Construction Outlook November 2015 by Ucane

A publication of the Utility Contractorsâ&#x20AC;&#x2122; Association of New England, Inc.

NOVEMBER, 2015

WE’VE GONE FROM

0- 60 IN THREE GENERATIONS!

THAT’S WHY NO ONE IN THE WATERWORKS INDUSTRY CAN KEEP UP WITH TEAM EJP. Everett J. Prescott, Founder President 1955-1978 After founding the first waterworks distributor north of Massachusetts in 1955, he expanded the company’s presence on the road and in the trenches, while bringing New England such “firsts” as factory-direct trucking of cast iron pipe.

Peter E. Prescott, CEO President 1978–2003 Peter expanded the company all the way to Indiana; added sister companies Quality Water Products (QWP), PEP Transportation, and Red Hed Supply & Manufacturing; and started 24-hour emergency service, Value-Added Services, the KNOW H2OW Engineering Seminars, and the University of Prescott training program.

Team EJP celebrates 60 years of leadership and innovation under three generations of the Prescott family.

Steven E. Prescott, President 2003–Present Steve created the Reference Manual, a comprehensive source of product and engineering information for EJP’s product lines; opened three locations in New York and three in New England; added a fourth sister company, Plastic Pipe Fabrication (PPF); expanded the scope of the Service Department; and added erosion control product lines.

Learn more about the team that was born to race at EJPracing.com.

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WAT ER , WAST E WAT ER & STO R MWAT ER SO LU T I O N S

Years of Excellence 1954-2015

NOVEMBER, 2015

IN THIS ISSUE

OFFICERS President TONY BORRELLI Celco Construction Corp. President Elect JOHN OUR Robert B. Our Co., Inc. Treasurer PAUL SCENNA Albanese D&S, Inc. Secretary RICHARD PACELLA, JR. R. M. Pacella Inc.

BOARD OF DIRECTORS MARCELLA ALBANESE Albanese Bros., Inc. VINCENT BARLETTA Barletta Heavy Division NICK BIELLO J. D’Amico, Inc. KEVIN COLE J. F. White Contracting Co. STEPHEN J. CONNOLLY ATS Equipment, Inc. MAUREEN DAGLE Dagle Electrical Const., Corp. THOMAS DESCOTEAUX R. H. White Const. Co., Inc. ALEX DUNN Travelers GREG FEENEY Feeney Bros. Excavation, LLC JERRY GAGLIARDUCCI Gagliarducci Construction, Inc. PHIL JASSET Honorary Board Member AL MORTEO FED. CORP. JOSEPH PACELLA RJV Construction Corp. BRIAN RAWSTON Jay Cashman, Inc. KENNETH STEVENS A. H. Harris Construction Supplies PAUL A. UMBRO Umbro & Sons Construction Corp. CHRIS VALENTI GVC Construction, Inc. DAVID ZOPPO R. Zoppo Corp. ANNE KLAYMAN Executive Director

3 President’s Message:

UCANE Members Exemplify Unity

5 Legislative Update:

• City of Boston Unveils New Online Permitting • Governor Signs Deficiency Budget to Close Out Fiscal Year 2015 Budget Year • Baker-Polito Administration Expands Supplier Opportunities for Veterans, LGBT, Disabled, and Small Businesses • MassWorks Infrastructure Program Awards Approximately $85.6 Million in Grant Funding • Massachusetts Senate Prepares for New Members While Certain Municipalities Elect New Mayors • Items of Interest

17 UCANE’s Annual Christmas Party & Scholarship Auction 18 UCANE’s 61st Annual Banquet 38 UCANE’s Banquet Sponsors 40 Contractor Member of the Year:

Marcella Albanese, Albanese Brothers, Inc.

43 Associate Member of the Year:

Bob Andersson, Aggregate Industries - N.E. Region

45 Special Recognition Award :

Fred Laskey, MWRA Executive Director

47 UCANE’s 5th Annual Appreciation Night Trade Show 49 Spotlight on Cape Cod:

Mashpee Approaches Barnstable, Sandwich Officials About Planning for Popponessett Bay

53 Benefits & HR Strategies:

Employers Face a Growing Burden of Regulatory Compliance

57 Financial Management: • Will the Third Shoe Drop?

• Year-End Investment Tax Planning • Year-End Family Tax Planning • Year-End Retirement Tax Planning • Year-End Charitable Tax Planning • Year-End Business Tax Planning • Year-End Estate Tax Planning Editor: Anne Klayman, Associate Editor: Suzanne Savage, Graphic Designer: Sherri Klayman Construction Outlook Chairman: Tony Borrelli Editorial Board: Tony Borrelli, John Our, Paul Scenna, and Richard Pacella, Jr. 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 Members Exemplify Unity

President of UCANE, one of my duties is to open all meetings and events and it was a distinct privilege for me to open our 61st Anniversary Banquet. “United We Stand” was the theme for the evening, and that was certainly the sentiment I felt standing at the podium and looking out over the more than 600 colleagues, coworkers, families, and friends in attendance. Though our companies often compete against each other for projects, we are also united in our advocacy for the water and sewer industry and construction as a whole. When we stand together, UCANE will continue to be the leading voice advocating for a modern and sustainable clean drinking and wastewater infrastructure for the New England region. As you will see from the pictures in this month’s issue of our magazine, this was again a first class evening of great food, music, and entertainment, which was only made possible through the generosity of UCANE members who are “united” in their commitment and generosity to our Association. So I want to thank all of our members who contributed to help make the evening such a success. I would also like to congratulate our Contractor and Associate Members of the Year, Marcella Albanese of Albanese Brothers, Inc. and Bob Andersson of Aggregate Industries - N. E. Region. I have had the pleasure of serving on the UCANE Board of Directors with Marcella and I know firsthand how deserving she is of this honor. As the father of three daughters, I am especially proud to

NOVEMBER, 2015

be serving as UCANE President at a time when another woman was voted as Contractor of the Year. Bob Andersson is well known and respected by everyone in our industry and I congratulate him on being voted Associate Member of the Year. In addition, this year, our Board of Directors voted to present a Special Recognition Award to MWRA Executive Director Fred Laskey who is celebrating 15 years with the Authority. As special as our Annual Banquet is, UCANE members’ shared sense of purpose extends far beyond this event. Their generosity is also another example of our member’s support of UCANE’s philanthropic and charitable endeavors. In that regard, we will gather again on December 3 at The Lantana in Randolph for our 42nd Annual Christmas Party in support of our College Scholarship Program. I know that our members will support this event so that in May 2016 we can again award twelve $2,000 scholarships to high school seniors who are the children of our members and their employees.

As the end of the year approaches, I would also like to wish all of our members and their families a safe and happy holiday season. n

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NOVEMBER, 2015

Mark Molloy, Esq., Lynch Associates, Inc.

City of Boston Unveils New Online Permitting

t the beginning of November, Mayor Marty Walsh unveiled the Boston Permits & Licenses online platform, the latest step in making Boston's permitting process easier, clearer, and more predictable. The release of the Boston Permits & Licenses platform will focus on supporting businesses, homeowners, and contractors through the entire permitting process. It has been in development over the past year, and will provide a more modern, easy-to-use interface. According to a press release from the Office of the Mayor, the following features will be part of the initial release of Boston Permits & Licenses, for the first time providing customers with the ability to: • Apply for multiple permits at once and group permits together in a single project. • Build a team of project partners, homeowner, contractors, and licensed professionals who can together advance all permits needed for a project to move forward. • View enhanced information about project review statuses. • Create accounts through Google Mail and other common login providers. • Identify project location on an intuitive mapbased interface. Boston Permits and Licenses is the product of a partnership with OpenCounter and Accela, first announced in December 2014. The new online experience will be rolled out in a series of phases, gradually incorporating new permit and license types and additional features, and continuously NOVEMBER, 2015

evolving based on user feedback and getting better with time. For more information about the new online permitting platform, please visit: www.permits.boston. gov. Individuals or companies interested in becoming beta users of the product and helping to provide feedback on new functionality can sign up on the website. continued on page 7

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Legislative Update continued from page 5

Governor Signs Deficiency Budget to Close Out Fiscal Year 2015 Budget Year

he Massachusetts Legislature sent Governor Baker a $327.8 million supplemental budget to address fiscal year 2015 deficiencies and fund new and ongoing initiatives in substance abuse prevention and treatment and services for children and families. The supplemental budget also directed $120 million to the state’s Stabilization Fund and $113.2 million to pay off state debt. The Governor signed the measure shortly after it reached his desk to prevent the otherwise unappropriated amounts from being deposited, in accordance with existing law, to the Commonwealth’s stabilization fund in its entirety. As passed, the supplemental budget still deposits $120 million to the state’s Stabilization Fund, or “Rainy Day Fund,” boosting the balance to approximately $1.25 billion. In an effort to combat the growing opiate crisis within the Commonwealth, the supplemental budget includes a total of $27.8 million for substance abuse treatment and prevention programs. This funding includes $1.2 million for the SBIRT substance abuse

NOVEMBER, 2015

screening program in schools and $3.8 million for substance abuse counselors. The bill also includes $5.8 million to support a new program at Taunton State Hospital for civilly committed women who would otherwise receive treatment at MCI-Framingham. In addition, the bill provides $2.2 million to support training and staffing needs at the Massachusetts Department of Children and Families and $1 million for training for adoptive and foster families. The bill also includes $250,000 for a grant program for municipal police departments to purchase body cameras and $300,000 for a pilot program to identify and address gaps in the criminal justice system for individuals with mental health and substance abuse disorders. With the Commonwealth currently within the 2016 fiscal year, the Governor will unveil his fiscal year 2017 budget in mid-January 2016. Expect the Baker Administration to begin soliciting input for their 2017 budget proposal shortly. continued on page 9

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Legislative Update continued from page 7

Baker-Polito Administration Expands Supplier Opportunities for Veterans, LGBT, Disabled, and Small Businesses

t a press conference in early November, Govwith the USBLN for the certification of SDVOBEs), ernor Charlie Baker expanded the Commonat a combined, existing benchmark of 3%. wealth’s supplier diversity program to include • Increasing the benchmark for registered Massabest practice innovations and updates from the pubchusetts-based small businesses in the Small lic and private sectors, the first expansion of benchBusiness Purchasing Program (SBPP) from 2.5% marks for minority and women-owned businesses in to 3.3%. four years, and the first-time certification of veteran, • Increasing the existing certified minority-owned disability, and LGBT-owned businesses. business enterprises (MBE) benchmark from Authorized under Executive Order 565, the 6% to 7%, and introducing a partnership with the Commonwealth’s Supplier Diversity Program (SDP) Greater New England Minority Supplier Developincludes changes to the state’s small and diverse ment Council (GNEMSDC), whereby the Commonbusiness certification and reporting processes and wealth will begin accepting MBE applications apcross-certification partnerships with the City of Bosproved by GNEMSDC starting on January 1, 2016. ton and nationally-recognized private certification or• Increasing the certified women-owned business ganizations. enterprises (WBE) benchmark from 12% to 13%, Benchmark increases and additions to the state and introducing a partnership with the Center for certification procurement process include the followWomen and Enterprise (CWE) to allow the orgaing, with the new certification categories undergoing nization to begin accepting WBE applications on a two to three year capacity-building period prior to January 1, 2016. unveiling benchmarks: • Acceptance and promotion of cross-certification • A first-in-the-nation LGBT-owned business cerwith the City of Boston of MBE and WBE applitification partnership between the state and Nacants on January 1, 2016. tional Gay and Lesbian Chamber of Commerce’s To read the Governor’s new Executive Order, (NGLCC) fully-accredited, industry-standard certification process recognized and accepted across please visit: www.mass.gov/governor/legislationexmany Fortune 1000 companies. ecorder/execorders/executive-order-no-565.html continued on page 11 • First-time certification of businesses owned by those with disabilities (Disability-Owned Business Enterprises or DOBE), in partnerMBO Precast Inc. ship with the U.S. Business 4 Marion Drive • Carver, MA 02330 Leadership Network’s (UST: 508-866-6900 • F: 508-866-5252 BLN) nationally-recognized www.MBOPrecast.com certification program, which will also conduct certifications of service-disabled, veteranStone Strong Retaining Wall Systems owned business enterprises Manholes / Catch Basins / Custom Structures (SDVOBE). Septic Tanks / Leaching Products • Expanding the certified servicedisabled, veteran-owned business enterprises (SDVOBE) category of the Supplier Diversity Program to include all certified veteran-owned business enterprises (VBE), continuing to use the federal VetBiz certification process (and new partnership

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Legislative Update continued from page 9

MassWorks Infrastructure Program Awards Approximately $85.6 Million in Grant Funding

he Massachusetts Executive Office of Housing and Economic Development recently announced the grant results of the MassWorks Infrastructure Program, which provides a one-stop shop for municipalities and other eligible public entities seeking public infrastructure funding to support housing production, economic development, and job creation through strategic investments in public infrastructure. The 2015 grant round, which generated 101 applications for more than $245 million, will distribute $85.6 million in funding for infrastructure projects with a focus on multi-family housing. Project awards included, but were not limited to the following: • Lancaster - Sewer Service Extension supporting Local Manufacturing - $980,000: Funding will extend sewer service along Sterling road, supporting local manufacturers James Monroe Wire & cable, Built-Rite Tool & Die, and Stainless Steel Coatings, and triggering the creation of 35 new full time jobs and 20,000 square feet of new workspace. • Fall River - Airport Road High Service Area Water Loop - $969,100: Fall River received a $969,100 MassWorks award to complete the Airport Road High Service Area’s water main loop, including the installation of 3,200 linear feet of 12-inch water main and new hydrants. This will ensure adequate water pressure for both the Life Science and Technology Park and the Commerce Park, both within a Priority Development Area. • Provincetown - Porous Pavement along Commercial St. - $1,960,000: The $1,960,000 MassWorks

award will reconstruct Commercial Street in Provincetown with porous pavement to mitigate storm water discharge into the Harbor. Commercial Street serves as the main commercial area downtown and provides direct access to Provincetown Harbor, both of which play a significant role in the economy of the town. MassWorks funding leverages over $5 million in federal and state dollars in support of the first two phases of the project. • Dalton - Infrastructure Improvements on Housatonic St., and Water Main Replacement - $380,000: Dalton's $380,000 MassWorks award compliments $8,008,912 in federal funds awarded to Dalton for infrastructure improvements on Housatonic Street, and will fund the replacement of a 2,300-foot water main. This project will result in improved sidewalks and roadway drainage, and increased pedestrian and motorist safety. • Chicopee - West End Mill District Redevelopment - $2,640,000: The MassWorks award of $2,640,000 will support the West End Mill District Redevelopment site. The award will address infrastructure deficiencies including improvements to the water, sewer, electrical systems, as well as a pump station that will make the redevelopment of the West End Mill District possible. • Holyoke - Lyman Terrace - $4,000,000: The Holyoke Housing Authority has partnered with The Community Builders to redevelop and preserve Lyman Terrace, a public housing property constructed in 1938. The $4 million MassWorks grant will fund streetscape work, a new throughway, sewer and drainage, as well as new water mains and hydrants. Governor Baker and Lt. Governor Polito have been criss-crossing the ComCall Your Nearest GENALCO Warehouse monwealth to make a series of MassWorks For These Supplies infrastructure grant award announceHYDRAULIC GRADE 8 STROBE LIGHTS ments during the months of September, OIL NUTS & BOLTS WEATHER CAPS October, and November. As part of the AIR CLEANERS program, each year, ten percent 10% of GREASE FITTINGS BUCKET TEETH the awarded funds are allocated to assist HYDRAULIC HOSE BUCKET LIPS municipalities with populations of 7,000 EQUIPMENT PAINT or less in completing roadway safety and BUCKETS transportation improvement projects. The CUTTING EDGES MassWorks Program has invested over CHAIN SLINGS $357 million across the Commonwealth BACKUP BELLS AIR, OIL & FUEL since the first competitive grant round was AND ALARMS FILTERS EXTREME ROTARY held in September 2011. More information PRESSURE GREASE ASPHALT CUTTERS is available at the MassWorks website at: GENALCO inc. 1-877-436-2526 www.mass.gov/hed/economic/eohed/ 55 years of service to New England Industry pro/infrastructure/massworks/. Needham Heights, MA FAX 781-449-6643

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NOVEMBER, 2015

Legislative Update continued from page 11

Massachusetts Senate Prepares for New Members While Certain Municipalities Elect New Mayors

onsidered an “off cycle” election year because of the lack of statewide or legislative races, there were still plenty of elections of interest in the Commonwealth. Of principal interest was the race for the Second Plymouth and Bristol seat left open by the sudden death of Senator Tom Kennedy. Representative Michael Brady defeated Representative Geoff Diehl, a Whitman Republican, for the Brockton-area Senate seat 14,381 to 10,252. While Diehl secured the communities outside of the City of Brockton, the City of Champions proved to be the difference for Representative Brady, a one-time Brockton City Councilor. Among other contested races: • Senator Robert Hedlund, a Weymouth Republican, defeated incumbent Weymouth Mayor Sue Kay 9,381 to 3,977. His election means that the Republicans may lose a seat in the Senate if they cannot hold on in the soon-to-be scheduled special election. • In Fitchburg, Representative Stephen DiNatale topped Andrew Couture 4,154 to 1,407 to win the open mayor's seat in that city.

• Incumbents Stephen Murphy and Charles Yancey lost to Annissa Essaibi-George citywide and Andrea Campbell in District 4 in the City of Boston. • Quincy Mayor Thomas Koch won re-election, while in Medford Stephanie Muccini Burke won a tight race to replace retiring, long-time mayor Michael McGlynn. The first part of 2016 is expected to involve special elections to fill the aforementioned seats being vacated by the various Representatives. It is anticipated that the special elections may be targeted for March 1, the date of the presidential primaries in Massachusetts. continued on page 15

• Representative Michael Finn failed to win the mayor's office in West Springfield, where town attorney Will Reichelt won 3,517 to 2,571. • Representative Tom Stanley also failed to unseat Mayor Jeannette McCarthy in Waltham. • Fall River Mayor Sam Sutter, who left his post as Bristol County district attorney to challenge Mayor Will Flanagan in a recall election last year, lost after less than a year in office to City Councilor Jasiel Correia. • Pittsfield City Clerk Linda Tyer beat incumbent Mayor Daniel Bianchi. NOVEMBER, 2015

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NOVEMBER, 2015

Legislative Update continued from page 13

Items of Interest • The City of Medford’s Water and Sewer Division is preparing to implement a new watermonitoring program that will allow residents to track and receive alerts about high usage and leaks. The program, called WaterSmart, will also enable city employees to monitor water usage throughout Medford and send alerts to residents in the event of a burst water main or detected leak. When the program goes live later this year, residents will be able to sign up using WaterSmart’s online customer portal, which provides real-time data on usage, charts and graphs analyzing consumption over time and the option to develop individual conservation and money-saving action plans, according to the program’s website, www.watersmart. com. The program, which is free for residents, also offers tips to improve water usage based on input provided by users, such as the number of people and bathrooms in a household, property size and other information. • The Value of Water Coalition, a national co-

alition of public and private water agencies, business and community leaders and national organizations united in communicating the importance of water to the economic, environmental, and social well-being of the country, recently held the event “Imagine a Day without Water”. The event, focused over a period of three days from October 6-8, raised awareness about the importance of water in our every day lives. The overall message focused on the need to continue investing in the Nation’s water infrastructure. To learn more about this initiative, please visit: www.thevalueofwater.org • The Massachusetts Department of Revenue announced that preliminary revenue collections for October totaled $1.662 billion, $46 million or 2.9 percent more than the state took in last October. Four months into the fiscal year, revenues total $7.613 billion, $304 million or 4.2 percent more than last year at this time and $126 million above benchmark. n

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SAVE THE DATE

UCANEâ&#x20AC;&#x2122;s Annual Christmas Party & Scholarship Auction Thursday Evening December 3, 2015 5:00 p.m. The Lantana

43 Scanlon Drive Randolph, MA Our membersâ&#x20AC;&#x2122; commitment to our Scholarship Program begins when our Association holds its Annual Christmas Party and Scholarship Auction. It is through the generosity of members who donate cash and auction items, and those who attend and bid for items that money is raised for our scholarships...all this to make certain that our Scholarship Program continues.

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NOVEMBER, 2015

you attended UCANE’s Banquet this year, then you experienced all that we are about to describe. If you missed it, then no description can re-create the evening, but we’ll try anyway. Put all your preconceived notions about celebrations aside, because UCANE’s 61st Annual Banquet was, as they say, OVER-THETOP. Whether it was the décor, or the Social Hour with its hot and cold seafood stations, or the Martini Bar with its three signature cocktails, or the artistic presentation of the Tuscan Bar, or the poignant award presentations to our Contractor and Associate Member of the Year recipients and their heartfelt acceptances, or the memorable remarks of the MWRA’s Executive Director, who received a Special Recognition Award, or the music of the renowned band, or the entertainment drawn from New York City, for the more than 600 members,

family and guests in attendance, this was a night that will be remembered for a long time. If what you’ve just read has grabbed your attention, you’ll want to read on about our Banquet details, which are even more riveting. The Ballroom’s color scheme was green, cream, and gold, with the major visual design focused around various sized rings and circles. On either side of the stage, floor to ceiling screens highlighted our Program Book cover with the night’s theme United We Stand. Also on the cover there were five linked rings, looking very similar to the symbol of the Olympic games, which is a worldwide representation of strength and unity. Our guests would soon learn that UCANE used this same symbol to represent various elements of our Association, which helped make UCANE one of the most respected and effective Associations in the country. continued on page 20

NOVEMBER, 2015

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Banquet continued from page 19

CANE President Tony Borrelli opened the evening’s program by welcoming everyone to the banquet. He then introduced Executive Director Anne Klayman who officially began the evening’s program by introducing our Officers and Board Members who were in attendance. Anne then turned her attention to the Banquet theme and stated, “Our theme for this evening revolves around rings, rings on our centerpieces, rings over the dance floor, rings on our stage backdrop, and rings on our Program Book covers. Rings are as deep in symbolism as they are in tradition. This unique shape, having no distinct beginning and no distinct end, has been chosen throughout the centuries because of its simplicity to represent many things like unity, fidelity, love, and friendship. In modern times we have also assigned other traits to rings; that of strength, skill, competition, and cooperation. These were precisely the attributes and the reason why the ring was adapted as the perfect symbol to represent the re-start of the Olympic games in the early 20th century. Five individual rings representing the five continents of the current participants, woven into a single strand, became an incredible chain, with each ring being dependent for its strength on the ring it is linked to. While one ring alone can be strong, linked together, they exhibit extraordinary strength.” Anne directed everyone’s attention to the fivering symbol on the screens saying, “Tonight we have chosen this symbol to represent all that UCANE stands for and we have assigned a special meaning to each ring, as I will explain.” According to Anne, the first ring represents our Association’s goals; to be the single and strongest voice of underground utility contractors, to speak out in support of clean drinking water issues wherever and whenever we can, to fight for the necessary drinking water and wastewater project funds on the federal, state, and local levels, and to support the

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NOVEMBER, 2015

agencies and their personnel who are doing an outstanding job planning and managing our state’s water resources. The second ring represents UCANE members who are unlike any other. They are drawn from both large and small companies; union and open shop, many of whom are second and third generation members. The third ring represents our member’s commitment to safety. The fourth ring is dedicated to the men and women who comprise the state agencies for whom UCANE members provide drinking water and clean water services, and with whom our Association has forged a special relationship, which emphasizes mutual respect through communication and transparency. The fifth and final ring represents UCANE’s major philanthropic and charitable efforts including our 35-year affiliation with the Leukemia and Lymphoma Society of Massachusetts; our 10-year commitment to the Sojourner House, a shelter for homeless families; the UCANE College Scholarship Program; our support of the Diabetes Association, the Pan Mass Challenge, the Alzheimer’s Association, the Rodman Ride for Kids, the Joe Andruzzi Foundation, the many other worthwhile charities. Anne concluded by saying, “Each UCANE ring; representing our goals, our members, our agency relationships, safety, and charity is strong by itself, but when each ring is linked together as it is in our Association, something special is created. To me these UCANE rings reinforce our theme, United We Stand.” continued on page 23

NOVEMBER, 2015

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Banquet continued from page 21

nne began the award presentations by stating, “We are here tonight to honor UCANE’s Contractor and Associate Member of the Year recipients. These awards are bestowed on our members by their peers in recognition of their involvement in our Association, and for their support of our industry.” She then presented UCANE’s 2015 Associate Member of the Year Award to Bob Andersson, Vice President and General Manager of Aggregate Industries Asphalt/Contracting Division for the North East Region and UCANE’s 2015 Contractor Member of the Year Award to Marcella Albanese, President of Albanese Brothers, Inc. Since both recipients names had been kept secret by members, families, and friends neither Bob nor Marcella were aware they would be receiving these awards. Finally, a Special Recognition Award was given to MWRA Executive Director Fred Laskey in recognition of his 15 years with the Authority, and for his commitment to protecting Massachusetts’ natural resources. Anne went on to thank the more than 125 companies that sponsored various segments of our Banquet. She specifically pointed to two companies, C. N. Wood Company, Inc. and Komatsu, who exemplify the generosity and commitment of our members and who have been UCANE’s banquet hosts for the past 16 years. Paula Benard, President of C. N. Wood Co., Inc. and Ed Powers, Director of Regional Sales and Marketing for Komatsu’s North East Region joined Anne on stage to thank our members for their loyalty. continued on page 25

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John Our and former New England Patriot Roland James

nne then went on to acknowledge some of our other major sponsors, specifically thanking J. Derenzo Co. (Hot Seafood Bar); Concrete Systems, Inc. (Cold Seafood Bar); Dagle Electrical Construction, Corp. (Photo Booths); HD Supply Waterworks and R. H. White Construction Co., Inc. (Martini Bar); Barletta Heavy Division and GTA Co., Inc. (Entertainment); Eastern States Insurance Agency, Inc. (Sweet Endings Candy Buffet); Aggregate Industries-N.E. Region, A. R. Belli, Inc., Hinckley Allen, LLP, McCourt Construction Company, Shea Concrete Products, The Vellano Companies, Inc., and J. F. White Contracting Co. (Band); American Shoring Inc., C.C. Construction, Inc., Gagliarducci Construction, Inc., Garrity Asphalt Reclaiming, Inc., Robert B. Our Co., Inc., and Taylor Oil Company (Sundae Bar). A complete list of Banquet sponsors can be found on pages 38-39. With the ceremonies completed Anne officially kicked off the party by reminding everyone that the raffle ticket they had filled out at the registration desk could win them one of seven fantastic prizes. She then clarified the rules, 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 pair of sterling and diamond earrings; a gold and sterling coin bracelet; a chance to win $10 million with more than $150 in Mass. lottery tickets; a gold, sterling, and diamond heart necklace; the latest GoPro camera; a 42-inch Sanyo TV; and a pair of Patriots vs. Miami Dolphins tickets. continued on page 27

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Banquet continued from page 25 In keeping with the tradition of doing something fun to kick off the festivities. Anne asked everyone to stand and sing along to “You’re the one that I Want”, from the movie Grease, with alternating verses for the men and for the woman. She challenged each group to sing as loud as they could to win a prize, with the bandleader being the judge. Everyone had so much fun and did such a great job that they all received a lottery ticket as a prize. Now everyone was really in the mood to party! UCANE’s President-Elect John Our (Robert B. Our Co., Inc.) then gave the invocation, and that was the signal for the festivities to begin. Whether it was the music by our amazing band “Flipside”; the tribute to the “Jackson 5”; the fabulous food served throughout the evening, finished off with our Gourmet Sundae Bar and Coffee Carts; the two photo booths set up outside the ballroom for guests to take fun photos with props throughout the evening; the huge hit of the Sweet Endings Candy Buffet; the ladies gifts of black and gold wristlets; and the thousands of light-up giveaways, UCANE’s 61st Annual 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 61 years in the making.

This incredible evening was only made possible by the generosity of our members. Therefore, UCANE would like to thank all of the companies that sponsored various segments of our Banquet. Once again, this was the UCANE event of the year not to be missed. We look forward to seeing all of you at next year’s Banquet. n

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Hot Seafood Bar J. Derenzo Co. Cold Seafood Bar Concrete Systems, Inc. PHOTO BOOTHS Dagle Electrical Const., Corp. Martini Bar HD Supply Waterworks R. H. White Const. Co., Inc. Entertainment Barletta Heavy Division GTA Co., Inc. Candy Buffet Eastern States Ins. Agency, Inc. Band

Aggregate Industries-N.E. Region A. R. Belli, Inc. Hinckley Allen, LLP McCourt Construction Company Shea Concrete Products The Vellano Companies, Inc. J. F. White Contracting Co. Sundae Bar American Shoring Inc. C.C. Construction, Inc. Gagliarducci Construction, Inc. Garrity Asphalt Reclaiming, Inc. Robert B. Our Co., Inc. Taylor Oil Company All Signage RoadSafe Traffic Systems, Inc. 38

Invited Guests Feeney Brothers Excavation, LLC Daniel O'Connell's Sons, Inc. Decorations Aggregate Industries-N.E. Region A. F. Amorello & Sons, Inc. GVC Construction Inc. P. J. Keating Company LM Heavy Civil Const., LLC The Vellano Companies, Inc. Program Book Sponsor Albert J. Tonry & Co., Inc. Program Book Advertisers Albanese D&S, Inc. American Shoring Inc. C.C. Construction, Inc. Concrete Systems, Inc. Dagle Electrical Const., Corp. J. Derenzo Co. GTA Co., Inc. P. Gioioso & Sons, Inc. G. Lopes Construction Inc. Milton CAT Northeast Traffic Control Svc., Inc. E. J. Prescott, Inc. Rodman Ford Sales, Inc. Starkweather & Shepley Insurance Brokerage, Inc. United Concrete Products, Inc. United Rentals Trench Safety C. N. Wood Co., Inc. & Komatsu

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Centerpieces CleanBasins, Inc. J. D’Amico, Inc. DeSanctis Insurance Agency, Inc. Ferguson Waterworks Griffin Dewatering New England, Inc. HD Supply Const. & Industrial White Cap Lorusso Heavy Equipment, LLC Ludlow Construction Co., Inc. McWane Ductile Rain for Rent - New England SPS New England, Inc. Starkweather & Shepley Insurance Brokerage, Inc. WES Construction Corp. Tim Zanelli Excavating Ladies’ Gifts Albanese Brothers, Inc. Albanese D&S, Inc. A. F. Amorello & Sons, Inc. Aon Construction Services Group Celco Construction Corp. FED. CORP. HD Supply Const. & Industrial White Cap Harris Rebar A. H. Harris Construction Supplies LM Heavy Civil Const., LLC S. M. Lorusso & Sons, Inc. R. M. Pacella, Inc. Prizes & Surprises ATS Equipment, Inc. A. F. Amorello & Sons, Inc. Aqua Line Utility, Inc. HUB International New England, LLC K & K Excavation Co., Inc. Lorusso Heavy Equipment, LLC Putnam Pipe Corp. United Concrete Products, Inc. Social Hour Darmody, Merlino & Co., LLP EJ NOVEMBER, 2015

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Marcella Albanese

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CANE’s Contractor Member of the Year Award is the highest honor bestowed on a member by their peers. Previous recipients are some of the most respected men and women 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. Our members voted Marcella Albanese of Albanese Brothers, Inc. as UCANE’s 2015 Contractor of the Year. She is a second generation contractor who comes from a family that is known for their ability to take on difficult projects, and for their support of our industry. Although she is a thoroughly modern woman, our recipient is, as they say, somewhat “old school”. As she once said in a magazine article about their business, “In our family, nothing is given and nothing is expected.” According to Marcella, time spent with their grandparents in Italy, helping out on their farm while being separated from their parents for many years, made her, her sister Maria, and her brother Dino more self-reliant, and physically and mentally strong, even before they reached their teens. Our recipient’s father Marco left the family in Italy and immigrated to the United States in 1970, taking whatever jobs he could find, until he landed a job in construction with P. Gioioso & Sons. For seven years he worked and sent money back to his family in Italy. Marco’s wife soon joined him, but they had to leave the children back in Italy with their grandparents. A few years later, Marcella and her siblings were reunited with their parents. In 1978, Marco and his brother John started Albanese Brothers, Inc. and focused their business on installing water and sewer pipe. In 1991, John formed his

NOVEMBER, 2015

own company, Albanese D&S, Inc. During this time, Marcella and her siblings began working at their father’s company and started learning all aspects of the business. As Marcella’s brother Dino stated, “Marco was very demanding…at home he was a regular loving dad, but in the office or out in the field, he treated his children like any other employee. He expected that a job would be done right the first time.” They not only had to earn Marco’s respect, they had to show him that they were capable of running the company. In 2010, Marco retired and the business was turned over to his children. Together they continue to build the company’s capabilities, including Marcella and Maria getting their WBE/DBE accreditations. Since the very beginning of their construction experience, Marcella and Maria have been involved in UCANE, with Marcella currently serving her second term on our Board of Directors. Her insight into contracting issues and her constructive ideas are always welcomed. Next year she will be moving up the ladder and will serve as UCANE Secretary. In her acceptance remarks, Marcella thanked her siblings Dino and Maria, both of whom are principles in the business, for their love and support. She also recognized her father Marco, her mother Filomena, and her Uncle John for all their love and support.

It was a great pleasure to present UCANE’s 2015 Contractor of the Year Award to Marcella Albanese, and we look forward to her continued dedication and support of our Association. n

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CANE’s Associate members are the businessmen and women who supply and service machinery and materials to our Contractor members, they also finance, bond, insure, litigate, and support them. We are very fortunate to 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. Bob Andersson has a long history of support within our industry, dating back to when he began his career working for Allied Paving, over 30 years ago. He was born and raised in Chelmsford, MA and attended Chelmsford High School. After graduation he went on to attend Worcester State College. In 1993, Bob went to work for Aggregate Industries, where today he is Vice President and General Manager of the Asphalt/Contracting Division, for the northeast region. During his time at Aggregate, the company has grown exponentially and much of its success can be attributed to Bob, and his personal interaction with the construction industry. In addition to belonging to UCANE for the past 22 years, Bob is an active member of the Construction Industries of Massachusetts. Where he served on their Board of Directors for many years, and currently holds the position of Chairman. He is also on the Board of their Labor Relations Division. In addition, he is the former Chairman of MAAPA. On a personal note, Bob and his wife Laurie are the proud parents of three children, Michael, Zachary, and Nikki. In addition to surprising Bob with this award, UCANE had another surprise for him. Bob’s three children along with his mother and in-laws were in attendance to help celebrate this special honor with him. In Bob’s acceptance remarks he mentioned just how much this award means. He said, “Many times I’ve sat in the audience when others have received this award but I did not know what it really meant and how it makes you feel until I received UCANE’s

NOVEMBER, 2015

Laurie and Bob Andersson award tonight. It was a total surprise to me. I want to thank UCANE members for this award and for inviting my family to be present when I received it. It means everything to me to have them here.” He went on to thank his wife Laurie, his children, his mother, and Laurie’s parents for their support over the years.

It was our great pleasure to present UCANE’s 2015 Associate Member of the Year Award to Bob Andersson. n

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n very few occasions, UCANE members have voted to give a special recognition award to a non-member who has shown outstanding dedication and commitment to protecting our state’s most precious natural resources in order to provide safe and clean drinking water to our citizens. This was one of those rare occasions. The City of Boston built one of the first sewer systems in the nation, but by the ’60s and ’70s that system, and the state agency responsible for maintaining the system, were both failing. By the early ’80s Boston Harbor was deemed the dirtiest harbor in the country. This reputation as the “dirty water” capital became a statewide embarrassment. In 1984, Boston Judge Paul Garrity issued a cease and desist order and stopped all hookups to the entire Boston sewer system, effectively halting all new construction. His action ultimately led to the creation of the Massachusetts Water Resources Authority, better known as the MWRA. In 1985, the MWRA became the primary agency responsible for cleaning up Boston Harbor and building a modern water and sewer infrastructure system. The success of the MWRA over the past 30 years cannot be denied. Under its management and supervision, Boston Harbor has been transformed into one of the cleanest in the country and the entire water and sewer system under MWRA control has won National Honors. In the history of the MWRA there have only been three Executive Directors, and we were honored to recognize the current director, Fred Laskey, who has ably guided the MWRA for the past 15 years. Since taking over the MWRA in 1990, Fred has overseen the completion of approximately $6 Billion worth of water and sewer related construction projects. He has been a motivating force within the Agency and is known for his ability to lobby for funding on the Federal, State, and local levels in order to meet the MWRA’s goal of building a modern water and sewer infrastructure that will stand the test of time. His advice and counsel are valued by the MWRA Advisory Board and he is often called upon to use his considerable personal skills to communicate the MWRA’s message and sell the MWRA’s plan and goals to municipalities in the Metropolitan Boston area, now numbering 61 cities and towns. Fred has an excellent rapport with many Massachusetts Governors, Lt. Governors, and State legislators who have entered public service during his tenure at the MWRA, and he continues to remind them that investments in water and sewer infrastructure promotes good health and protects the environment. These investments also help promote economic growth, protect our states waterways and recreational resources, and overall, afford a better quality

NOVEMBER, 2015

Donna and Fred Laskey of life for the citizens of the Commonwealth. Under Fred’s leadership, the MWRA and UCANE have forged a special relationship. There exists a mutual respect where the MWRA shares as much information as possible about their future capital plans with UCANE members. Upon accepting his award Fred stated, “Rather than talk about myself I’d like to talk about UCANE. I don’t know that there is a better professional trade association in the Commonwealth of Massachusetts; you have it on every front. Whether it be the safety training, whether it be the advocacy at Beacon Hill, when UCANE comes knocking the doors open. Just the whole package is a tribute not only to Anne and the staff, but also to your officers who do so well at making this organization so successful.”

It was our pleasure to present this Special Recognition Award to MWRA Executive Director Fred Laskey n

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Mashpee Approaches Barnstable, Sandwich Officials About Planning for Popponessett Bay The towns of Mashpee, Sandwich, and Barnstable may be the first towns in the state to collaborate on watershed permitting, as they focus in on Popponessett Bay.

he permitting could involve zoning and capital expenses to help clean up pollution in the bay caused by nutrient loading. The bay is bordered by Mashpee and Barnstable, but areas in Sandwich are in the Popponessett Bay watershed and, therefore, contribute to pollution that flows from septic systems through groundwater into the bay. “I believe it’s a very important effort. I believe it needs to involve all levels of our community,” Barnstable Assistant Town Manager Mark Ells told members of the Barnstable Town Council at their meeting last week. State environmental regulators are encouraging the collaborative effort as a way to get towns to work together to deal with wastewater impacts on waterways. There is new legislation that allows the process, Ells said, and town officials are reviewing the legislation. “They were looking for a community to step forward and begin this pilot process. I think because of the Mashpee selectman’s background, he was willing to help to embark on this,” Ells said. Mashpee Selectman Andrew Gottlieb, who is also executive director of the Cape Cod Water Protection Collaborative, approached Ells and asked if the town would be interested in meeting about Popponessett Bay and watershed permitting. Ells agreed, he said, because the town of Barnstable needs to know what other towns are doing with regard to shared waterways. The meeting involves no obligation, Ells said.

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“They can do it alone, but there are three communities within the watershed that impacts the particular watershed they are interested in, which is Popponessett Bay. So it was appropriate that before he embarks on that, he comes to us and ask that question,” he said. If the three towns cooperate on watershed planning, the effort would be a first in the state and would be seen as a pilot program, Ells said. But because the effort would be new, Ells said he does not know how state officials would react. “It may bog down as soon as we get to discussions with regulators because they really haven’t thought through this process yet,” Ells told the town council at last week’s meeting. continued on page 51

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Cape Cod continued from page 49 Ells said the effort comes out of the Cape Cod Water Protection Collaborative, a board he sits on as the representative for the town of Barnstable. But he said with wastewater planning in the region moving into a new phase because of the completed 208 Plan, a regional document on wastewater planning, he advised that an elected town official should join him on the board. “I absolutely think that leadership should be involved,” Ells said. Written by Laura M. Reckford, CapeCod.com News Editor. Reprinted with permission. n

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BENEFITS & HR TRATEGIES Brian Charon, CHRS Senior Vice President, Eastern Benefits Group

Employers Face a Growing Burden of Regulatory Compliance As an employee benefit broker, I have the opportunity to meet with a lot of different types of companies. Whether it is a contractor, manufacturer, social services organization, software developer, food distributor, or any other industry, it doesn't matter… they all have one thing in common. You would probably guess that I am talking about the rising cost of health insurance. While it is true that health insurance costs are a consistent concern for all employers, there is another issue that has been growing over the last several years. I'm talking about the growing burden of Regulatory Compliance.

egardless of which political side of the fence you fall on, I think we can all agree that there are a growing list of laws and regulations as they pertain to employer sponsored employee benefit plans. In general, laws and the regulations used to enforce them are intended to better us as a society. Laws such as the Affordable Care Act (ACA), otherwise known as Health Care Reform, help to improve access to healthcare, protect the rights of employees and eliminate discriminatory practices. While well intentioned, laws like the ACA have brought about an avalanche of regulations. As the employer, you have the burden of continually navigating new sets of complex regulations, filing reports to the IRS, Division of Labor and other federal/state agencies. In addition, employee notification rules require that you provide employees with detailed disclosure documents about your plan and the ACA. If I had five or six pages available for this article, I could probably list all of your required employee disclosures. And even with that, I expect a new requirement would be added in the short time between the point I submit this article and it goes to print. Needless to say, compliance is here to stay. So, what steps should you take?

NOVEMBER, 2015

1. Review a compliance checklist. If you don’t know where to start, I recommend contacting the Compliance Officer at your insurance broker’s office. If your broker does not have a compliance department, recommend finding a new broker. The services provided by employee benefit brokers have evolved and expanded over the years to include compliance, communication, and HR support. Simply providing quotes and answering questions is not enough. 2. Identify which compliance and notification requirements you need to complete or how you should change your policies and procedures to be in compliance. 3. Assess the penalties for non-compliance. While the various compliance and disclosure notices are required, some penalties are larger than others. For many employers the compliance list can be overwhelming. Do the math…and prioritize your compliance with the corresponding size of the penalty. Certain policies, such as ACA 1095 C Reporting, will require your immediate and ongoing attention. continued on page 55

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Benefits & HR Strategies continued from page 53 4. Create & Execute a calendar for compliance. Depending on the time of year, you may have certain notifications or filing requirements. 5. Re-evaluate your compliance plan each year. Expect your broker/advisor to assist with an Annual Compliance Audit. Be sure to add and remove tasks as policies and procedures change. In this era of regulatory change, I would like to tell you that various state and federal agencies are taking a wait and see approach. However, the reality is that many agencies, like the Division of Labor (DOL), have increased their audit activity significantly over the last few years. While I cannot possibly list all of the potential audit scenarios or questions in this article, I can tell you that the DOL has been very active in auditing benefit plans. If you were to receive an audit request from the DOL, the following are some of the items you should expect they will be looking for within 10 business days of the letter. A copy of your Summary Plan Description (SPD) A Legal ERISA document which is the primary vehicle for informing participants and beneficiaries about their rights and benefits under their employee benefit plans. (Not the certificate provided

by the insurance carrier). Copy of Health & Welfare 5500 filings. This annual filing is required by all plans that have had at least 100 employees enrolled in a plan at the beginning of the year. For example, if you had 105 employees enrolled in a group life policy you must file a 5500. Failure to do so comes with a potential penalty of $100/day per plan for each day you are late in filing. Summary Annual Report provided to employees. Open Enrollment Notice to include SBC, Notice of Exchange, Notifications for CHIPRA, WHCRA, CMS, and Women & Infants.

The responsibility to provide proof of compliance falls on the employer. State and Federal agencies will not hesitate to issue significant fines/penalties for failure to comply. Ask yourself…“If I received an audit request today, am I prepared? Could I do so within 10 business days?” If you have any questions regarding regulatory issues contact your Compliance Officer at your insurance broker’s office. n Dave Pateuk / Owner Email: dave@northeastshoring.com Website: www.northeastshoring.com

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SPECIAL ISSUE

John E. Merchant, CPA

2015 TAX PLANNING ROUNDUP • • • • • • •

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Will the Third Shoe Drop? Year-End Investment Tax Planning Year-End Family Tax Planning Year-End Retirement Tax Planning Year-End Charitable Tax Planning Year-End Business Tax Planning Year-End Estate Tax Planning

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Will the Third Shoe Drop?

s of this writing, major U.S. stock market indexes are extremely volatile. They're in the negative column for 2015, but that could change by the time this issue goes to press. In any case, it's likely that stock market values in late 2015 will still be much higher than they were in the dark days of early 2009.

Indeed, that’s a key issue for year-end tax planning. The year 2000 was the last of Bill Clinton’s eight years as President, and the stock market crashed, ending the tech boom. The year 2008 was the last of George W. Bush’s eight years as President, and the stock market crashed, ending the real estate boom. The year 2016 will be the last of Barack Obama’s eight years as President—will the current stock market boom meet a similar fate?

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No one knows, but it’s a possibility to consider. As ofhave thisalways writing, major U.S. so stock Stocks risen and fallen, we could see a market modest down year in 2016 or even a painful indexes are extremely volatile.plunge. What does thisnegative have to docolumn with year-end tax planThey're in the for 2015, ning? If you’re concerned about a stock market dip, butstrategy that could changeyour by the time this one is to reduce exposure to equities. However, most of your stock market holdings may be issue goes to press. In any case, it's likely trading at prices higher than what you paid, so selling that stock market values in late 2015 will could trigger capital gains tax. What’s more, recent tax still be may much higher than they were in the increases raise the tax bill on profitable sales. dark daysissue, of early In this we’ll2009. present some ideas for reducing your exposure to potential stock market Indeed, that’s a keyaissue for year-end slide without increasing your tax bill. Of course, that tax planning. 2000 was thetax lastplanshouldn’t be yourThe onlyyear focus in year-end of Bill Clinton’ s eight years asinPresident, ning—we’ll have tax-saving tactics other areas— but if you have significant holdings of stocks and the stock market crashed, endingor stock funds, you may want to consider some of these sugthe tech boom. The year 2008 was the gested strategies. last of George W. Bush’s eight yearsonaspage 59 continued

President, and the stock market crashed, ending the real estateOUTLOOK” boom. The year “BUY FROM THE ADVERTISERS IN CONSTRUCTION

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Financial Management continued from page 57

Year-End Investment Tax Planning

here’s one certain way to avoid owing tax on capital gains: Don’t sell any investments at a profit. At least, wait until January to take gains, postponing any tax obligation for a year. Moreover, there’s an argument for staying the course with your stock market holdings. Historically, investors following a “buy and hold” strategy often have outperformed those who tried to move in and out of the stock market. Timing the market has been difficult, if not impossible, and that probably will be the case in the future. In 2015, the broad U.S. stock market is more than 10% higher than it was at the 2008 peak, before the financial crisis drove down share prices. Investors who held on are ahead of where they were, and have collected seven years of (probably low-taxed) stock dividends in the interim. They’ve avoided paying tax on realized gains as well. What’s more, investors who truly maintained their strategy reaped another benefit. In late 2008 and in the following years, stocks were “on sale,” as it turned

out, selling at what proved to be low prices. Regular investing paid off, without a tax bill from taking gains.

Risk Reduction Staying the course and investing through turmoil sounds like a good way to survive a steep stock market reversal. In practice, though, that plan has flaws. Many people aren’t emotionally equipped to hold onto assets that seem to be losing value, day after day, and to keep investing when stocks trade at lower prices. Therefore, another tax-efficient way to lower your stock market exposure is to put future investment dollars into cash, bonds, or other asset classes. Example 1: Art Young has a $500,000 portfolio, with $350,000 (70%) in stocks and $150,000 (30%) in bonds. Art invests $2,000 every month, with that same 70-30 ratio, stocks to bonds. If Art is truly concerned about a stock market setback, he can stop putting more money into stocks. Starting with the fourth quarter of 2015, Art can put his monthly $2,000 investment entirely into bonds. continued on page 61

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Financial Management continued from page 59 Over the final three months of 2015 and throughout 2016, Art will invest $30,000 in bonds ($2,000 times 15 months). By year-end 2016, Art’s $530,000 portfolio (without counting interest, dividends, or market moves) will still have $350,000 in stocks. His exposure to stocks will have dropped from 70% to 66%.

The 0% Solution Instead of buying and holding, Art might sell equities to reduce his stock market exposure. However, profitable sales in his taxable account are likely to lead to a tax bill. Indeed, if Art is working and earning a substantial amount, he might owe 20% on any long-term capital gains, not the basic 15% tax rate. Art also could owe the 3.8% Medicare surtax, depending on the amount of income he reports for 2015. However, the situation could be different for Art’s widowed mother, who has a modest income. Example 2: Barbara Young estimates that she’ll report $25,000 of taxable income in 2015, after her deductions. This puts her in the 15% tax bracket, which goes up to $37,450 of taxable income this year, for single filers. For people in the 10% and 15% tax brackets, long-term capital gains are taxed at a 0% rate. As a result, Barbara can sell enough stocks to cause a $12,000 gain in 2015, and stay in the 0% bracket for long-term gains. This strategy can work well for retired couples because the 15% tax bracket for a joint return goes up to $74,900 in taxable income this year. Married seniors might take enough long-term stock gains by

year-end 2015 to fully fill up that tax bracket. Those gains will be taxed at a 0% tax rate, and the sellers can reinvest the proceeds elsewhere, if they want to trim stock market risk.

Gain From Losses Although taking gains in his taxable account will create taxes for Art, he can consider taking losses there. Energy stocks and funds have posted losses this year, and the same is true of precious metals securities. With the overall market barely ahead for the year, many individual issues have lost value. By taking losses this year in his taxable account, Art creates an opportunity to take an equal amount of gains there, untaxed. If he wishes, Art can reinvest the proceeds in other asset classes or put them in the bank, to reduce reliance on stocks. continued on page 63

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Financial Management continued from page 61

Year-End Family Tax Pla Year-End Family Tax Planning

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nother approach to reducing stock market exposure without incurring steep tax bills involves year-end gifts to family members. One way to use gifts in family tax planning is to transfer assets to youngsters such as your children or grandchildren. In 2015, the annual gift tax exclusion is $14,000. (See the article,“Year-End Estate Tax Planning,” in this issue for more details.)

Kiddie stu

Depending on and their scho “kiddie tax” ru basis (cost, for tax purposes) and holding period. play. Those ru Assume here that each $14,000 gift has an $8,000 youngsters to to reducing stock basis,Another reflectingapproach what Gil and Karen paid for the fund Example: Gil and Karen Martin, who have three full-time stud shares. Each exposure child receives $28,000 of fund shares market without incurring children, own stock funds that have appreciated and would a $12,000 sharply since the purchase dates several years ago. code kiddies, steep have tax bills involveslong-term year-endgain giftson toan immediate sale of those shares. In late 2015, Gil gives $14,000 worth of stock funds family members. One way to use gifts in $2,100 this ye to their son Nick, $14,000 of those shares to their parents’ rate. Th family tax planning to transfer assets KiddieisStuff daughter Patti, and $14,000 to their daughter Retax advantage to youngsters such asof your nee. Karen does the same. Thus, the Martins have Depending on the age thechildren children and their sell the shares orstatus, grandchildren. In 2015, thetax” annual reduced their stock market exposure by a total of school the so-called “kiddie rules might $84,000 (six $14,000 gifts) without owing any tax and comegift intotax play. Those isrules are complex, exclusion $14,000. (See the but the On the ot without having to file gift tax returns. youngsters to whom they apply include full-time have finished article, “Year-End Estate Tax Planning,” After such a gift, the recipient retains the asset’s continued on page 65 reached age 2 in this issue for more details.) kiddie tax ye Example: Gil and Karen Martin, the shares an who have three children, own stock part of the ga funds that have appreciated sharply gains are taxsince the purchase dates several years income is no ago. In late 2015, Gil gives $14,000 single tax ret worth of stock funds to their son on a joint ret Nick, $14,000 of those shares to their By the sam daughter Patti, and $14,000 to their • Use caution and dig by hand when • Pre-mark the location of intended a 22-year-old Renee. Karen does the same. working within 18” of a marked facility. excavation using white stakes, daughter paint or flags. the appreciate Thus,• the Martins have reduced their If a line is damaged, do not backfill. Notify the affected utility company • In MA, ME, NH and RI, notify Dig Safe school or reac stock market exposure by a total of immediately if the facility, its protective at least 72 business hours in advance. Nick may be $84,000coating, or a tracer wire is damaged. (six $14,000 gifts) without • In Vermont, notify Dig Safe at least on a profitabl tax and without having to Call 911 if the damaged facility poses 48 business hours in advance. owing• any Alternative a risk to public safety. file gift tax returns. • Notify non-member facility owners. • Know your state’s excavation requirements. After such a gift, the recipient retains are very youn • Maintain the marks placed by Go to digsafe.com for educational material underground facility owners. on to the gifte the asset’ s basis (cost, for tax purposes) and current laws. shares they re and holding period. Assume here that their long-tim each $14,000 gift has an $8,000 basis, might be able reflecting what Gil and Karen paid for

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Financial Management continued from page 63 students under age 24. For tax code kiddies, any unearned income over $2,100 this year would be taxed at the parents’ rate. Thus, there would be little tax advantage for such gift recipients to sell the shares immediately. On the other hand, children who have finished their education or reached age 24 generally are past the kiddie tax years. If so, they might sell the shares and owe 0% tax on all or part of the gains. Long-term capital gains are tax-free as long as taxable income is no more than $37,450 on a single tax return in 2015, or $74,900 on a joint return. By the same logic, if Nick Martin is a 22-year-old student now, he can hold the appreciated shares until he finishes school or reaches age 24. At that point, Nick may be able to use the 0% tax rate on a profitable sale. Alternatively, if the Martin children are very young, they could simply hold on to the gifted shares, as well as any shares they receive in future years. With their long-time horizon, the youngsters might be able to ride out market volatility, see the shares appreciate in the future, and take 0% gains at some point. In any case, the Martins will have reduced their stock market exposure without owing tax, and they’ll

have helped their children build a college fund, pay off student debt, buy a home, or find another use for the transferred shares.

Senior Strategies Instead of (or in addition to) gifts to children, appreciated shares can be given to retired parents who might have modest taxable income. This plan can be especially attractive for taxpayers helping to support elderly relatives. Example 2: Assume that the Martins are providing financial help to Gil’s parents, who are living on a modest fixed income. Gil and Karen could each give $14,000 of appreciated stock fund shares to Gil’s mother and $14,000 of such shares to Gil’s father by year-end 2015, for a total of $56,000. If those funds pay dividends, the senior Martins could hold onto the shares and probably owe 0% on the dividend income. The same 0% tax rules for long-term capital gains also apply to qualified dividends. Alternatively, Gil’s parents could sell the gifted shares. Assuming the same basis as in example 1 ($8,000 per $14,000 of shares), their taxable gain would be $24,000, some or all of which could be taxed at 0%. The money could be used for retirement living expenses. continued on page 67

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Financial Management continued from page 65

Year-End Retirement Tax Planning

ne relatively easy way to reduce exposure to a possible stock market correction without taking taxable gains is to sell equities held in a tax-advantaged retirement account such as an IRA or a 401(k). Transactions inside these accounts don’t generate taxes. Example 1: Sue Taylor has $200,000 in her 401(k) and $200,000 in a taxable investment account. In both places, $120,000 (60%) is in stocks and stock funds, for a total of $240,000: 60% of her investments. Sue wants to cut back on equities, fearing the market will retreat. As a result, Sue sells $60,000 of the stocks in her 401(k), reinvesting the money in bond funds and other asset classes besides equities. Now, Sue still has a $400,000 portfolio but only $180,000 (the original $240,000 minus the $60,000 she sold) in stocks and stock funds. Thus, her allocation to equities has dropped from 60% to 45%, leaving Sue less exposed to a steep setback. What’s more, Sue owes no tax on the sale inside her 401(k). To further reduce her allocation to stocks, Sue can reset her 401(k) contributions to reduce or eliminate equities. The last quarter of the year, when employees typically go over their company benefits, can be an excellent time to reset retirement plan asset allocations and future contributions.

The Medicare Access and CHIP Reauthorization Act of 2015, signed into law in April, raises the stakes. Starting in 2018, Medicare enrollees with modified adjusted gross income (MAGI) over $133,500 ($267,000 on a joint return) will pay about $273 a month, plus inflation adjustments, versus around $210 a month this year. Those with MAGI over $160,000 ($320,000 jointly) will pay $336 a month, up from $272 now. If the new rates take effect in 2018, why pay attention at year-end 2015? Because the 2018 Medicare premiums will be based on the income you report for 2016 on the tax return you file in 2017. Shifting income from 2016 to 2015, with year-end moves, may result in lower Part B premiums when those costs rise. Planning for lower premiums shouldn’t include shifting to municipal bonds, however, because tax exempt interest income is counted in your MAGI for this purpose. Instead, you might consider a Roth IRA conversion in 2015, rather than in 2016, to avoid boosting taxable income for next year. Converting a traditional IRA to a Roth IRA will reduce future required taxable distributions, and those distributions might push you into higher Part B premiums in future years. continued on page 68

Traditional Tactics Some perennial year-end tax planning moves for retirement make sense in 2015, as usual. • If you’re not already maximizing your contributions to 401(k) and similar plans, see if you can add some pretax salary deferrals this year. The 401(k) ceiling for 2015 is $18,000, or $24,000 if you’re 50 or older. • Execute Roth IRA conversions. You must have the account for at least five years (and be at least age 591⁄2) to take totally tax-free withdrawals, but any conversion in 2015 gets a January 1, 2015, start date for the five year requirement. Your wait might be barely more than four years. • If you’re 701⁄2 or older, make sure you take at least the 2015 required distributions from retirement accounts by December 31, in order to avoid a 50% penalty on any shortfall.

Planning for Premiums Some high-income retirees face a stealth tax: extra premiums for Medicare Part B, which covers medical costs. Although most Medicare enrollees pay about $105 a month for Part B in 2015, those with high incomes pay from $147 to $336 a month.

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Financial Management continued from page 67

Year-End Charitable Tax Planning

end oftake the year typically is a time Giveheand for making charitable donations. If

If your philanthropic intentions are conthat’s your practice, consider tributing shares of appreciated stocks or significantly greater than Dan’s or stock funds instead of cash. As long as Beverly’ s, consider a charitable remainder the shares have been held longer than trust (CRT). The principle the same in one year, you’ll get a full taxisdeduction assets, and the as2015 it isfor forthe theappreciated strategies described charity can easily cash in your gift. previously: securities Example Donate 1: Beverlyappreciated Carson donates $20,000 to her alma mater each year. In 2015, she decides toto get a charitable tax deduction and, if contribute $20,000 worth of shares of ABC Corp., she boughtreduce near theyour 2009 exposure market low. Her it’stock s a concern, to basis in the donated shares is $6,000, in this scenario. a stock market now trading near record Here, Beverly gets the same $20,000 tax deduction sheIn would get from you a cash donation. The college, levels. addition, (and perhaps a tax-exempt entity, can sell the shares and keep the another beneficiary yourcapital spouse) entire $20,000. Thus, taxsuch on theas $14,000 gain is never paid, and Beverly has reduced her stock can receive an income stream thatshe might market exposure by $20,000. The cash would have donated remains in her checking account, flow as long as an income beneficiary for Beverly to spend or invest elsewhere. is alive. Most investment firms and charitable organizations canCRTs help youcome executein a donation of appreciated assets. two forms: annuity Multiple Choice trusts and unitrusts. An annuity trust The tactic used by Beverly Carson might be fairly pays a fixed amount each year, with simple to implement, for one $20,000 donation. But if Beverly’s consists of awhat minimum ofyear-end 5% of philanthropy the original five $4,000 donations? Or 10 $2,000 donations? The contribution. A unitrust pays a the fixed paperwork effort involved might outweigh tax advantages, for many donors. percentage of the trust value each year, If you intend to contribute appreciated securities to multiple consider goingof through a donor with a charities, minimum of 5% the trust’ s advised fund (DAF). Many financial firms and community value. You’ll also get partial upfront foundations offer DAFs, whichasimplify such philanthropy. tax deduction for the fair market value of the remainder interest in the CRT that will eventually pass to the charity.

Example 2: Dan Evans, who is concerned about a possible stock market collapse, typically makes $25,000 of charitable donations each year, spread among various recipients. Changing tactics a bit, in late 2015 Dan donates $25,000 worth of stocks and stock funds to a DAF. All of the shares are highly appreciated, after long-term holding periods. Dan’s total basis in the donated shares is $10,000. For this contribution to the DAF, Dan gets a full $25,000 tax deduction for 2015. After the shares have been sold, that $25,000 goes into his account at the DAF, with no reduction for capital gains tax. Then Dan can simply tell the DAF to distribute $4,000 to this charity, $6,000 to that charity, etc. There is no time pressure to make these contributions—and no threat to Dan’s charitable tax deduction for 2015. Thus, Dan has reduced his exposure to stocks, avoided capital gains tax, and reduced his tax bill.

Example 3: Flo Grant uses $600,000 of highly appreciated securities to fund a charitable remainder unitrust in late 2015. The trust will pay 5% of its value annually to Flo or to her husband Harold, as long as either is alive. Setting up and maintaining a CRT requires some effort and expense, so these trusts generally make sense if you have a substantial amount to contribute. You can get similar benefits Give and Take with a If yourcontribution philanthropic intentions are significantly smaller by acquiring greater than Dan’s or Beverly’s, consider a charitable aremainder charitable gift annuity (CGA). trust (CRT). The principle is the same as it is for the strategies described previously: Donate apMany charities and other nonprofits preciated securities to get a charitable tax deduction continued on page 69 offer CGAs, often with minimum investments as low as $5,000 or $10,000. Typically, you need to be 50 or older to qualify for a CGA.g

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Financial Management continued from page 68 and, if it’s a concern, reduce your exposure to a stock market now trading near record levels. In addition, you (and perhaps another beneficiary such as your spouse) can receive an income stream that might flow as long as an income beneficiary is alive. CRTs come in two forms: annuity trusts and unitrusts. An annuity trust pays a fixed amount each year, with a minimum of 5% of the original contribution. A unitrust pays a fixed percentage of the trust value each year, with a minimum of 5% of the trust’s value. You’ll also get a partial upfront tax deduction for the fair market value of the remainder interest in the CRT that will eventually pass to the charity. Example 3: Flo Grant uses $600,000 of highly appreciated securities to fund a charitable remainder unitrust in late 2015. The trust will pay 5% of its value annually to Flo or to her husband Harold, as long as either is alive. Setting up and maintaining a CRT requires some effort and expense, so these trusts generally make sense if you have a substantial amount to contribute. You can get similar benefits with a smaller contribution by acquiring a charitable gift annuity (CGA). Many charities and other nonprofits offer CGAs, often with minimum investments as low as $5,000 or $10,000. Typically, you need to be 50 or older to qualify for a CGA. continued on page 70

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Financial Management continued from page 69

Year-End Business Tax Planning

s usual, the Section 179 “expensing” deduction is set for a drastic reduction. And, as usual, business owners probably can make year-end plans for equipment purchases with the expectation that a higher deduction amount for 2015 will be enacted. Typically, purchases of business equipment are depreciated over several years, so the amount you spend can be deducted gradually from business income. However, the tax code allows some purchases to be deducted in full right away.

Example: Brett Benson spends $20,000 on equipment for his manufacturing company this year. Brett can expense (deduct) that $20,000 to get an immediate tax benefit, rather than spread the tax savings over several years. Generally, an immediate tax savings is more valuable than a future tax savings.

By the Numbers For the expensing deduction, two numbers are critical. One is the maximum amount you’re allowed to deduct. The other is the phaseout amount: the amount of equipment you can purchase before losing the expensing benefit. The phaseout provision essentially restricts this tax break to small and midsized companies because giant firms buy so much equipment that they lose the ability to expense any equipment outlays. The tax code currently calls for the expensing

deduction to be capped at $25,000, with a dollarfor-dollar phaseout beginning at $200,000. Thus, if your company buys $210,000 worth of equipment, the excess $10,000 reduces the expensing limit from $25,000 to $15,000. In truth, those $25,000 and $200,000 numbers are not realistic today. Congress has repeatedly passed tax laws with higher limits: In recent years, expensing up to $500,000 worth of equipment has been permitted, with a phaseout starting at $2 million of annual purchases. All signs point to a repeat performance for 2015. Both Houses of Congress already have indicated willingness to extend some expired tax breaks, including the $500,000 and $2 million limits for expensing business purchases. Therefore, you should go ahead with purchases of equipment that truly will help your company become more productive, even if this year’s total tops $25,000. New and used equipment will qualify. Make sure to have equipment placed in service by year end, in order to get a deduction for 2015. Similarly, the “bonus depreciation” tax break has expired but likely will be restored for 2015, judging by Congressional activity. Under this provision, which applies only to new equipment, purchasers can take a 50% first year depreciation deduction, followed by depreciating the balance of the purchase price over several years. Both expensing and bonus depreciation tax breaks reduce the cost of capital and increase cash flow for small companies, so you should consider their impact when planning equipment purchases. continued on page 71

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Financial Management continued from page 70

Year-End Estate Tax Planning

n 2015, the federal estate tax exemption is $5.43 million. With little planning, a married couple can pass up to $10.86 million worth of assets to heirs, so no estate tax will go to the IRS. Those numbers will increase in the future with inflation. With such a large exemption, you may think that estate tax planning is unnecessary. However, nearly half of all states have an estate tax (paid by the decedent’s estate) or an inheritance tax (paid by the heirs) or both. The tax rate goes up to 16% in many states, or even higher in some. What’s more, state estate tax exemptions tend to be lower than the federal exemption; in some states, there is virtually no exemption for certain estates. Therefore, you may find year- end estate tax planning to be worthwhile, even if you don’t anticipate having an estate over $5 million or $10 million. Employing the Exclusion In terms of year-end planning, anyone with estate tax planning concerns (federal or state) should consider year-end gifts that use the annual gift tax exclusion, which is $14,000 in 2015. That is, you can give up to $14,000 worth of assets to any number of recipients, with no tax consequences. You don’t even have to file a gift tax return.

Married couples can give up to $28,000 per recipient, from a joint account, or $14,000 apiece from individual holdings. Larger gifts probably won’t be taxed because of a generous lifetime gift tax exemption, but you’ll be required to file a gift tax return and there could be future tax consequences. Example: Walt and Vera Thomas have two children. In 2015, Walt can give $14,000 worth of assets to their son Rick and $14,000 to their daughter Ava. Vera can do the same, moving a total of $56,000 from their taxable estate. Similar gifts might be made to parents you’re helping to support. As explained previously in this issue, giving appreciated stocks and stock funds to loved ones may be an effective way to reduce exposure to any market retreat. Whatever your purpose, keep in mind that there is no spillover from one year to the next. If you miss making $14,000 annual exclusion gifts in 2015, you can’t double up with a $28,000 exclusion gift in 2016. Moreover, make sure that gifts are completed— checks must be cashed—by December 31. Therefore, you should put your plans for year-end gifts in motion well before year end. Reprinted from CPA Client Bulletin. n

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