Archive for the ‘Tax – State & Federal Hiring and Equipment Credits’ Category

Video (7.32 minutes) #Trump Tax Reform Will Likely Benefit Taxpayers at All Levels

Sunday, December 4th, 2016

Video: President-Elect #Trump Tax Proposal Will Likely Favorably Impact Most Taxpayers.


With control of Congress, President-Elect Trump will most likely be able to get many of the tax provisions he promised during the election passed.  A business tax decrease to as low as 15% (from the current maximum of 36%) and a personal tax decrease to 33% (currently as high as 39.6% plus 3.8% on net investment income).  Potential elimination of:

1) the 3.8% Obamacare Net Investment Income Tax

2) the individual Alternative Minimum Tax (AMT)

3) the business AMT, and

4) Estate and Gift Taxes

will further benefit higher income taxpayers.


These changes make the year-end tax planning process even more important than prior years, since deferring income into 2017 will benefit most taxpayers and accelerating deductions into 2016 will generally provide greater tax savings than paying such expenses in 2017.  Of course taxpayers in AMT in 2016 will need to take greater care in their planning.


Additional tax planning strategies can be accessed at: in the Articles and Tax Alerts section.



How Will Trump’s Presidency Impact The Economy?

Saturday, November 26th, 2016


Blake Christian, CPA/ MBT, Holthouse Carlin & Van Trigt LLP

President-elect Trump has made it clear that he will be focusing on infrastructure projects during his first 100 days, so hopefully some of the long overdue projects in Long Beach, such as the 710 Freeway, will get some funds.


If Mr. Trump takes a hard line and directs the Secretary of the Treasury to label China a “currency manipulator,” we might see a short-term trade embargo from the Chinese side, which would negatively impact the port traffic, and also impact U.S. exporters – and possibly manufacturers using imported raw materials.


Tax reform is also at the top of his list and, since he will have cooperation of the House and Senate, we will likely see some quick tax reform, including a decrease in personal (maximum 33%) and business tax (15%) rates, as well as a promised favorable 10% rate on foreign earnings that are brought back onshore. Congress will undoubtedly challenge the new president with respect to the trillions of dollars of deficit increase these tax cuts will cause. Therefore, the ultimate tax changes will likely not be as dramatic as Mr. Trump has proposed.


From a public safety standpoint, President Trump will be pushing to pass the Restoring Community Safety Act, which is focused on reducing surging crime, drugs and violence by creating a Task Force On Violent Crime and increasing funding for programs that train and assist local police; increase resources for federal law enforcement agencies and federal prosecutors to dismantle criminal gangs and put violent offenders behind bars. While Long Beach crime is down in most areas, this bill, if passed, may offset some of the negative impact anticipated from the recent passage of Proposition 57.


One final thought. Trump’s focus on improving the Veteran’s Administration should benefit our local VA hospital and possibly Fisher House also. He mentions both fairly regularly.


New Go-Biz California Competes Tax Credit Application Deadline is April 14th

Thursday, March 27th, 2014

Last year the Governor and the California Legislature took action to wind down the California Enterprise Zone Program beginning in 2014.  EZ Credits can still be claimed on 2013 and amended in the four prior years, and employers can continue to claim hiring credits through 2018 on qualified employees hired priro to 2014.

As a replacement for the EZ program, various incentives, including the California Competes Credit Program  (“CC Credit”) has been initiated.   The CC Credit requires taxpayers to subit detailed information to Scaramento for evalauation and consideration for a pool of credits (discussed below).  25% of the credits will be earmarked for Small Businesses – defined as those with less than $2M of gross revenues.

The The California Governor’s Office of Business and Economic Development (GO-Biz) has been conducting educational sessions concerning the California Competes Tax Credit throughout Southern California this week.  Many local businesses and practitioners have attended the meetings. .  The ideal taxpayer profiles are as follows:


  • Planning to add headcount in California any time between 2014 through 2018 in excess of 2013 FTEs and/or
  • Planning to make capital expenditures in California any time between 2014 – 2018


About the Credit


The CC Credit is a negotiated income tax credit available to businesses that want to stay and grow or want to come to California.  Tax credit agreements will be negotiated by GO-Biz and approved by a newly created “California Competes Tax Credit Committee,” consisting of the State Treasurer, the Director of the Department of Finance, the Director of GO-Biz, one appointee from the Senate, and one appointee of the Assembly. Credits have a carry-forward provision of 6 years.


Amount of Credits Available


California has a fiscal year that runs from July 1 – June 30.  The amount of CC credits by fiscal year budgeted by the Governor  under the Go-Biz program are as follows:


  • Fiscal Year 2013/2014 – $30M
  • Fiscal Year 2014/2015 – $150M
  • Fiscal Year 2015/2016 – $200M
  • Fiscal Year 2016/2017 – $200M
  • Fiscal Year 2017 /2018 – $200M


What To Do?


  • Apply immediatley for the current round of tax incentives
  • Evalaute other existing state and federal incentives
  • Discuss and understand your growth plans between now and 2018.


Why Now?


  • You want clients to hear from you rather than our competitors
  • Application for fiscal year 2013/2014 closes on April 14.  It may be strategically better to submit application for the fiscal year 2014/2015.  The application period for 2014/2015 should open after July 1, 2014.

HCVT has significant experience in identifying and documenting various federal, state and local tax incentives and we have deep connections within the economic development community.


We can assist you in presenting your project to maximize your probability of securing some of the avaialble tax incentives.


Please contact us today:  (562) 590-9535.    Ray Dagarag, Blake Christian or Victor Gonzales


2013 State Tax Climate – How Does Your State Rank?

Friday, July 19th, 2013


The Tax Foundation provides some invaluable studies on an annual basis.


The link above provides a state-by state ranking for 2013.


Please contact us if you need assistance on selecting the optimal state for your operations.   (562) 216-1800.

California to Wind Down Enterprise Zone Tax Credit Program beginning in 2014. Business must take action now to secure refunds and continue earning credits beyond 2013.

Friday, July 19th, 2013

While the California Governor and Legislature have effectively dismantled the last economic development tool avaialble to cities and small businesses, the current EZ program can still generate valuable refunds and future credits for businesses that document their eligible employees and assets.   Action must be taken before year-end to maximize credits.


For more information: or call (562) 216-1800.



California Enterprise Zone Proposed Changes Will Likely Hurt Small Businesses and Their Minority Employees

Thursday, March 28th, 2013

California’s Housing & Community Development (HCD) Department runs the statewide EZ program which includes 42 California cities.  They have proposed changes to the employee vouchering process, which will significantly complicate getting certifications from cities to confirm that an employee  is eligible to earn credits for the employer.   Virtually all the qualified businesses operate in the most economically challenged areas of the state and hire large numbers of inner-city employees — who are also typically economically challenged.

These changes are still under review, but are expected to be released in June of 2013.

California’s tax rate hit 9.3% fairly quickly and climb as high as 13.3%  — the highest in the country.  These EZ Program credits are necessary to give taxpayers a relatively small tax reduction compared to other states.

More EZ information, including the proposed vouchering regulations, can be found at:   Or call me at: (562) 216-1800.


Tax Transparency – How Technology, Social Activism and Government Enforcement is Altering the Tax Compliance and Tax Policy Process

Thursday, March 28th, 2013

From the AICPA Corporate Taxation Insider


Corporate tax transparency and corporate tax reform

Trends in technology and increased availability of information have placed a spotlight on corporate and individual taxpayer compliance and financial stewardship.

March 28, 2013 by Blake E. Christian, CPA/ MBT

Last  month I attended the annual University of Southern California Gould School of  Law Tax Institute conference. As usual, the  quality of the presenters, as well as the technical content, was exceptionally  high.

While  there were plenty of presentations covering the American Taxpayer Relief Act  (ATRA) of 2012, P.L. 112-240, a few notable presentations covered some  interesting trends and predictions relevant to business taxpayers.

Following  is a summary of a few tax trends and policy discussions:

Technology and tax transparency (Click the link for the full article):

C Corps vs. S Corps and LLCs – C Corps Worth a Second Look With 2013 Individual Tax Rate Hikes

Sunday, March 24th, 2013

I am not suggesting that taxpayers convert their pass-trough entities to C Corps, but with the fedeal and California bump in rates, it may be worth evalauting a C Corp for any new operations. This works best for capital-intensive operations holding assets that are not likely to appreciate. Double-taxation on exit must be evalauted. Annual savings can make this move compelling.

California Enterprise Zone Program Effectiveness Being Evaluated on Flawed Data

Sunday, February 13th, 2011

Governor Brown, certain legislators and the press appear to be blindly using flawed data backed by union interests.  The following Op-Ed reconciles the difference between the various economic studies and supports the retention of the California EZ program.

For latest CA EZ Program legislative updates:  (Please see second section and sign the EZ petition)

Long Beach Business Journal Op-Ed

CA Enterprise Zone Program – Job Panacea or Budget Casualty

Blake Christian, CPA

February 2011

The California EZ program was initially adopted in 1986 and common to most of the other 42 state EZ programs can trace their roots back to Location-Based Incentive Credit programs (LBIC’s) first established in the aging villages throughout the U.K.    To encourage business owners to keep or move their businesses to these regions, various tax incentives were offered. 

The U.K. program was a smashing success and U.S legislators quickly adopted similar programs that encourage businesses to hire and train economically and physically/ mentally challenged individuals and move them from taxpayer funded entitlement programs to private payrolls. Today there are over 8,500 distinct tax zones throughout the U.S.                                                

The California EZ program began in 1986 and today applies to 43 zones throughout the state, and Long Beach’s current EZ current program benefits over 300 companies and over 7,000 employees annually.  Similar job creation and job retention results can be found throughout California and the U.S.

Despite being a big EZ proponent while Mayor of Oakland, Governor Brown in his second term has proposed to plug a portion of the $28 billion state deficit with savings from terminating the EZ program. Based on the most recent 2008 Franchise Tax Board (FTB) data, scrapping the EZ program would potentially save $291 Million ($274 Million in Hiring and Sales Tax Credits and $17 Million of benefits for Banks that make riskier loans to these inner city businesses).  This is only 29% of the $1 billion EZ program cost often quoted in the press.  The Business Deduction and Net Operating Loss (NOL) benefits are simply timing difference and do not reflect true revenue losses for the state.

The California EZ Program contains 5 different tax incentives:

1)        Employee Hiring Credit – To encourage job creation and retention, employers can earn a maximum credit for qualifying employees of $6 per hour. 

2)        Sales & Use Tax Credits – To encourage investment in new equipment, tax credits of 10% or more can be secured for certain assets used exclusively in the EZ.

3)        Asset Expensing and NOL Provisions – These provisions have limited application and simply accelerate deductions in certain years.

4)        Lender Net Interest Deduction – Lenders that make loans to certain distressed EZ’s are allowed to exclude from California taxable income the net interest income. 

5)        Employee-Level EZ Credit – Certain part-time workers who work in an EZ may claim a $525 tax credit.

The recent battle in Sacramento has revolved around competing EZ studies –  2008 Public Policy Institute of California (PPIC) study and the 2006 HCD (California Department of Housing and Community Development) study  and the 2010/2011 USC/Maryland studies

The PPIC study, as authored by Jed Kolko and David Neumark claims to have analyzed “every California business” from 2002 to 2007 , concluded that while “well run and well marketed EZ’s were effective in creating and retaining jobs”, most EZ’s did not.  The California Budget Report summarizes the the PPIC findings:

The PPIC Study used jobs as the sole measure, and the major flaw in their analysis relates to their use of imprecise Dun & Bradstreet (D&B) job ranges, rather than securing specific year-to-year job figures.  D&B surveys ask employers to disclose employee numbers in general ranges such as 0 to 5, 6 to 10, 100 to 250, etc.; therefore, if  headcount rose from 3 to 5, or 100 to 120 (40% and 20% increases), no job growth would be reported using the D&B ranges. 

The competing 2006 HCD and 2010/2011 national and California studies were performed by USC and University of Maryland professors and used more detailed data, including 8,000 national  census tracts, as well as each of the census tracts in California containing an EZ.   The USC/Maryland studies measured and concluded the following for EZ communities:

-           Reduced unemployment rates by 3.1% (CA)/ 3.4% (Nat’l)

-           Reduced poverty rates by 8.6% (CA) /  26.1% (Nat’l)

-           Increased average wages and salary income by over $3,100 (CA)/ $2,700 (Nat’l)

-           Generally the programs did not “steal” businesses from one area of a state, but rather kept those businesses from fleeing the state.

To reconcile the main disputes between these studies, following are some key points: 

- The CBP states that over 90% of businesses utilizing the program are large businesses and they use $10 million of assets as the low end of “large”.   Using gross receipts as the proper measure shows that the number of companies claiming credits is relatively evenly dispersed across company sizes. More importantly, the vast majority of taxpayers are formed as closely-held “pass-through” entities such as LLC’s, S Corps and partnerships.  Not surprisingly, the number of personal returns (generally representing smaller businesses) claiming EZ benefits in 2007 was 14,317 while only 5,631 corporate returns  claimed EZ benefits.  This omission creates another critical distortion in the CBP’s analysis. The vast majority of EZ clients we review have less than 100 employees.

- One misunderstood aspect of the EZ program related to large companies concerns the tax “apportionment” rules which severely limit larger company’s ability to utilize the EZ credits.  As a simplified example, if Walmart operated 10% of their California stores in EZs, only 10% of the gross liability can generally be reduced from 8.84% by 10% to the extent EZ credits are available, resulting in a 7.56% tax rate – hardly a bargain compared to other states.

-The CBP Paper highlights that larger cities claim large annual tax breaks as compared to rural EZs.  Larger cities will virtually always produce larger credit amounts.

-  Assembly member V. Manual Perez has recently submitted AB 231 to fine-tune the TEA guidelines, including eliminating higher earning TEA residents from EZ qualification.  He has also submitted AB 232 which fine-tunes the overall EZ program approval and administration process.

With businesses and jobs fleeing to other lower cost, and business friendly, states at an accelerating rate, Governor Brown and the legislature will be wise to re-work and retain the EZ program, rather than scrap it.

California Tax System is #2 (From the Bottom)

Tuesday, November 9th, 2010

A Race to The Bottom….

California’s business friendliness reached a new low in this year’s annual survey by the Tax Foundation.  With a one-point drop to 49th place, California was beaten out by New York for the bottom spot.

As a result of the combination of: 1) 2010 California legislation which denies the use of Net Operating Loss carryovers in 2010 and 2011, as well as accelerating quarterly estimates and 2) California’s mid-term election results in bringing in many of the same “usual (tax-and-spend) suspects” at both the state and federal level, the Golden State is well positioned to drop to 50th place next year.

Read the in-depth comparison of business friendly and not-so-business friendly states to operate in:

On the positive side, California continues to allow the use of the valuable Enterprise Zone and R&D tax credits.  For more information, check out the library of articles at:

For post-election tax planning information and the impact of the potential expiration of the Bush Tax Cuts, please also check-out Video #4 at: