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Volume 4, Issue 11, November 2006

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Estate Planning: Advantages of a Family Limited
Partnership

Family limited partnerships (FLPs) are often utilized as a valuable estate planning tool. FLPs are similar to limited partnerships in that there are both general and limited partners. General partners retain control over the operations of the business and are personally liable for the business’ debts; limited partners do not participate in the business operations and have limited liability for business debts.

FLPs are structured so that, generally, the senior generation transfers assets into the partnership and receives ownership in the partnership, and, over time, transfers assets to the younger generation through a series of gifts.

Organizing a business as a family limited partnership can have a number of distinct advantages:

The senior generation maintains management control over the assets while shifting limited ownership to the younger generation and can be compensated for performing management duties.

Because the limited partnership interests that are gifted to younger generations do not typically retain the full fair market value of the original assets, utilizing an FLP for gifting instead of directly transferring business assets can result in gift and estate tax savings.

The structure of an FLP enables the senior generation to reallocate business income and asset appreciation to younger family members and also protects limited partners’ interests from creditors.

The partnership agreement can be structured so that family members retain continuous ownership of the business, and the agreement can be revised to reflect changes in family circumstances.

Only the value of a general partner’s ownership interest in the FLP is includable in his or her estate.

Because FLPs have recently been scrutinized by the IRS, it is critical that you meet with your attorney and your accountant to ensure that all state laws are upheld. The certified public accountants and consultants at Kemper CPA Group LLP are available to answer your questions about the tax implications of family limited partnerships. If you would like additional information regarding whether a family limited partnership is right for you, contact an office near you to set up an appointment to discuss your options.

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Congratulations to the University of Southern
Indiana Accounting Team!

The partners and staff of Kemper CPA Group LLP wish to extend sincere congratulations to the University of Southern Indiana (USI) Accounting Team, for their first place finish in the 2006 Indiana CPA Society (INCPAS) Case Study Competition!

This is the third consecutive year in which the USI team has won the Case Study Competition – truly an outstanding accomplishment! Six teams competed in the finals, which were held November 3, 2006, in Indianapolis, Indiana. The teams were challenged with preparing a written report and giving an oral presentation on a case study related to the peer-review process in accounting.

The winning team members include senior May Flores, Newburgh, Indiana (who was also on the 2005 winning team); senior John Hayden of Evansville, Indiana; senior Adam Knepp of Montgomery, Indiana and junior Amy Oglesby of Galatia, Illinois. Team coach Jeanette Maier-Lytle, an instructor of accounting at USI, also received the 2006 Outstanding Accounting Educator award.

Partners and staff from the Evansville, Indiana office of Kemper CPA Group LLP assisted the USI team in a dress rehearsal of their presentation.

The team from Butler University of Indianapolis won second, while Manchester College, in Manchester, Indiana, won third place. Teams from Indiana University Purdue University at Indianapolis, Purdue University Calumet and Valparaiso University were honorable mention finalists.

Congratulations to all of the participants in the 2006 INCPAS Case Study Competition!

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More Highlights of the Pension Protection Act
of 2006

The Pension Protection Act of 2006, previously discussed in our October 2006 e-Newsletter, included several noteworthy provisions related to charitable giving.

Taxpayers may only claim a deduction for clothing and household item donations that are in good condition; the law does not, however, define “good condition.” The IRS can deny deductions for items that it deems “of minimal monetary value.”

When you make a monetary charitable contribution, a deduction will only be allowed if you can show a bank record or written communication from the charity that includes the date and amount of the contribution as well as the name of the charity. Examples of documentation for monetary gifts may include a cancelled check, credit card statement, or receipt from the charity. While the IRS does not require you to send this documentation in with your tax return, you must retain it, should questions about your return arise.

The act permits individuals who are age 70½ or older to send IRA distributions directly to a charitable organization. These distributions are tax free, and have a maximum annual cap of $100,000. This provision is only in effect until December 31, 2007 and has a number of additional limitations and restrictions.

Several provisions of the Katrina Emergency Tax Relief Act of 2005 (KETRA) were extended until December 31, 2007 by the new law. The deductions for donation of “apparently wholesome food inventory” by business entities and for books donated to public schools by C corporations were both extended.

For additional information regarding the new law’s impact on your specific tax situation, contact the accounting professionals at Kemper CPA Group LLP today.

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New Standard Mileage Rates for 2007

The IRS has announced the 2007 standard mileage rates, used to calculate deductible costs related to operating a vehicle for business, charitable, moving or medical purposes. Largely due to the increased cost of vehicles and fuel, the rates for business mileage and medical or moving mileage have increased, while the rate for charitable use, which is set by statute, has not changed.

Effective January 1, 2007:

The standard mileage rate for use of a vehicle for business miles is 48.5 cents per mile, up from 44.5 cents in 2006.

The rate for use of a vehicle for medical or moving purposes is 20 cents per mile, up from 18 cents in 2006.

The rate for driving a vehicle for a charitable purpose remains the same, at 14 cents per mile.

Should you need any additional information concerning the 2007 standard mileage rates, the certified public accountants and consultants at Kemper CPA Group LLP can help. Contact us for further details.

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Loose Change

The November/December 2006 issue of the “Loose Change” Newsletter includes the following articles:

Contact Kemper Capital Management LLC for all of your investing needs.

Investment advisory services offered by KCPAG Financial Advisors LLC, a registered investment advisor. Securities officered through Securities America, Inc., a registered broker/dealer. Member NASD/SIPC. Thomas A. Moore, John D. Porter, Polly Reynolds, Shawna D. Horne, Jeffery C. Holt, CA insurance Lic. #0E38034, Jessica Daugherty, Joseph M. Mendes, CA Insurance Lic. #0C62535, Regina S. Hughes, Gregory Meador, Marcia Elder, Registered Representatives. Insurance services offered through KCPAG Insurance Services LLC. Kemper Capital Management LLC and its subsidiaries are not affiliated with Securities America.

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Microsoft Dynamics - How to Help Your Employees Run Your Business

You have a business, and many aspects of your business must be properly managed every day so your business will be profitable. With Microsoft Dynamics, your key employees will have the tools they need to help you run your business. And the certified professionals at  Kemper Technology Consulting can help you with Microsoft Dynamics planning, installations, implementation and support.

Microsoft Dynamics is a suite of applications and services that work for a variety of businesses, including retailers, manufacturers, service companies and wholesalers. From budgeting to marketing, customer relationship management to Internet portals, Microsoft Dynamics offers tools that can help keep your business in sync – and it fully integrates with Microsoft Office, Microsoft Servers, and the Microsoft.NET programs.

Here is a brief listing of the Microsoft Dynamics suite product families (there are more – for a complete listing, visit Microsoft Dynamics on the Internet:

Business intelligence and reporting – budgeting, forecasting, trends

Collaborative workspaces – secure, web-based access to data for groups

Configuration and development – development tools are included for customization to meet the needs of your business

Customer relationship management – marketing, tracking of customer activity

Financial management – general ledger, payables, receivables, and more

Supply chain management – keep track of multiple sites, inventory, order management, distribution and more

Manufacturing – you can coordinate your entire manufacturing process

Retail point of sale – automate your sales, from point-of-sale to actual delivery

Do you need specialized products? There are add-in products that have been developed specifically to meet industry or company-specific needs.

Microsoft Dynamics will bring together data from all areas of your business, to allow for complete analysis when you need to make a critical decision. The products can be highly customized and can also be made available (securely) via the Internet for easy access.

If you would like to talk with us about how Microsoft Dynamics can help your business, contact Kemper Technology Consulting today.

Kemper Technology Consulting
Robinson, IL
618-546-5633
www.kempertc.com

Evansville, IN  •  Indianapolis, IN  •  Paducah, KY  •  Effingham, IL

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Please be advised that, based upon current Internal Revenue Service (IRS) rules and standards, the advice herein is not intended to be used, nor can it be used, as the sole basis for decisions. Additional issues may exist that could affect the treatment of the individual transactions, and this narrative does not provide a conclusion with respect to all such issues.

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