Cathy B. Goldsticker,CPATitle:Member and co-leader of the Tax Accounting ServicesGroup

Company: Brown Smith Wallace

Q: Im not sure if I should expand my business' existing office, which I own, or construct on a new site. What are the tax considerations that can help me make a decision?

A: A major tax issue involves construction costs versus leasehold improvements. Construction costs, including the acquisition cost of the property and fees such as developer and architect fees, and building improvements are written off over 39 years. Leasehold improvements are similar to construction costs but are incurred as a tenant or landlord and can be written off over a 15-year period with certain restrictions.Carpeting, furniture, decorative lighting and other tangible personal property, subject to certain limits, can be written off in the first year.Personal property items are typically incurred as construction costs but can be written off over a shorter period. The 2009 limit for what office personal property can be immediately expensed is currently $133,000, assuming you don't spend more than $503,000 on tangible personal property items. It is expected that this $133,000 expense amount for 2009 will increase to $250,000, pending approval of the economic stimulus package in Congress.Bonus depreciation that allows the deduction of 50 percent of first year qualified costs for land improvements and personal property not normally eligible for first year write off would also be extended under the stimulus package. Also, you should write off any replaced or abandoned improvements and furniture for an immediate tax benefit. Federal and state laws provide tax credits if certain buildings are improved, whether leased or owned.

St. Louis Business Journal - by Rick Desloge

Brown Smith Wallace’s Benefit Plans Plus unit has merged with a competitor, Qualified Plan Services from Highland, Ill.

The merger creates a 22-person retirement plan service provider that will generate between $2.5 million and $3 million in revenue this year, said Patrick Shelton, Brown Smith’s managing member of the unit.

The deal was effective May 1, said Nancy Flachsbart, who founded Qualified Plan Services 27 years ago. The deal included an asset sale to Benefit Plans, but neither Shelton nor Flachsbart disclosed terms of the deal.

Flachsbart, 62, said she had been considering potential merger partners for several years to firm up a succession plan for her business. She avoided contact with national firms because she feared they might not retain her Illinois office. “We wanted to be in that (Illinois) marketplace,” said Shelton, 41, adding that the combination will double Benefit Plans’ sales force. He will be the managing member from St. Louis. Flachsbart will have an ownership stake in the combined business and will continue running the Illinois office. Prior to the deal, Benefit Plus’ 12-person staff administered 500 plans. Qualified Plan Services’ 10-member staff administered 250 retirement plans and 70 company cafeteria plans for clients that included Forshaw of St. Louis and Rottler Pest Control. Both companies are known as third party administrators, which handle the technical back shop work for company retirement and other employee benefit plans. Third party administration businesses are generally small and scattered throughout the country; most date from the mid 1980s when 401(k) plans started to become more popular with businesses, said Kent Novell, principal with Retirement Research Inc. in West Hartford, Conn. He said more of the firms are likely to be sold in the coming years as their founders consider succession plans. “Those (third party administrators) that have deeper pockets are likely to go on an acquisition spree in the next few years,” Novell said. The deal places Benefit Plans among the largest third party administration firms locally. Harvey Wallace, managing principal of Brown Smith, said the deal with Qualified Plan presents an opportunity to transfer other Brown Smith services to the Metro East. The entire accounting and consulting firm, including several other subsidiaries, generated $26.5 million in 2008 with a staff of about 200.

Three St. Louis-based accounting firms have been named to industry magazine Practical Accountant's list of top Midwest firms.

RubinBrown, Brown Smith Wallace, Anders Minkler and Diehl were ranked among the area's 15 largest firms based on fiscal 2008 revenue.RubinBrown, ranked No. 4 on list, posted 2008 revenue of $52.4 million, up 11 percent from 2007; Brown Smith Wallace, ranked No. 8, had revenue of $26.7 million, up 8 percent from the prior year; Anders Minkler and Diehl, ranked No. 13, had 2008 revenue of $17.4 million, up 4 percent from 2007.Springfield, Mo.-based BKD topped the list with revenue of $357.8 million in fiscal 2008.The list is featured in the April 2009 issue of Practical Accountant.

St. Louis Business Journal - by Greg Edwards

Accounting Today magazine named Brown Smith Wallace one of the best accounting firms to work for, based on confidential staff surveys. It was one of 60 firms recognized nationally and the only one in St. Louis. The firm, which had revenue of $25 million in 2007, has more than 200 employees. Harvey Wallace is managing partner.

Retaining minority stake offers chance at second bite of the apple

St. Louis Business Journal - by Gil Stuenkel

Business owners who have concluded now is a good or necessary time to sell their companies can take a number of important steps to help them obtain a solid return, even in a down economy.

Brad Pursel, a principal at Brown Smith Wallace who focuses on exit strategies for business owners, said one option to getting something done without giving away the business for peanuts is to retain a minority stake.

The seller maintains part of the business and has the option to sell the remaining interest to the new majority owner at a later date for the price it would command at that time. This option may be appealing, Pursel said, because its difficult to project future cash flow during uncertain times.

"Its a chance to take a second bite of the apple and participate in future increases in the business, if the seller believes the company is undervalued today," he said.

Scott Soucy, partner with Anders Minkler Diehl LLP, said another option is an earn-out sale, based on the future performance levels of the company, with additional purchase price paid to the seller. This often can bridge the gap between the sellers opinion of the business and the buyers willingness to pay.

Even in a slumping economy, high-quality companies remain in demand, said Soucy, a former corporate chief financial officer who directs AMDs strategic and technology services groups. He suggested that owners looking to get out act the same way they would if they were selling a house.

Stage it by using the time on the market to address issues that may need attention, he said. Do systems need upgrading? Is it time to make product improvements? These are more long-term fixes aimed at a future sale, but if you have to sell now, try for a deal that gives the seller a long-term consulting agreement. This creates a win-win situation, providing additional compensation for the seller and help for the new owner in transition.

St. Louis Business Journal - by Evan Binns

Martin Doerr has been named member-in-charge of tax services at Brown Smith Wallace, the area’s sixth largest accounting firm, with 195 employees.

Doerr had been president of the accounting, tax and advisory services practice at CBIZ for three years before joining Brown Smith Wallace.

Doerr, 54, will oversee expansion of the firm’s tax practice, which he hopes to grow to $10 million by the end of fiscal 2010. Currently, the practice posts an estimated $7 million in revenue.

Harvey Wallace, managing member of Brown Smith Wallace, said Doerr’s addition was a unanimous decision to strengthen the firm’s accounting, auditing and financial advisory services. “We’re telling our clients that have a strong balance sheet that there is no better time to go out and get great talent and pursue other strategic opportunities,” Wallace said. He said Doerr’s background with national firms, middle market companies, and retailers would drive growth for the practice.