced, but you or your estate may not actually owe any tax, if today’s generous exemptions remain in effect. continued on page 71

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12/11/09 3:13:09 PM

NOVEMBER, 2014

Financial Management continued from page 70

A

Year-End Business Tax Planning

s of this this writing, the status of equipment expensing for 2014 is unclear. The same is true for bonus depreciation. The ongoing uncertainty on these issues may have an impact on your year-end plans to acquire business equipment.

Section 179 of the tax code allows certain types of equipment to be expensed: the purchase price is fully tax deductible when the item is placed in service, rather than deducted over a multi-year depreciation schedule. New and used equipment qualify for this tax benefit, with some exceptions (such as real estate).

In recent years, Congress has consistently expanded the reach of Section 179.

By 2013, up to $500,000 of purchases of equipment eligible for the deduction could be expensed; a business could buy up to $2 million worth of eligible equipment that year before losing any of this benefit.

Example 1: In 2013, DEF Corp. bought $2,085,000 of business equipment eligible for the Section 179 expense deduction and elected to not take bonus depreciation on the equipment. This was $85,000 over the Section 179 limit, so DEF could deduct only $415,000 (the $500,000 ceiling minus $85,000) as an expense in 2013 under Section 179. DEF must recover the other $1,670,000 of the costs of its 2013 purchases through depreciation methods.

The $500,000 and $2 million limits for Section 179 expired after 2013. Under current law, the 2014 limit for expensing is $25,000 worth of purchases (plus an inflation adjustment) with a phaseout beginning at $200,000 worth of purchases. Similarly, bonus depreciation was available for new equipment until expiration after 2013. This provision allowed a 50% depreciation deduction on purchases of new equipment, before using an extended schedule to depreciate the balance. Currently, bonus depreciation is not permitted in 2014.

Dealing with Doubts Both houses of Congress have indicated interest in restoring an expanded Section 179 deduction as well as bonus depreciation for 2014. However, any updates probably won’t be announced until late in the year. If that’s the case, how should business owners and self-employed individuals proceed?

Start by acquiring any equipment that your company truly needs for current and future profitability. If your business needs the item now, buy it now, and deduct the cost as the tax law permits.

If the timing isn’t urgent, consider limiting purchases to those that will bring 2014 acquisitions up to $25,000, which will be the Section 179 ceiling if no extension is passed.

Keep in mind that equipment must be placed in service by the end of 2014 to qualify for depreciation deductions (if reinstated) or expensing this year, so merely paying for equipment in 2014 does not entitle you to a deduction. However, this also means that you can get the 2014 tax benefits for equipment placed in service in 2014 even if you defer payment for the equipment until 2015.

Reprinted from CPA Client Bulletin. n

GENERAL CONTRACTOR Manufacturer and Installer of Bituminous Concrete Products 100 Wales Avenue-Rear Avon, MA 02322 Office: 508-583-2029 Plant: 508-587-6953

NOVEMBER, 2014

226 Nicks Rock Road Plymouth, MA 02360 Scale House: 508-732-9148 Asphalt Plant: 508-732-9140

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E.H. Perkins Construction, Inc. & Subsidiaries P.O. Box 301, Wayland, MA 01778 (508) 358-6161 • (781) 890-6505

-PLANT LOCATIONSQUINN-PERKINS S & G CO. Burlington (781) 272-0200 PANDOLF-PERKINS CO. Sterling (978) 422-8812 • (800) 339-3389 KANE-PERKINS CO. Hudson (978) 562-3436 • (800) 287-3436 GRAVEL • SAND • STONE FILL AND LOAM BITUMINOUS CONCRETE (PAVING) READY-MIX CONCRETE PRECAST CONCRETE PRODUCTS

E

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Equal Opportunity/Affirmative Action Employer

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Advertisers’ Index ATS Equipment, Inc. .............................................................8 Allied Recycling Center.........................................................6 American Shoring, Inc..................................... Ins. Back Cvr. Boro Sand & Stone Corp......................................................13 Dennis K. Burke, Inc............................................................27 Concrete Systems, Inc..........................................................54 Dagle Electrical Construction, Corp....................................22 Darmody, Merlino & Co., LLP............................................61 DeSanctis Insurance Agency, Inc. .......................................11 Dig Safe System, Inc............................................................68 The Driscoll Agency ............................................................55 EJ......................................................................................... 40 Eastern Pipe Service, LLC...................................................67 Eastern States Insurance Agency, Inc..................................70 T. L. Edwards, Inc................................................................71 Ferguson Waterworks.......................................................... 66 Foley Carrier Services, LLC............................................... 60 Geod Consulting, Inc............................................................68 Genalco, Inc............................................................................7 Godwin a Xylem brand.........................................................63 L. Guerini Group, Inc...........................................................70 HD Supply Waterworks..........................................................2 A. H. Harris & Sons, Inc. ....................................................58 Hinckley Allen, LLP............................................................12 P. J. Keating Company..........................................................18 P. A. Landers, Inc.................................................................69 Lawrence-Lynch Corp..........................................................56 Lorusso Corp....................................................................... 60 Lorusso Heavy Equipment, LLC.........................................20 Mabey, Inc........................................................................... 60 Mass Broken Stone Company...............................................67 Milton CAT...........................................................................42 Norfolk Power Equipment, Inc.............................................62 North East Shoring Equipment, LLC.....................................9 NorthStar Insurance Services, Inc.........................................4 Ocean State Oil.......................................................................9 Our Outhouses, Inc...............................................................13 Palmer Paving Corporation................................................. 64 E. H. Perkins Construction Co., Inc.....................................72 Podgurski Corp.....................................................................68 E. J. Prescott, Inc..............................................Ins. Front Cvr. Rain For Rent-New England................................................ 44 Read Custom Soils .............................................................. 64 Rodman Ford Sales, Inc........................................................26 Rogers & Gray Insurance Agency, Inc................................ 46 Schmidt Equipment, Inc.......................................... Back Cvr. The Scituate Companies...................................................... 24 Scrap-It, Inc..........................................................................34 Shea Concrete Products........................................................10 Smith Print........................................................................... 64 Starkweather & Shepley Ins. Brokerage, Inc.......................65 Systems Support Corporation.................................................7 Taylor Oil Company.............................................................14 Ti-SALES, Inc. ....................................................................58 Albert J. Tonry & Co., Inc....................................................58 United Concrete Products, Inc. ............................................56 United Rentals Trench Safety...............................................36 C. N. Wood Co., Inc. ............................................................32 Woodco Machinery, Inc.......................................................16

“BUY FROM THE ADVERTISERS IN CONSTRUCTION OUTLOOK”

NOVEMBER, 2014

from Design to Delivery American Shoring is the Leader in High Quality, ModularTrench Shoring A complete line of heavy duty and light weight aluminum or steel trench shoring is available for all your needs.

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