You Cant Change Your Mind After You Convert
Watch for Hazards When Buying a Franchise
Filing Reminders for Tax Exempts
Tax Elections Give You Choices

Under the new tax law, it is now easier to convert your employer-sponsored retirement plan such as a 401(k), 403(b), or 457 into a Roth IRA account. This is similar to converting your traditional IRA into a Roth IRA, but with one very significant difference.

When you convert a traditional IRA into a Roth IRA, you can change your mind and undo this conversion (also known as a recharacterization) by October 15 of the following year. This may make sense when the value of the account has dropped since you did the conversion, because you do not want to pay tax on a higher value than the account currently has.

When you convert an employer-sponsored retirement plan, you do not have the option of undoing the conversion by October 15. Once you convert your employer-sponsored retirement plan into a Roth IRA, it cannot be undone.

If you decide to convert your entire 401(k) into a Roth IRA, the entire balance will be taxable in the year of the conversion.

If you want to take advantage of this new provision, please contact our office first because there are some very important tax planning consequences to consider. If done without proper tax counsel, you may be paying more taxes than you should. In light of the new tax law, there are now more variables that need to be considered in your tax planning.

With a franchise, you dont have to start a company from scratch. Whether the business sells fast food, automotive services, gourmet coffee, or dry cleaning, successful franchises are usually based on a proven business idea and a recognized brand name. The best franchisors can jump start a business by providing staff training, location advice, and detailed operations manuals. And some have ongoing relationships with financial institutions, which can help when youre searching for start-up capital.

But buying into a franchise requires careful analysis and a healthy dose of skepticism. Before taking the plunge, watch for these hazards:

Unrealistic forecasts. Sometimes predicted revenues do not materialize. Thats because early entrants may have cornered the most profitable territories already. So be aware that rosy forecasts based on historical data do not always pan out. Get market research for the area youve staked out (preferably from several sources), and determine the least amount of revenue youll need to cover costs and remain profitable.

Unanticipated costs. In addition to an initial outlay for franchise rights, youll incur numerous out-of- pocket costs. These might include advertising, inventory and supply expenses, additional fees for training staff, legal expenses, and so on. Generally, youll also pay a continuing royalty on sales whether or not you make a profit. Failure to factor in these additional costs can sink a business before it gets started.

Undependable franchisors. This is one area where research is vital. Contact other franchisees and ask about their experiences with the company. Have they been satisfied with the companys support, including training, the quality of goods delivered, and ongoing relationships? Take a hard look at the companys key management staff. How long have they been in business? What experience and education did they bring to the company? How many of their franchises have failed and why?

Unproven business model. If youre considering a franchise thats not exactly a household word, use caution. Of course, jumping in during the initial stages of a fast-growing franchise can be especially lucrative. But theres no substitute for proven marketability. Often a great idea on paper needs to be tweaked (or overhauled) when a company enters the marketplace. Unless you can live with significant risk including the potential loss of your investment steer toward a franchise with a solid track record.

If franchises are on your mind, give us a call for help with your analysis.

Tax-exempt organizations are required to file annual reports with the IRS. Those with gross receipts below $50,000 can file an E-postcard rather than a longer version of Form 990.

The deadline for nonprofit filings is the 15th day of the fifth month after their year-end. For calendar- year organizations, the filing deadline for 2012 reports is May 15, 2013.

Choices. They're everywhere. In tax law, choices are called elections, and they can have consequences for your current return, as well as prior and future year returns.

You may not even think of some tax choices as elections, such as deciding to file jointly or separately, using the standard deduction instead of itemizing, or filing for an extension of time to submit your return.

Others are more recognizable. For example, when you have passive income from multiple rentals, you have the option to combine, or group, your properties into a single activity. Grouping makes it easier to meet the requirements necessary for you to deduct losses, and grouping could also potentially reduce your exposure to the new 3.8% federal surtax on net investment income.

Though grouping might seem to be an obvious choice, there's also a drawback that's present in many tax elections: it's irrevocable. In the case of grouping, that means when you sell a property included in a group, you may not be able to immediately deduct unused losses from prior years.

Depreciation offers choices, too. Bonus depreciation, an election to write off up to 50% of the cost of an asset, is automatic you claim it unless you opt out. On the other hand, you must elect to use Section 179, another accelerated depreciation method for writing off the total cost of assets in the year of purchase.

Call us for details about available elections and how to make them. We're here to help you select the right choices.