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R&D Windfall in New Housing Law
by Tom Sanger, Tax Partner, Moss Adams LLP
On July 30, 2008, President Bush signed the Housing and Economic Recovery Act of 2008 into law. In addition to the housing provisions, the bill allows taxpayers to receive a cash refund for some of their previously claimed research and
development (R&D) and alternative minimum tax (AMT) credits. This refund will be requested on your 2008 corporate tax return.
For tax years ending after March 31, 2008, the Act provides that corporations otherwise eligible for bonus depreciation may instead elect to "accelerate" the use of some of their older research credit and AMT carryovers. The amount that
can be accelerated through a refundable credit is limited to the lesser of:
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Six percent of the taxpayer's accumulated R&D credits and AMT carryovers that are attributable to taxable years beginning before 2006;
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20 percent of the additional depreciation that would result from applying the bonus depreciation rules to otherwise bonus-eligible property acquired after March 31, 2008; or
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$30 million.
The election is available for the taxpayer's first taxable year that ends after March 31, 2008. If the election is made, taxpayers must use the straight line depreciation method for property that would otherwise be eligible for bonus
depreciation.
Corporations will need to factor this tax benefit into their quarterly tax rate projections and estimated tax payments. Therefore, the credit should be discussed with your Moss Adams' tax and audit professionals.
For questions or additional information, please contact your local Moss Adams tax professional or Tom Sanger at
tom.sanger@mossadams.com or 425-303-3190.
Credit for Production of Cellulosic Biofuel
by Cary Grenrock, Clean Technology Group Leader, Partner, Moss Adams LLP
While ethanol is typically produced from the starch contained in grains such as corn and grain sorghum, it can also be produced from cellulose. Cellulose is the main component of plant cell walls and is the most common organic compound on
earth. It is more difficult to break down cellulose to convert it into usable sugars for ethanol production. Yet, making ethanol from cellulose dramatically expands the types and amount of available material for ethanol production. This
includes many materials now regarded as wastes requiring disposal, as well as corn stalks, rice straw and wood chips or "energy crops" of fast-growing trees and grasses according to the Renewable Fuels Association.
Using materials other than corn is also beneficial from the stand point of potentially reducing demand and price pressure on this food and feedstock crop.
Public Law 11-234 generally provides for a credit for cellulosic biofuel produced after December 31, 2008, through December 31, 2012. The credit is $1.01 per gallon with some restrictions under amended Internal Revenue Code (IRC) section
40. Cellulosic Biofuel is defined in the IRC as any liquid fuel which is produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis, and meets the registration requirements for fuel and
fuel additives established by the Environmental Protection Agency.
For questions or additional information, please contact your local tax professional or Cary Grenrock at
cary.grenrock@mossadams.com or 949-221-4065.
Company Valuation: A Moving Target
by Owen Dahl, CIFA, LIFA, Partner, Moss Adams LLP
For many, new valuation pronouncements have been as predictable as the seasons, and nearly as regular. The growing list of fair (or fair market) value pronouncements now affects most aspects of the accounting and tax reporting environment,
including private equity investors, public companies, and small start-ups alike. For small and mid-sized companies, the new regulations are particularly onerous, especially for technology-based companies who rely on stock-based
compensation to reward their key employees.
It is not surprising that companies are looking for ways to avoid the cost and invasiveness of a professional appraiser whenever possible. Regardless, the need to meet audit and tax requirements cannot be avoided, leaving many companies
searching for the right balance between risk and cost. This is often where a valuation consultation can truly pay off. By establishing good policies and procedures at the beginning, many of the pitfalls that we see can be avoided.
Read the full article benchmarking, finding the right valuation tool and best practices to avoid red flags with the IRS.
For questions or additional information, please contact Owen Dahl
owen.dahl@mossadams.com or 206-302-6562.
Bob Bunting to Speak on IFRS Convergence
AeA: From U.S. GAAP to IFRS: Not If, but When
Upcoming Event! September 16, Santa Clara, CA
Have you considered the implications of the upcoming move to IFRS (International Financial Reporting Standards) and what this means to your business? As you may know, the SEC is already accepting IFRS-prepared financial statements for
foreign filers and there's much speculation as to the broader applicability of IFRS to nonpublic U.S. companies. What does this mean for your company? What should you start thinking about, when does it makes sense to begin conversion, and
how will you be impacted down the road?
Hear from Bob Bunting, Deputy President of IFAC, past chair of the AICPA and former CEO of Moss Adams LLP on the anticipated changes to accounting standards and practices and how it translates to your company. Visit the AeA web site to
register or learn more.
Moss Adams Supports these Upcoming Events
BIOCOM CFO Roundtable
August 26 in San Diego, CA
Attendance at this event is limited to CFOs. If you are a CFO and would like to attend, please contact Karen Halle at
karen.halle@mossadams.com or 858-627-1411.
Astia Clean Tech Breakfast: Innovations in Transportation
September 30 in San Francisco, CA
Attendance at this event is limited to CFOs. If you are a CFO and would like to attend, please contact Karen Halle at
karen.halle@mossadams.com or 858-627-1411.
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