In This Issue . . .
Holiday Greetings
Small Employers Must Be
Aware of Health Care Tax
Credit Changes for 2014
Business Value and Buy-Sell
Agreements - Protect Your
Interest
HAPPY HOLIDAYS
Wishing you every happiness this holiday season
and throughout the coming year
Understanding the
Implications of Minnesota's
Nonconformity to Federal
Tax Provisions
Olsen Thielen Named Best
Support Company by MSAE
Gaining Trust in Your
Business Partners
Holiday Trivia
Flexible Spending Account
"Use it or Lose it" Change
How Will You Respond
When Your Veterans Return?
Beware: Deceptive
Solicitations Sent to
Minnesota Businesses
2675 Long Lake Road
St. Paul, Minnesota 55113
Phone (651) 483-4521
Fax (651) 483-2467
300 Prairie Center Drive Suite 300
Minneapolis, MN 55344
Phone (952) 941-9242
Fax (952) 941-0577
Olsen Thielen
Certified Public Accountants & Consultants
WWW.OTCPAS.COM
Small Employers Must Be Aware of Health Care Tax Credit Changes for 2014
There are a couple changes to the Small Business Health Care Tax Credit that small business owners need
to be aware of. One change is very important in order to be eligible for the Small Business Health Insurance
Tax Credit for 2014.
What are the requirements to qualify for this credit? You may qualify for the credit if you are: A small employer with fewer than 25 full-time equivalent employees; pay an average wage of less than $50,000 a year;
and pay at least half of employee health insurance premiums.
Before looking at the 2014 changes let’s look at what 2013 brings. For 2013, if a small business qualifies for
the health insurance credit, they will receive up to a 35% credit of the health insurance premiums they paid
for the year. For exempt organizations it will be 25%. This has been the case since 2010.
Starting in 2014, there are two changes to the credit. First, the credit increases to 50% for health insurance
premiums paid by small business employers and 35% for exempt organizations. Second, for 2014, this
change will be the difference between receiving the credit or not. In order to be eligible for the credit in 2014,
small business employers must purchase health insurance for employees by enrolling in a health insurance plan offered through a Small Business Health Options Program (SHOP) Marketplace. This could be
an unwelcome surprise to many small businesses. If they continue purchasing their insurance through their
current broker and would otherwise qualify for the credit, they will not be eligible for the credit since they did
not go through SHOP.
It is crucial that small business owners are aware of this issue when looking at their renewal options for
2014. Small businesses should analyze whether the cost of health insurance premiums purchased through
their broker without the benefit of the health insurance credit is cheaper than if they buy through SHOP and
take advantage of the health insurance credit. The broker will be able to help with pricing the private plan,
but small business owners may need to do their own research for the SHOP plan. Check the IRS website
for additional information. Please contact Scott Hoyles, CPA, MBT, CGMA at (651) 483-4521 if you have
questions.
NOVEMBER/DECEMBER 2013
Business Value and Buy-Sell
Agreements – Protect Your Interest
Understanding the Implications of Minnesota's
Nonconformity to Federal Tax Provisions
Settling on how to determine the value of a business under a
shareholder buy-sell agreement is a decision that carries with
it potentially significant future implications. Valuing a business
based on net book value, a multiple of sales or earnings, or some
other narrowly defined formula could result in a considerable
departure from the actual fair market value of the company on the
valuation date. Consequences of this include:
The American Taxpayer Relief Act (ATRA) of 2012 extended a
number of federal tax provisions that were set to expire in 2012.
In previous years, Minnesota has conformed to these provisions,
but this is set to expire in the 2013 tax year. Minnesota's nonconformity will cause a number of differences between the calculation
of Federal taxable income and Minnesota taxable income. The
following are some of the key differences that could increase your
Minnesota tax liability in 2013.
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The departing shareholder or deceased shareholder’s estate
may receive too much or too little for their ownership interest.
Naturally, one side of the transaction will feel harmed, which
can result in costly litigation and damaged relationships.
In estate tax situations, the IRS requires business interests
to be valued at fair market value. If the value under the
buy-sell is too low, the estate might not get enough cash to
even cover the estate tax liability.
In the case of a declining business, an outdated formula
could result in a value that is too high, placing an undue
burden on the remaining shareholders.
The magnitude of these issues can be huge, especially in cases
where Company operations have changed significantly since the
buy-sell agreement was created. Whether reviewing and revising an existing buy-sell agreement or creating a new one from
scratch, there are some things that business owners can consider
to protect their interests:
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Is the valuation effective date clear for all triggering
events? A company’s value can be different, sometimes
significantly different, at different points in time. Clearly
defining the effective date of the valuation avoids a potential
point of contention.
Does the valuation take into consideration current and
relevant information affecting value? Making sure this
question is addressed can avoid major headaches in the
future. Agreeing on a competent certified business appraiser to provide an independent, defensible opinion of
the value of the Company is a great way to do this. In an
estate situation, the IRS will require a certified business
valuation.
In the event of a death, will life insurance fund the stock
purchase? Many companies carry life insurance to cover
share purchase obligations. Valuing the business periodically or after a significant operational change can help make
sure coverage is sufficient.
The costs of a poorly-written buy-sell agreement can be substantial. The Minnesota Business Valuation Group (a wholly-owned
subsidiary of Olsen Thielen CPAs) professionals can help you
make sound decisions on the front end to avoid future adversity.
For more information on the Business Valuation services we can
provide contact Tony Stinar, CPA, ABV at (651) 483-4521 to discuss your valuation needs or visit the MBVG website:
www.busvalgroup.com.
More Holiday Trivia
Which famous mathematician was born on Christmas Day? (Sir
Isaac Newton in 1642). Who wrote the song, "Here Comes Santa
Claus"? (Gene Autry). Who wrote "A Christmas Carol"? (Charles
Dickens). Where does the Dr. Seuss Grinch live? (Mount
Crumpit). Herbie the elf, in the song "Rudolph the Red-Nose
Reindeer" wants to be something--what is it? (A dentist).
WWW.OTCPAS.COM
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Adoption Benefits - ATRA permanently extended the non-taxability of up to $12,970 in employer-provided adoption assistance. Minnesota has not conformed to this provision, so taxpayers will be required to include any employer-provided
adoption assistance in their Minnesota taxable income.
Employers need to be aware that this amount should be
included in Minnesota wages on the taxpayer's W-2.
Transit Assistance - ATRA extended the non-taxability of up
to $240 per month in transit benefits through 2013. Minnesota did not adopt this extension, resulting in any transit assistance above $125 per month being fully taxable in Minnesota. Similar to adoption benefits, employers will need to include this amount in the Minnesota wages on the taxpayer's
W-2.
Discharge of Indebtedness on Principal Residence - ATRA
extended, through 2013, a provision that allows taxpayers
to exclude otherwise taxable income from relief of mortgage
indebtedness on a qualified personal residence. Minnesota
requires taxpayers to include the amount discharged in their
Minnesota taxable income.
IRA Distribution for Charitable Purposes - Through 2013,
ATRA extended a provision that allows taxpayers age
70-1/2 or older to exclude up to $100,000 of IRA distributions if the distributions go to a charitable organization.
Minnesota does not allow this exclusion. Taxpayers will be
required to include this in their income, but will be allowed
an itemized deduction for the contribution in their Minnesota
return.
Mortgage Insurance Premiums - ATRA extended a provision that allows taxpayers to take a deduction for the cost of
insurance premiums to cover their qualified principal mortgage. Minnesota disallowed this provision, and taxpayers will
be required to addback the amount of the deduction taken on
the federal return.
If you have any questions on how these changes will affect your
Minnesota tax liability, please contact Allison Boyd, CPA, MBT at
(651) 483-4521.
Olsen Thielen Named Best Support Company by MSAE
The Midwest Society of Association Executives (MSAE) has
named Olsen Thielen the recipient of their “2013 Volunteer Award
– Best Support Company”.
Olsen Thielen is an active member in the Association, participating as a yearly Gold sponsor; host of bi-monthly sessions of the
Women’s Leadership Connection luncheons; participating in the
Association’s financial networking group; contributors of newsletter articles; and participating as speakers at MSAE conventions
and meetings.
Olsen Thielen’s Not-for-Profit Niche is championed by Principals
Linda Nelson, CPA, Daniel Owens, CPA and Patrick Powers,
CPA, as well as a number of staff experienced in the not-for-profit
area.
NOVEMBER/DECEMBER 2013
Gaining Trust in Your Business Partners
Flexible Spending Account “Use it or Lose it” Change
Olsen Thielen welcomes Brian Stueve, CPA, CITP, CISA to our
growing SOC Reporting practice. SOC stands for Service Organization Control, and SOC reports are an independent audit of a
company’s internal controls (i.e. business processes) completed
by an independent CPA firm.
Flexible spending accounts (FSA’s) are pre-tax accounts that
are used to pay health costs including co-pays and deductible
amounts. In the past, the IRS added a “grace period” which was
difficult to enforce. Recently, the IRS issued Notice 2013-71
which provides an easier rule to administer.
Many businesses are choosing to outsource some of their key
internal functions such as payroll processing or accounting. A
SOC report is one way for them to gain trust in their outsourced
business partners and have visibility into the activities that are
performed on their behalf.
Notice 2013-71 allows an alternative to the “use or lose” rule for
flexible spending accounts. It permits Internal Revenue Code
Section 125 cafeteria plans to be amended to allow up to $500
of unused amounts remaining at the end of the plan year to be
paid or reimbursed to participants for qualified medical expenses
incurred in the following year. However, the plan cannot also
allow the “grace period” rule. The $500 of carryover was developed in order to combat unnecessary spending at the end of the
year. Unused amounts greater than $500 will be forfeited.
Whether you are a firm that is beginning the move to outsourcing, or a provider of these services and wish to learn more about
SOC reporting, please contact Brian at (651) 483-4521, or
another member of our SOC Reporting team.
Holiday Trivia
1. We all know Rudolph has a red nose. Does he have
antlers?
2. What famous hotel magnet was born December 25, 1887?
3, The movie, "Miracle on 34th Street", is in what city?
4. Peter, Paul & Mary had this #1 song during Christmas 1969?
5. In 1962, the U.S. Postal System first did what?
6. The most popular item on top of a Christmas tree is what?
7. Average number of lights on a Christmas tree is 200 or 350?
8. There are 365 days in a year. What number is Christmas
Day?
9. How much did it cost to send a Christmas card within the
same city early in the Victorian era?
10. Christmas Ridge is located where?
11. Alvin the Chipmunk wants what for Christmas?
12. What is the biggest selling Christmas single of all time?
13. In what city does the movie "It's a Wonderful Life" take place?
14. Frosty the Snowman first debuted on which network?
15. Where did the Brady Bunch put their Christmas tree?
16. When did flashing Christmas lights get introduced - 1930 or
1950?
17. What automobile manufacturer was born on Christmas Day
1878?
18. Whitney Houston had this #1 song during Christmas 1992?
19. What was the last state to declare Christmas a legal
holiday?
20. This Florida town maintains a fully decorated tree year
round?
21. What came first - the book or the movie of "Miracle on 34th
Street"?
22. What country group recorded "Christmas in Dixie" in the
early 1980's?
23. What are the traditional colors of the candles on an advent
wreath?
24. After red and green, what are the two most popular
Christmas colors?
25. In the song "Jingle Bells" who was seated by my side?
Answers: 1.Yes. 2. Conrad Hilton. 3. New York City. 4. "Leaving on a Jet Plane". 5. Issued first Christmas stamp. 6. Angel. 7.
200. 8. 359. 9. Nothing. 10. Deep in the Pacific Ocean. 11. Hula
Hoop. 12. "White Christmas". 13. Bedford Falls. 14. CBS.
15. By staircase. 16. 1930. 17. Louis Joseph Chevrolet.
18. "I Will Always Love You". 19. Oklahoma. 20. Christmas, FL.
21. Movie. 22. Alabama. 23. Pink and purple. 24. Silver and
gold. 25. Miss Fannie Bright.
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A cafeteria plan offering a health FSA that intends to use the
new carryover option must be amended in order to enact the
new carryover provision. This amendment must be made on or
before the last day of the plan year for which the amount is to be
carried over. Example: for a plan year that ends December 31,
2013, the amendment must be adopted by December 31, 2013
in order to carry over $500 of unused expenses to 2014.
For information regarding taking advantage of this ruling please
contact your plan administrator.
How Will You Respond When Your Veterans Return?
The U.S. Court of Appeals for the First Circuit, in No. 12-1023,
has found that Military Leave is insufficient reason to deny an
employee a discretionary promotion in a case in which a trial
court misinterpreted the USERRA, the Uniformed Services
Employment and Reemployment Rights Act, when it rejected a
Navy reservist's claim that he should have been promoted to a
supervisory position upon his return from military duty in Iraq.
The point of contention in the case was whether the promotion in
question would have been an automatic promotion or a discretionary promotion. The 1st Circuit found that the statute permits
a claim based on “reasonable certainty”; “reasonable certainty”
that Rivera-Melendez would have been promoted if his career
had not been interrupted by military service in discretionary
promotions as well as automatic promotions. The court found
that applying the “escalator principle” – the principle that returning service members are reemployed in the job that they would
have attained had they not been absent for military service with
the same seniority, status and pay, as well as other rights and
benefits determined by seniority - is appropriate in discretionary
promotions with the same “reasonable certainty” test of whether
promotion would have occurred in the absence of military service.
The Take Away
When considering employee actions involving military service,
ensure you understand your obligations as an employer under
the (USERRA). Protections offered to service members are significant and remain confusing to many.
For additional information: http://www.dol.gov/vets/programs/
userra/userra_fs.htm
NOVEMBER/DECEMBER 2013
Olsen Thielen & Co., Ltd.
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OLSEN THIELEN
& CO., LTD.
Certified Public Accountants & Consultants
2675 Long Lake Road
St. Paul, MN 55113
Return Service Requested
Beware: Deceptive Solicitations
Sent to Minnesota Businesses
It has come to our attention that Minnesota Corporations and
Limited Liability Companies are receiving solicitations that appear to be coming from the Minnesota Secretary of State.
The scam offers to file an “Annual Meeting Disclosure Statement/Meetings of Directors and Shareholders” for $125 and
asks for information regarding the names, addresses, and phone
numbers of the entities’ officers. Although it appears to be very
official, there is no such required form. The fine print reads “THIS
PRODUCT OR SERVICE HAS NOT BEEN APPROVED OR
ENDORSED BY ANY GOVERNMENT AGENCY AND THIS OFFER IS NOT BEING MADE BY AN AGENCY OF THE GOVERNMENT”. The mailing address is a UPS box in St. Paul.
Be wary if you receive this solicitation. We have reported it to
the Attorney General. If you have any questions regarding
correspondence or compliance with the Minnesota Secretary
of State, please contact their office at (651) 296-2803 or Sara
Hirsch, CPA at (651) 483-4521.
Find us on any of these popular sites
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Minnesota Business Valuation Group
We value your business.
Olsen Thielen has a nationally recognized valuation department, Minnesota
Business Valuation Group, (MBVG), a wholly-owned subsidiary.

Some of the uses for a business valuation include:
Goodwill
ESOP
Litigation Support
Stock Option Plans
Gifting
Estates
Mergers/Acquisitions
Purchase Price Allocation
For more information, please visit MBVG at:
www.BusValGroup.com
Newsletter Policy
This newsletter is designed to present information on business and tax
matters in general terms and is not intended to be used as a basis for
specific action without obtaining further advice. For more information
contact us at [email protected].
Editor:
Assistant Editor:
Mike Bromelkamp, CPA, ABV, MBA, CIA, CITP
Barbara Graf
Contributors:
Allison Boyd, CPA, MBT
Sara Hirsch CPA
Scott Hoyles, CPA, MBT, CGMA
Larry Kugler
Lisa Dunnigan, MCTS, CNE
Tony Stinar, CPA, ABV
NOVEMBER/DECEMBER 2013