IN THIS ISSUE Berntson Porter & Company’s mission is to assist its clients in identifying, clarifying and achieving their goals. We accomplish this by caring about our clients’ families and companies as if they were our own.

Principals’ Corner .............1

Client Spotlight .................2

Tax Update .........................4

Tax Reference Sheet

Selected 1099Reporting for 2015 ............5

W-2 Fringe BenefitReporting for 2015 ........... 6

Year End Planning Strategies for Contractors .......................7

Why are Mergers and Acquisitions so Active? .....8

The Pension Plan Audit Question .............................9

Client News ........................9

BP News............................10

Fall 2015

PRINCIPALS’ CORNERA Thriving Workforce

How is the labor market for your industry? A common theme I hear from clients and business leaders revolves

around the difficulty of finding qualified employees. The current unemployment rate is hovering around 5% and a number of recent surveys have put the hiring of hourly and salaried positions as the biggest challenge companies are currently facing. The economy is providing opportunities to expand and it is vital to find and keep outstanding employees to insure successful growth.

This coincides with what our industry is experiencing. At Berntson Porter we continue to grow our business and recognize the importance of attracting, hiring and retaining the best employees who can give our clients excellent planning, business advice, customer service and provide high quality compliance work. Every year, regardless of the economy, we take a formal approach to hiring. We have a full time recruiter who works closely with our HR manager, department heads and upper management to understand our anticipated future employment needs. This ties directly into our growth plan and the number of new hires we need. We retain current employees by investing in them to boost their success and advancement. In our business it is about having the best people. It is critically important to differentiate ourselves from other CPA firms and make Berntson Porter a highly sought-after place to work.

We understand to be successful it is necessary to have a systematic approach to our recruiting. Retaining employees requires challenging them to develop and providing opportunities to be successful. Here are some direct steps and actions we take in this process.

1. On campus student recruiting for new staff hires. At various colleges we get to know the professors, attend career fairs, participate in “meet the firm” nights and do presentations for the accounting students. We introduce our firm to students early in the process of obtaining their accounting degrees. We offer both externships and paid internship

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BERNTSON PORTER IS A 2015 “BEST OF THE BEST FIRM TO WATCH”!

INSIDE Public Accounting has named Berntson Porter a 2015 “Best of the Best Firm to Watch.” We are honored to receive this award that recognizes the top accounting firms in the nation for growth, profitability and culture.

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CLIENT SPOTLIGHT

Square One Distribution is a world-class action sports company that designs, manufactures and distributes water

sports products through high-end specialty retailers in the U.S. as well as distributors in over 50 countries around the globe. Square One is the visionary behind Ronix Wakeboards and Radar Water Skis, two of the best known brands in water sports. These brands also create a full product line of wake surfboards, tubes, standup paddleboards, ropes, safety vests and anything else you might need in or behind a boat. New to the company is a cutting-edge line of boat ballast and wake shaping devices under the brand name 8.3.

Paul O’Brien, Herb O’Brien and Brian Gardner started the company ten years ago. Our firm’s success is built on innovation,

programs where students get to perform hands-on work for us. We get to know them and let them get to know us. This allows us identify the top students to target for potential hire when they finish school.

2. Incentives for our employees. We encourage our employees to be our headhunters. We offer cash referral bonuses

for the successful hiring of experienced individuals. Often our employees know the best candidates and can be effective recruiters.

3. Initial training. Every hire at Berntson Porter goes through a formal onboarding process where they get oriented on our software programs, research programs, and firm procedures. This initial training process allows them to get welcomed

into our firm and learn more about our philosophy, culture and history.

4. We provide the best office tools and technology in our industry. Our employees had considerable input in the design and functionality of our new office. Every Berntson Porter employee has a state of the art desk that rises or lowers so they can work standing or sitting. They have the latest computers, three monitors each and the ability to work remotely during our flexible work periods.

5. Provide opportunities for advancement based on individual interests and capabilities. Employment at our firm includes formal coaching and mentoring with a self-directed career path. Every employee at Berntson Porter has a coach. Coaches meet regularly with employees to guide, develop and monitor each individual’s growth plan. The success of our firm is dependent on each individual’s progress and advancement, so it is paramount for us to assist them in achieving their goals.

PRINCIPALS’ CORNER (CONTINUED)

6. Formal leadership training for experienced managers. Currently we have several employees participating in a leadership training programs through our membership in Prime Global (our association of independent accounting firms). This training has professional instructors and includes peers at similar levels from other member firms throughout the country. This is a three year program with two meetings a year held at the offices of Prime Global firms as well as ongoing follow up and training throughout the program.

7. Corporate Philanthropy. As part of our success and prosperity we recognize the importance of giving back to our community. We partner with numerous non-profits and make this part of our corporate culture. Our firm and employees provide direct financial support as well as numerous volunteer hours.

I know our efforts pay off. We have the best CPAs and staff working for us. I am proud of our people, their capabilities and the dedication they give to Berntson Porter and our clients. We are able to hire smart and talented individuals and have a very low turnover rate for our industry. We are honored annually with nominations and awards related to our firm’s success, working environment and philanthropy.

Stein Larsen, CPA, Principal. Stein can be reached at 425.289.7604 or slarsen@bpcpa.com

“...we have some of the best CPA’s and staff working for us. I am proud of our people, their capabilities and the dedication they give to Berntson Porter and our clients.”

CORPORATECITIZENSHIP

A W A R D S

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P General bookkeeping services

P CFO services – One-time, monthly or quarterly services

P Year-end reporting – W-2s, W-3s, 1099s, 1096s, payroll reports

P Trust accounting – State compliance, clean-up

P QuickBooks Services – Setup, cleanup & maintenance and exporting data to Excel for tax preparation

Manage Your Business Instead of Your BookkeepingBerntson Porter offers a variety of bookkeeping services through our paraprofessionals including:

For more information contact Karen Nierescher, Senior Manager and Director of Accounting Support & Bookkeeping Services (ASBS)

425.289.7673 or knierescher@bpcpa.com

continuous improvement, and a culture of ownership where employees are engaged and invested in the company’s overall direction. Many of our associates have a direct ownership stake in the company, which has been crucial to our growth. Having everyone think as an owner helps us make decisions with broad support across the entire organization. Several of our sponsored athletes, who are among the elite in their sport, are also owners and the promotional value this has created in the marketplace with aspiring athletes and recreational enthusiasts has proven to be invaluable.

Recently, Square One Real Estate purchased land and developed its new Snoqualmie Ridge, Washington main office and warehouse. This one-of-a-kind facility is over 75,000 square feet in size with stunning panoramic views of the Cascades, Mt. Si and Mt. Baker. The building was designed to capture the company’s creative energy and link into the marketing flair of its products with the use of vibrant colors, modern materials, advertising and brand recognition on both the interior and exterior. The distinctive design and architecture has garnered attention in the real estate market and resulted in nominations for awards by organizations like the National Association of Industrial and Office Properties (NAIOP) and the American Institute of Architects (AIA).

Still, for all our success as a thriving global company, Square One has remained a company built on having fun for employees and customers. We have two private, custom-designed lakes at our disposal to use for research & development, training, marketing and general recreational activities. Radar Lake in Woodinville, Washington is a private 120 acre water sports paradise where numerous world champion skiers have trained and where we host many philanthropic events. The newer Lake Ronix in Orlando, Florida is a private 230 acre lake where athletes can train year round. This lake boasts a wakeboard cable park with multiple features. Our goal in Orlando is to create a world class recreational training center for our customers to attend.

Our business partnership with Berntson Porter & Company has been a vital part of our success. BP has been instrumental in helping us grow our business. With our twenty-plus year relationship, Stein Larsen and his team have helped us with many projects over the years. We receive not just the normal compliance services, including reviewed financial services and tax return preparation, but also guidance on corporate structure, tax planning, profitability analysis, and estate planning. It has been a great relationship and has helped both us and our banking partner have great confidence in the decisions we make. Some of our projects have been pretty complicated and the creative ideas Berntson Porter came forward with helped us close deals that otherwise may not have been possible.

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TAX UPDATEInvestigate special tax rules and deductions:

• Inventory valuation – Depending on your method of accounting, inventory should be reported at cost or the lower of cost or market for tax purposes. Under the lower of cost or market method of accounting, “normal” goods may be reduced in value to their current replacement cost

within certain parameters. Regardless of the inventory valuation method employed by the taxpayer, “subnormal” goods should be valued at net realizable value. Subnormal goods are any goods that are unsalable at normal prices or unusable in the normal way because of damage, imperfections, shop wear, changes of style, odd or broken lots, or other similar causes, including second-hand goods taken in exchange. Generally an actual offering of such inventory at a reduced valuation within

30 days of the inventory valuation date is required in order to claim revaluation. However, no such offering is required if inventory is obsolete or otherwise unsalable since such merchandise presumably has no value.

• Section 263A – IRC Section 263A requires certain overhead costs to be capitalized as part of inventory for tax purposes. This rule applies to all manufacturers and to resellers with average gross receipts in excess of $10 million for the past

three years. For manufacturers and resellers already subject to Section 263A, consider ways to manage year-end inventory to reduce its impact. For resellers who have not been subject to 263A in the past, but are approaching the threshold, take a look at projected year-end sales to determine ways to defer recognition until the following year.

• Section 199 – Domestic Production Activities Deduction - Domestic manufacturers are allowed a deduction of 9% of the lesser of taxable income or qualified domestic production activities net income in 2015. The deduction is limited to 50% of the W-2 wages for the taxable year.

• Section 179 and bonus depreciation – IRC Section 179 allows taxpayers to expense, rather than capitalize, property placed in service during the current taxable year. The Section 179 deduction for 2015 is reduced to $25,000, with phase- outs beginning once asset acquisitions reach $200,000. The deduction is completely phased out once acquisitions exceed $225,000. The 50% bonus depreciation deduction is no longer allowed in 2015. However, depreciation extenders are expected to be passed by Congress, including a $500,000 Section 179 deduction with phase-outs beginning once asset acquisitions reach $2,000,000, phasing out completely at $2,500,000, and a renewal of the 50% bonus depreciation deduction.

• Research and development tax credit – While the Research and Development Credit is currently set to expire, it is expected to be renewed for 2015 (the credit has been retroactively reenacted 16 times since its inception). A company that designs, develops or improves products, processes, techniques, formulas, inventions or software may be eligible for the credit.

We have identified millions of dollars of tax savings utilizing this credit in situations where it was not identified as applicable by prior CPA firms.

• Multi-state operations – Have you evaluated the impact of conducting business across state lines? There are strategies that can be used to decrease your multi-state tax burden, one of which is evaluating where inventory is held. When filing nonresident tax returns in most states, income is apportioned based on sales, payroll and property. Property includes fixed assets, rents and inventory and for companies located in multiple states, considering the location of inventory could result in tax savings. Evaluating whether inventory could be transferred to states with little to no income tax could lead to an increase in tax savings.

It is important to consider these issues collectively as they may have an impact on your financial statements, banking relationships and tax liability. The Distribution and Manufacturing Practice Group at Berntson Porter has the knowledge and expertise to answer your questions and help you with your planning needs.

Krysta Smith, CPA, Senior Tax Staff. Krysta can be reached at 425.289.7649 or ksmith@bpcpa.com.

State and Local Taxes

At Berntson Porter, we understand the complexity of state and local taxes and can work with businesses to ensure they are not overpaying.

We also help you identify key risks, activities and sales that bring on added risk for state tax assessments.

Eliminate the Uncertainty

Minimize your risk with planning from Berntson Porter’s State and Local Tax group. For more information, contact Chris Laine, Director of State and Local Tax Services, at claine@bpcpa.com or 425.289.7609.

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SELECTED 1099 REPORTING FOR 2015*

FORM TITLE SOME COMMONLY-USED REPORTABLE ITEMS

AMOUNTS TO REPORT

DUE DATE TO IRS

DUE DATE TO

RECIPIENT (UNLESS

INDICATED OTHERWISE)

1099-DIV Dividends and Distributions

Distributions, such as qualified dividends, including exempt interest dividends, capital gain distributions, or nontaxable distributions, which were paid on stock and liquidation distributions.

$10 or more ($600 or more in

some cases)

February 29thMarch 31st

- if filed electronically

February 1st

1099-INT Interest Income Interest income not including interest on an IRA or an HSA

$10 or more ($600 or more in

some cases)

February 29thMarch 31st

- if filed electronically

February 1st

1099-MISC Miscellaneous income

(Also, use this form to report the occurrence of direct sales of $5,000 or more of consumer goods

for resale)

A reporting exception exists here for payments

made to incorporated businesses, unless the payment is for legal

services.

Rent or royalty payments; prizes and awards that are not for services, such as winnings on TV or radio shows

Payments for services performed (including parts and materials) for a trade or business by people not treated as employees (i.e. independent contractors).

Substitute dividend and tax-exempt interest payments reportable by brokers

Gross proceeds paid to attorneys

$600 or more, except $10 or more for

royalties

$600 or more

$10 or more

$600 or more

February 29thMarch 31st

- if filed electronically

February 17th

February 17th

February 1st

1099-R Distributions from Pension Annuities,

Retirement or Profit-Sharing Plans, IRAs,

Insurance Contracts, etc.

Distributions from retirement or Profit-Sharing plans, IRAs, SEPs, or insurance contracts and IRA recharacterizations.

$10 or more February 29thMarch 31st

- if filed electronically

February 1st

1094-C Transmittal of Employer-Provided Health

Insurance Offer & Coverage Information

Returns

Provided by health insurance issuers, including self-insured employer-sponsored plans

N/A February 29th February 1st

1095-C Employer-Provided Health Insurance Offer &

Coverage

Applicable large employer provides to employees info about the health insurance coverage offered to your employees.

N/A February 29th February 1st

* Reporting is for the 2015 tax year, all due dates refer to 2016.

TAX REFERENCE SHEET

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W-2 FRINGE BENEFIT REPORTING FOR 2015

FRINGE BENEFITADDED

TO W-2 AS WAGES

SUBJECT TO FICA/MEDICARE

HOW TO VALUE BENEFIT

2% Owner-Shareholder of S-Corp Health Insurance

Health insurance is part of a group insurance plan (i.e. covers other employees in addition to the shareholder(s)) Yes No Actual Cost

Health insurance is not part of a group insurance plan (i.e. covers only the shareholder(s) and shareholders cannot be rationally segmented as an employee class)

YesYes

Also subject to FUTA/SUTA

Actual cost grossed up for FICA and Medicare

Shareholder(s) is/are the only employee(s) Yes No Actual Cost

Disability Insurance

Disability Insurance is part of a group plan (i.e. premiums paid by employer) No No N/A

Disability insurance is not part of a group plan (i.e. covers only the key employees) or salary continuation plan Yes

Yes Also subject to FUTA/SUTA

Actual cost grossed up for FICA and Medicare

2% owner/shareholder of S-Corp is only employee and/or is part of a group plan Yes No Actual Cost

Group Term Life Insurance

Death benefits exceed $50,000 YesYes

Also subject to FUTA/SUTA

Based on IRS tableReport in Box 12, Code C

Death benefits up to $50,000 No No N/A

Health Savings Accounts

Up to $3,300 for self-only or $6,550 for family ($1,000 increase for individuals 55 or older) No No N/A

2% owner/shareholder of S-Corp Yes No Actual Cost

Personal Use of Auto YesYes

Also subject to FUTA/SUTA

Based on IRS table

Personal Use of Company Aircraft YesYes

Also subject to FUTA/SUTA

Based on IRS table

Taxable Sick Pay from Third Parties YesYes

Also subject to FUTA/SUTA

Written statement provided by third party payer

Expense Allowance

Not supported by employee expense reporting YesYes

Also subject to FUTA/SUTA

Payments in excess of amounts substantiated on employee

expense reportFully supported by employee expense reporting or per diem amounts within federal guidelines No No N/A

Moving Expenses

Qualified reimbursed moving expenses (as defined by the IRS) No No Need to be reported in Box 12 of W-2 (Code P)

Non-qualified reimbursed moving expenses YesYes

Also subject to FUTA/SUTA

Actual cost of reimbursement grossed up for FICA and Medicare

Other Miscellaneous Fringes (not de minimus) (i.e. country club dues, sporting events tickets, etc.) Yes

Yes Also subject to FUTA/SUTA

Fair market value of the fringe benefit

Cost of employer sponsored health coverage (employer and employee paid) is reported in Box 12 using code DD. This amount is not taxable and reporting is optional in 2016 for employers with fewer than 250 W-2s filed the year-ending 2015.

FUTA: Federal Unemployment Tax Act, SUTA: State Unemployment Tax Act, FICA: Federal Insurance Contributions Act.

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favorable 2014 amounts will be retroactively extended in 2015. Berntson Porter is closely monitoring the situation and will keep you updated.

We also recommend a thorough review of your fixed asset listing to ensure you are not paying personal property taxes on equipment no longer owned by the company.

Job Schedules Thoroughly analyze job schedules to ensure that the estimated costs to complete and estimated gross profit are accurate, given all the known information. If negative variances become a trend, it could indicate poor estimating and job cost forecasting. This trend can result in users of the financial statements losing confidence in the company’s ability to estimate jobs accurately.

Backlog Focus on turning awarded work into contracted work. A signed contract is typically required under GAAP to include a project in the company’s backlog at year-end. 9

Research and Development Opportunities The research and development tax credit is a government-endorsed tax incentive that rewards companies for using research and development to improve their processes. Construction, design and architecture firms are generally eligible for this credit if specific requirements are satisfied. The credit is a topic of the 2015 Senate Finance Committee’s tax extender’s bill and BP is closely monitoring the bill as it progresses.

Energy Incentives Another popular deduction extended in 2014 is the Section 179D energy efficient building deduction. This deduction can be as high as $1.80 per square foot for energy efficient commercial buildings placed in service or remodeled from 2006 to 2014. The House Ways and Means Committee is currently considering the extension of these incentives into 2015 and BP is closely monitoring the status of the extension. If a qualifying building is constructed on property owned by a federal, state or local government, a contractor who is the primary designer on the project may be

entitled to the deduction. Also, check with your state and utility districts as they may offer additional credits for energy savings.

Currently, the Senate Finance Committee and the House Ways and Means Committee have a proposed tax extender bill and a House proposal to extend the Section 179 and bonus

YEAR END PLANNING STRATEGIES FOR CONTRACTORS Fall is the time to proactively consider tax strategies and

financial statement position for the fiscal year-end. When developing a strategy, you should look at how the strategy will impact your company in terms of your tax liability and financial statement strength as well as how a given strategy could impact your financial covenants or the surety’s view of the year-end financial statements.

Here are several considerations when developing your year-end tax and financial statement strategy:

Cash Cash is always king. Any strategy should focus on maximizing the company’s cash reserves at the end of the year. When circumstances allow for it, consider requesting early payment from customers with large A/R balances and delaying cash disbursements for payables until after year-end.

Accounts Receivable Review the accounts receivable listing prior to year-end, paying particular attention to balances outstanding over 90 days. Focus efforts on collecting these amounts prior to year-end. Balances over 90 days are generally discounted heavily by financial statement users and can even be excluded in covenant calculations.

Retention Receivable Review the retention listing for retention due on completed contracts. Determine the action items that need to be completed before you can collect the retention and focus on getting those done. Submit all necessary paperwork including the execution of a conditional final lien release.

Fixed Assets The Section 179 fixed asset deduction continues to be an attractive strategy for contractors. As it currently stands, companies can expense only $25,000 under Section 179 on qualifying fixed asset purchases. In 2014, companies could expense up to $500,000, subject to income limitations and phase-out beginning at $2 million of fixed asset acquisitions. Additionally, the bonus depreciation deduction, which allowed companies to take 50% bonus depreciation on qualifying fixed asset purchases, expired at the end of 2014. Note that there is a possibility that the

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We Bring You the WorldHarness the power of Berntson Porter’s International Consultancy Group, providing tax compliance and consulting services through its global network of partners.

We can help you with IC-DISC planning, understanding taxation in other countries, entity structure, estate planning and more.

For more information, contact Liting Chuang, Principal and leader of BP’s International Consultancy Group, at 425.289.7625 or lchuang@bpcpa.com.

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WHY ARE MERGERS AND ACQUISITIONS SO ACTIVE?

I’m getting versions of this question weekly so I imagine many of our

clients and readers wonder about it as well. Short answer: M&A activity is in the midst of a sort of perfect storm!

The number of global M&A deals closed each year has been rapidly increasing since 2012 according to Dealogic, a provider of M&A data to investment bankers. Completed deals are estimated to be close to 4,500 in 2015, near the 2007 peak of slightly more than 4,500. My discussions with, and data from, regional investment bankers, brokers, bankers and attorneys, along with the number of projects we are working on in our office, also indicates a high number of transactions under way.

Why are we in a perfect storm for deal activity?

First, is available capital. Corporations and private equity groups, large and small, are holding hundreds of billions of capital dollars earmarked for expansion and acquisition.

Second, is the business cycle. We are in the seventh year of the anemic recovery that began in June of 2009. Entrepreneurial optimism about the economic future is driving investments in businesses.

Third, is available leverage. According to GF Data Resources, an aggregator of deal statistics in the middle market, senior debt in transactions with enterprise values of $10 to $25 million rose from 39.8% of the deal to 47.6%, while sub debt declined from 16.5% to 15.2 % between 2014 and Q1 2015. This overall increase enabled investor equity to drop from 43.7% to 37.2%. In smaller deals, banks are actively funding 80% to 85% of deal prices, often with Small Business Administration (SBA) guarantees. Buyers can leverage their money to invest in bigger deals or more deals. In addition, a combination

of buyer cash, bank debt, seller debt, earn-outs and consulting agreements create capital structure flexibility that can work for the buyer and seller.

Fourth, are historically low costs of borrowing, due in large part to Federal Reserve Bank policy of pushing down interest rates and to a low inflation environment.

Fifth, are lower rate-of-return (ROR) hurdles demanded by buyers. In general, buyers have reduced their required rates of return, as reflected in higher valuation multiples. Lower ROR increases the number of deals buyers can invest in while at the same time, raising the prices they will pay for deals. Corporations and individuals also seem to have lower ROR hurdles based on valuation multiple increases.

According to GF Data, the average enterprise valuation (EV) based upon EBITDA multiples for transactions in the $10 to $25 million range increased from 5.5X to 5.9X, and for transactions in the $25 to $50 million range the multiples increased from 6.3 times to 7.7 times between 2014 and 2015. According to Pratt’s Stats, a service which tracks smaller transactions, multiples in the $1 to $5 million and over $5 million EV range have also been robust, averaging 4.3 times, and 5.5 times, respectively, in 2014.

depreciation deductions, the Research and Development tax credit, and the 179D energy deduction, but no action is expected until November. As previously indicated, our team is keeping apprised of the situation and will alert you to any new developments.

Other items to consider in your year-end tax and financial statement planning include state income tax planning, maximizing retirement plan contributions for the company’s owner group, reviewing insurance coverage including life insurance considerations and succession planning.

The implementation of these strategies will have an impact on your company’s year-end financial position and tax liability. Remember to always discuss your strategy and expected outcomes with the users of the financial statements prior to implementation. Berntson Porter is ready to assist you if you would like more information on these year-end strategies, as well as help identifying strategies for 2015 and beyond.

Rhett Ennis, CPA, Senior Manager, Assurance Services. Rhett can be reached at 425.289.7628 or rennis@bpcpa.com

Wealth Management

Contact Greg Porterfor this analysis.

Are your investments being managed properly? Are you meeting your financial goals? Let BP Wealth Management “audit” your portfolio and make specific recommendations on how to reduce risk while meeting your goals.

Greg Porter, CPA, MBA, MS (Tax), CVA, MAFFPresident of Berntson Porter Wealth Management, LLCgporter@bpcpa.com or 425.289.7601

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THE PENSION PLAN AUDIT QUESTIONemployees that are eligible to participate, but elect not to. So, your pool of participants is actually a lot larger than you may think. If you have former employees with balances still in the plan, make every effort to distribute those funds to the former employee as this will reduce your number of eligible participants.

OK, my plan needs an audit, now what?

Plan early. There are severe penalties for filing late.

Hire your independent auditor (aka BERNTSON PORTER).

Gather all your plan documents (Plan document, Plan amendments, Summary Plan Description, IRS Determination Letter, Prior year Form 5500).

Contact your third party administrator and request the auditor’s packet. Generally the auditor’s packet has most of the reports the auditor will need, including allocation reports, discrimination and coverage tests, Form 5500, etc.

Obtain the annual investment statement.

If you’ve been told your plan needs to be audited, don’t panic. We are here to help!

Mary Actor, Principal and Director of Assurance Services. Mary can be reached at 425.289.7608 or mactor@bpcpa.com.

Does your company sponsor a profit sharing or 401(k) pension plan? If so and you have more than 100 employees, you may

be required to have your plan audited. How do you know if you need an audit of your pension plan, you ask?

Generally, plans with 100 or more eligible participants as of the beginning of the plan year are considered “large” plans and plans with fewer than 100 participants are considered “small” plans. Plans that are considered “large” are required to attach an audited plan financial statement to the annual return, Form 5500.

If the general rule were applied without exception, plans that frequently fluctuate between slightly more or less than 100 eligible participants would have to switch from being categorized as a “small” plan and a “large” plan, which frankly would be inconvenient, costly and disruptive. The good news is that there is some flexibility as to whether or not a plan can file as a “large” plan or a “small” plan. As a result, you have the reporting options listed in the chart below.

Basically, if you filed as a “small” plan in the prior year and have more than 100, but less than 120 participants in the current year, you can continue to file as a “small” plan. Our recommendation, file as a “small” plan and avoid the audit.

The key to the calculation is the word “eligible” participant. Eligible participants include individuals currently contributing to the plan, former employees with money held in the plan AND

Sixth, is the increasing supply of businesses for sale by Baby Boomers. Boomers are transitioning out of business ownership and into new life adventures. Increasing supply combined with the drivers above generate more deals.

We are experiencing a very active deal market. If you are thinking about selling in the next several years please call

Allan VanderHamm to discuss how you can optimize value and increase chances of a successful sale to a third party or to company insiders.

Allan VanderHamm, CPA Principal and leader of Business Transition Services. Allan can be reached at 425.289.7613 or avanderhamm@bpcpa.com

Number of Eligible Participants at Beginning of Current Year

Requirements Followed for the Prior Year Form 5500

Requirements to be Followed for the Current Year Form 5500

Fewer than 80 Small Plan or Large Plan Small Plan80-99 Small Plan Small Plan80-99 Large Plan Small Plan or Large Plan

100-120 Small Plan Small Plan or Large Plan100-120 Large Plan Large Plan

More than 120 Large Plan Large PlanMore than 120 Small Plan Large Plan

CLIENT NEWSJohansen Excavating, Inc. was presented the 2015 National Utility Contractors Association (NUCA) Ditchdigger of the Year award at NUCA’s annual gala in October. The Award is presented to a contractor member who has made a significant contribution to NUCA and the underground utility construction industry.

Bering Air’s Jim Rowe was honored as one of Alaska’s 2015 Aviation Legends by the Alaska Air Carriers Association.

The RAM Restaurant and Brewery recently participated in the 3rd annual ‘Ales for ALS,’ a fundraising and awareness campaign to help find a cure for ALS (amyotrophic lateral sclerosis).

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This newsletter is distributed with the understanding that it is not providing legal, accounting, or other professional advice or opinions on specific acts or matters and, accordingly, no liability is assumed in connection with its use whatsoever.

ADDRESS SERVICE REQUESTED

11100 NE 8th St., Suite 400Bellevue, Washington 98004

BP NEWSGreg Porter presented on implications of selling a company at Bank of America’s Retire Well Seminar.

BP Presentations: Principal Allan VanderHamm presented at BEI 2015 National Conference for Exit Planning. Principal Chris Laine and Geoffrey Fischback, Tax Manager, presented at the 2015 PrimeGlobal State and Local Taxes (SALT) annual Roundtable in Pittsburgh.

Berntson Porter’s Mission of Caring celebrated a busy fall! Team BP participated in the 2015 Food Frenzy competition for Food Lifeline, as well as the American Heart Association’s HeartWalk and our annual Community Service day, where we preserved forests for EarthCorps. Team BP volunteering for EarthCorps. Go team!