Determining the Value of Your Construction Company

Construction company owners may need a business valuation for a variety of reasons, a possible transaction being the most common. Determining the appropriate value of a construction business is not an exact science and can be difficult, especially for the actual owners. Owners who started their businesses from scratch may value the company beyond its monetary worth. Accordingly, owners commonly benefit from the services of an independent appraiser in determining the true value of their businesses. Additionally, a valuation can be difficult due to the various approaches and factors that need to be considered before coming to a realistic conclusion. Some of the different approaches to valuation include: liquidation value (the value if sold for the quick liquidation of assets to exit a business), fair market value (the value compared to a similar transaction in the market with a willing buyer and seller), and investment value (the value assigned by a particular investor, which is not necessarily what others would pay).

In addition, there are three primary approaches that appraisers take when valuing a business, which include: income-based (assess value based on expected cash flows), market-based (comparing company value based on similar companies within the industry), and asset-based (the company’s estimated equity equals the assessed value of assets minus liabilities). Appraisers should be mindful of the industry and any changes that may affect operations. For
example, the construction industry is greatly affected by fluctuations in lending rates, labor rates, and material prices.

The industry was also affected by the introduction of the Tax Cuts and Jobs Act (TCJA) that was passed at the end of 2017. The law’s primary changes include: reduced corporate tax rates, limitations on deductibility of interest expense, limitations on net operating losses, and accelerated depreciation. Each of these can greatly impact valuation, so a business owner’s best response would be to consult with their tax advisor on how the TJCA could affect the valuation of their business.
To find out more about the various valuation methods for companies, click here. For additional information and answers to your questions, please contact a member of your client service team or Paul Esche, CPA, CCIFP, CCA at pesche@hsccpa.com or 800.880.7800 ext.1335.

Offices Close for Busy Season Holiday

Both the Evansville, IN and Louisville, KY offices of Harding, Shymanski & Company, P.S.C. will observe the end of the busy season by taking some additional time off. The firm will open at 9:00 a.m. (local time) on Tuesday April 16th and will be closed for a company holiday on Friday April 19th.  “I want to thank each and every one of our staff for their dedication and effort in meeting the variety of deadlines these past four months,” said Trudy Stock, president and CEO. “It was a joy to witness so much teamwork!”

Final Regulations Governing the New Partnership Audit Regime Issued

Image of a green exit sign, reading "Changes, next exit". Effective for tax years beginning on or after January 1, 2018, a new audit regime for examining partnership tax returns and collecting any related tax will apply, replacing the old process known generally as the TEFRA rules. Click here for more information.

For any questions, please contact John Rittichier, CPA at jrittichier@hsccpa.com or 800.880.7800 ext 8484 or Mike Vogel, CPA at mvogel@hsccpa.com or 800.880.7800 ext 1358.

401(k) Contributions and Student Loans

A recently issued IRS private letter ruling gives new hope to former students working to pay off their student loan debts. Student loan debts have been on a rapid rise, nearly tripling over the last decade. Former students are looking for help from whatever corner possible, and may now have a tangible solution by collaborating with their employer.

Private Letter Ruling 201833012 affirmed that employers can substitute qualifying student loan repayments made by employees in place of employee matching contributions for company 401(k) plans. Under the typical 401(k) structure, employees must contribute a portion of their earnings to their 401(k) in order for the employer to contribute an employer match. This alternative system under the letter ruling gives employees the option to both pay off their student loans and receive retirement benefits at the same time. This change in employer match should have a net zero impact to the employer’s bottom line.

Employers who wish to provide the benefits described above will need to amend their existing 401(k) plan documents to account for the change. Having the ability to assist employees in paying off their student loans can make a potential employer very attractive in the competitive hiring marketplace.

To learn more about 401(k) student loan benefits from MarketWatch, click here or contact Aaron Wilzbacher, CPA at 800.880.7800 ext. 1322, awilzbacher@hsccpa.com.

2019 Ohio Valley Construction Market Outlook Survey

Do you want to know about regional trends? We invite you to participate in Harding, Shymanski & Company, P.S.C.’s Ohio Valley Construction Market Outlook Survey.

WHO: Construction business executives with businesses headquartered or performing construction work in the Ohio Valley Region.*

WHAT: 15-minute online survey reporting current financial data and market perspectives.

WHEN: The survey is open now through April 12, 2019. Participants will receive a free bound copy of the results that will be presented at the Ohio Valley Construction Market Outlook Forum this summer.

WHERE: Take the survey now at:
https://www.surveymonkey.com/r/OhioValleyConstruction2019

The survey is being conducted by Harding, Shymanski & company, P.S.C., and all responses will be held in the strictest confidence.

*Ohio Valley Region includes: Southern Illinois, Southern Indiana (from Marion County south), Southwestern Ohio, Western and Central Kentucky as far east as Fayette County.

Tax Reform’s Impact on Business and Professional Service Firms

Since the Tax Cuts and Jobs Act of 2017 was passed, many businesses have begun to analyze the new law to determine how it may impact their businesses, their partners and their shareholders. In addition to the broaImage of green landscape along the coast. Pathways outline the shapes of two faces; the pathway resolving into arrows that connect and point to the sky. der questions related to choice of entity, businesses must also consider how key changes to the tax code affect their businesses, partners and employees. Click here for more information.

For any questions, please contact John Rittichier, CPA at jrittichier@hsccpa.com or 800.880.7800 ext 8484 or Mike Vogel, CPA at mvogel@hsccpa.com or 800.880.7800 ext 1358.

IRS Concedes Research Tax Credit Tooling Case

TSK of America Inc. (a manufacturer of automotive parts) included tooling costs for metal stamping and plastic injection molding in the calculation of its 2013 Research Tax Credit. The tools were purchased from a third party with the intent of being used in production processes.

TSK’s customers usually require TSK to sell any unique tools to them. However, in this case TSK kept the tools due to an extensive trial and error process involved in refining the effectiveness and efficiency of the tools. Despite being purchased from a third party, the tools did not immediately perform at optimal effectiveness and efficiency and had to be altered.

In 2013, TSK included $9.3 million in supplies and materials as part of its qualified research expenses. The IRS initially only allowed approximately $1.2 million of expenses, which would have reduced the Research Credit by $500,000. The IRS’s ultimate concession in this case strengthens the arguments of manufacturers with similar fact patterns, but does not provide any precedential value as it never went to court.

For more information on the case or Research Credits in general, click here or contact John Rittichier, CPA at 800.880.7800 ext. 8484 or at jrittichier@hsccpa.com.

2019 Girl Scouts of Southwest Indiana’s Advancing Women Company of the Year Award

Harding, Shymanski & Company, P.S.C has been honored with the 2019 Girl Scouts of Southwest Indiana’s (GSSI) Advancing Women Image of work associates receiving award.Company of the Year award for its dedication to advancing women in their industry and by encouraging a healthy work-life balance.

The proceeds from this event support the Girl Scout leadership program, ensuring that ALL girls in our local communities have the support, experiences, and opportunities they need to realize their potential.

The Advancing Women Company of the Year award winner criteria lie at the core purpose of the Firm, which is “to help our clients, our people and the firm be more successful.” This annual event honors outstanding female leaders and businesses for their accomplishments, community stewardship, and commitment to making a positive difference. In effort to support female employee’s work-life balance, a flexible work schedule exemplifies the dedication of the Firm to empower healthy leadership within the home and workplace. Shannon Brewer, a Vice President and CPA for over 20 years, shared, “my experience here at Harding Shymanski is maybe a bit unique in that I am a vice president who also works an alternative schedule. What that means is that I work normal accountant hours during busy season, and the rest of the year I work three days a week in the office. Of course there are times when I am working on my ‘off days,’ but the flexibility allows me to be with my family.”

Leading by example is a sure way to properly equip and empower aspiring female leaders and professionals to confidently achieve their goals. Women of both today and tomorrow can be encouraged by the Firm’s CEO, Trudy Stock, who said “be bold and know you have control over your destiny. Find good mentors that will help you along the way. Remember it isn’t just about keeping your head down and working hard – make sure you are regularly communicating your desire to continue to grow and advance your career.”

Visit https://youtu.be/7XpXs3sY3e4 for one on one interviews and more about the award!