Does your business market its products or services to other companies? Or might it start doing so in the future? If so, it’s critical to recognize the key differences between marketing to the public — or even certain segments of the public — and business-to-business (B2B) marketing.

Whereas wide-scale marketing campaigns generally need to be simple, concise and catchy, effective B2B campaigns are typically more detailed, complex and substantive. Here are three critical points to keep in mind:

1. Solve their problems. You’re not selling a product or service; you’re selling a solution. For example, a company selling aspirin is offering to solve the problem of anyone with a headache. But in B2B marketing, you want to show how your product or service can help a company cure the cause of that headache, not just the symptom.

Think of it from your own perspective. When other companies try to sell to you, you’re not going to pay for anything without an acceptable return on investment. Tell the businesses you’re marketing to precisely how your product or service will solve problems in areas such as productivity, quality, time and costs. Better yet, show them with real-world examples and testimonials.

2. Provide plenty of specifics. When marketing to the public, an abundance of detail can confuse or bore buyers. In B2B marketing, specifics are often what close the deal. Every industry faces myriad challenges that encompass a wide array of technical, technological and regulatory details. Speak their language. Make it clear you understand what they’re up against.

And give yourself plenty of room to do so. Whereas a traditional sales letter or pamphlet sent to an individual is usually best kept short and colorful, B2B marketing materials can be longer and more detailed. Apply the same principle to social media: Posts directed at other companies can go to greater lengths as long as they include current and cogent points.

3. Get to know the people involved. If you tried to get to know every person included in a mass marketing campaign, you’d never get anywhere and probably go out of business. In B2B campaigns, however, specific people — that is, those who make the buying decisions at your targeted accounts — mean everything.

In fact, under an approach called account-based marketing, a company directs its B2B marketing efforts directly at the individual or set of individuals at each targeted account (or certain high-valued accounts). It’s the “personal approach” writ large, with your sales and marketing staff working together to get to know and appeal to the sensibilities and personalities of the people representing the companies that buy from you.

Obviously, any B2B marketing effort will need to go beyond these three points. Nonetheless, they should form a solid foundation in this often-tricky area. Our firm can help you assess the financial impact of your marketing efforts, B2B and otherwise, and come up with strategies for the future.

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The IRS has released final regulations and another round of proposed regs for the first-year 100% bonus depreciation deduction. The Tax Cuts and Jobs Act (TCJA) expanded the deduction to 100% if the qualified property is placed in service through 2022, with the amount dropping each subsequent year by 20%, until it sunsets in 2027. (The phaseout reductions are delayed a year for certain property with longer production periods.) Of course, Congress could act before that to extend or revise the deduction.

To qualify for 100% bonus depreciation, property generally must 1) fall within the definition of “qualified property,” 2) be new (meaning the property’s original use begins with the business) or acquired used property, and 3) be acquired and placed in service by the taxpayer after September 27, 2017.

The final regs address several critical issues related to these requirements and include some changes from the set of proposed regs issued in August 2018. The newly proposed regs provide guidance on some areas not covered in the final regs.

Eligibility of qualified improvement property

Prior to the TCJA, qualified retail improvement property, qualified restaurant property and qualified leasehold improvement property were depreciated over 15 years under the modified accelerated cost recovery system (MACRS).

The TCJA classifies all of these property types as qualified improvement property (QIP). QIP generally is defined as any improvement to the interior of a nonresidential real property that’s placed in service after the building was placed in service. Although Congress intended QIP placed in service after 2017 to have a 15-year MACRS recovery period and, therefore, qualify for bonus depreciation, a drafting error didn’t make that clear.

In what’s been called “the retail glitch,” the 15-year recovery period didn’t make it into the TCJA’s statutory language. The preamble to the final regs explains that legislative action is required to remedy this problem. Until then, QIP placed in service after 2017 is subject to a 39-year depreciation period and remains ineligible for bonus depreciation.

Used property questions

The TCJA makes bonus depreciation available for qualified used property that wasn’t used by the taxpayer or a predecessor at any time prior to its acquisition. The final regs define the term “predecessor” to include:

• The transferor of an asset to a transferee in a transaction subject to rules for tax attribute carryovers in corporate acquisitions,
• The transferor of an asset to a transferee in a transaction in which the transferee’s basis in the asset is determined by reference to the asset’s basis when it was in the hands of the transferor,
• A partnership that’s considered as continuing,
• The deceased person, in the case of an asset acquired by an estate, or
• The transferor of an asset to a trust.

The regs indicate that the IRS believes the consideration of such parties when determining whether a taxpayer has used a piece of property is necessary to prevent the abusive churning of assets by taxpayers.

The August 2018 proposed regs explained that a business has used a piece of property if it or a predecessor had a depreciable interest in the property at any time before acquisition, regardless of whether the taxpayer or predecessor claimed depreciation deductions. However, the regs also requested comments on whether the IRS should provide a safe harbor as to how many taxable years a taxpayer or predecessor must look back to determine if a depreciable interest existed.

The final regs include a safe harbor look-back period that considers only the five calendar years immediately prior to the taxpayer’s current placed-in-service year for the property. If the taxpayer and a predecessor haven’t been around that long, only the number of calendar years they’ve existed is taken into account.

In addition, the final regs provide that “substantially renovated property” can qualify for bonus depreciation even if the taxpayer had a prior depreciable interest in it before the renovation. A property is substantially renovated if the cost of the used parts is less than or equal to 20% of the total cost of renovated property, whether the property is acquired or self-constructed.

Date of acquisition issues

Under the TCJA, eligible property must be acquired after September 27, 2017, or acquired according to a written binding contract entered into by the taxpayer after September 27, 2017. The final regs provide that the acquisition date of property acquired according to a written binding contract is the later of:

• The date on which the contract was entered into,
• The date on which the contract is enforceable under state law,
• The date on which all cancellation periods end, if the contract has one or more cancellation periods, or
• The date on which all conditions subject to such clauses are satisfied, if the contract has one or more contingency clauses.

The August 2018 proposed regs provided that property manufactured, constructed or produced for the taxpayer for use in its business by another person under a written binding contract that was entered into prior to the manufacture, construction or production is acquired according to a written binding contract. Many commenters disagreed with this position, prompting the IRS to reconsider.

Thus, the final regs provide that such property is self-constructed property. This property type isn’t subject to the written binding contract rule and is eligible for bonus depreciation if the taxpayer began manufacturing, constructing or producing it after September 27, 2017.

The ADS factor

Property that must be depreciated under the alternative depreciation system (ADS) generally isn’t eligible for bonus depreciation. As the final regs note, some tax code provisions require the use of the ADS to determine aggregate basis for the purposes of the respective provision — but not for purposes of calculating Section 168 depreciation deductions.

The final regs state that such requirements to use the ADS generally don’t render property ineligible for bonus depreciation. They also clarify that using the ADS to determine the adjusted basis of a taxpayer’s tangible assets for purposes of allocating business interest expense between excepted and nonexcepted businesses generally doesn’t make the property ineligible.

Effective dates

The final regs are effective for qualified property placed in service during tax years that include September 24, 2019. You can elect to apply the regs to qualified property acquired and placed in service after September 27, 2017, or during tax years ending on or after September 28, 2017, as long as all of the rules in the final regs are consistently applied. Alternatively, you can rely on the August 2018 proposed regs for qualified property acquired and placed in service after September 27, 2017, during tax years ending on or after September 28, 2017, and ending on September 24, 2019.

Proposed regulations

The proposed regs contain additional rules regarding the definition of qualified property, consolidated groups, the treatment of components of self-constructed property and the application of the midquarter convention. They also propose exceptions to some of the final regs.

For example, the proposed regs include an exception to the depreciable interest rule for used property when the taxpayer disposes of the property within 90 days of placing it in service. If certain requirements are satisfied, the taxpayer’s depreciable interest in the property during that period isn’t taken into account when determining whether the property was used by the taxpayer or a predecessor at any time before the taxpayer’s reacquisition of it.

Taxpayers generally can rely on the proposed regs for qualified property acquired and placed in service after September 27, 2017, during tax years ending on or after September 28, 2017, and ending before the taxable year that includes September 24, 2019.

Maximize your depreciation deduction

The final and proposed first-year 100% bonus depreciation deduction regs may provide you with some unexpected opportunities to claim bonus depreciation. In some cases, it might be worth amending your 2017 and 2018 tax return filings (or, in the event that you filed an extension, adjust your returns prior to filing). Contact us to maximize depreciation deductions for your business.

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Here are some of the key tax-related deadlines affecting businesses and other employers during the fourth quarter of 2019. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.

October 15

• If a calendar-year C corporation that filed an automatic six-month extension:
  • File a 2018 income tax return (Form 1120) and pay any tax, interest and penalties due.
  • Make contributions for 2018 to certain employer-sponsored retirement plans.

October 31

• Report income tax withholding and FICA taxes for third quarter 2019 (Form 941) and pay any tax due. (See exception below under “November 12.”)

November 12

• Report income tax withholding and FICA taxes for third quarter 2019 (Form 941), if you deposited on time (and in full) all of the associated taxes due.

December 16

• If a calendar-year C corporation, pay the fourth installment of 2019 estimated income taxes.

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Imagine giving your company’s retirement plan a report card. Would it earn straight A’s in preparing your participants for their golden years? Or is it more of a C student who could really use some extra help after school? Benchmarking can tell you.

Mind the basics

More than likely, you already use certain criteria to benchmark your plan’s performance using traditional measures such as:

• Fund investment performance relative to a peer group,
• Breadth of fund options,
• Benchmarked fees, and
• Participation rates and average deferral rates (including matching contributions).

These measures are all critical, but they’re only the beginning of the story. Add to that list helpful administrative features and functionality — including auto-enrollment and auto-escalation provisions, investment education, retirement planning, and forecasting tools. In general, the more, the better.

Don’t overlook useful data

A sometimes-overlooked plan metric is average account balance size. This matters for two reasons. First, it provides a first-pass look at whether participants are accumulating meaningful sums in their accounts. Naturally, you’ll need to look at that number in light of the age of your workforce and how long your plan has been in existence. Second, it affects recordkeeping fees — higher average account values generally translate into lower per-participant fees.

Knowing your plan asset growth rate is also helpful. Unless you have an older workforce and participants are retiring and rolling their fund balances into IRAs, look for a healthy overall asset growth rate, which incorporates both contribution rates and investment returns.

What’s a healthy rate? That’s a subjective assessment. You’ll need to examine it within the context of current financial markets. A plan with assets that shrank during the financial crisis about a decade ago could hardly be blamed for that pattern. Overall, however, you might hope to see annual asset growth of roughly 10%.

Keep participants on track

Ultimately, however, the success of a retirement plan isn’t measured by any one element, but by aggregating multiple data points to derive an “on track to retire” score. That is, how many of your plan participants have account values whose size and growth rate are sufficient to result in a realistic preretirement income replacement ratio, such as 85% or more?

It might not be possible to determine that number with precision. Such calculations at the participant level, sometimes performed by recordkeepers, involve sophisticated guesswork with respect to participants’ retirement ages and savings outside the retirement plan, as well as their income growth rates and the long-term rates of return on their investment accounts.

Ask for help

Given the importance of strong retirement benefits in hiring and retaining the best employees, it’s worth your while to regularly benchmark your plan’s performance. For better or worse, doing so isn’t as simple as 2+2. Our firm can help you choose the relevant measures, gather the data, perform the calculations and, most important, determine whether your retirement plan is really making the grade.

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Estate planning isn’t just about what happens to your assets after you die. It’s also about protecting yourself and your loved ones. This includes having a plan for making critical medical decisions in the event you’re unable to make them yourself. And, as with other aspects of your estate plan, the time to act is now, while you’re healthy. If an illness or injury renders you unconscious or otherwise incapacitated, it will be too late.

Without a plan that expresses your wishes, your family may have to make medical decisions on your behalf or petition a court for a conservatorship. Either way, there’s no guarantee that these decisions will be made the way you would want, or by the person you would choose.

2 documents, 2 purposes

To ensure that your wishes are carried out, and that your family is spared the burden of guessing — or arguing over — what you would decide, put those wishes in writing. Generally, that means executing two documents: 1) a living will and 2) a health care power of attorney (HCPA).

Unfortunately, these documents are known by many different names, which can lead to confusion. Living wills are sometimes called “advance directives,” “health care directives” or “directives to physicians.” And HCPAs may also be known as “durable medical powers of attorney,” “durable powers of attorney for health care” or “health care proxies.” In some states, “advance directive” refers to a single document that contains both a living will and an HCPA.

For the sake of convenience, we’ll use the terms “living will” and “HCPA.” Regardless of terminology, these documents basically serve two important purposes: 1) to guide health care providers in the event you become unable to communicate or are unconscious, and 2) to appoint someone you trust to make medical decisions on your behalf.

Living will

A living will expresses your preferences for the use of life-sustaining medical procedures, such as artificial feeding and breathing, surgery, invasive diagnostic tests, and pain medication. It also specifies the situations in which these procedures should be used or withheld.

Living wills often contain a do not resuscitate order (DNR), which instructs medical personnel to not perform CPR in the event of cardiac arrest.

HCPA

An HCPA authorizes a surrogate — your spouse, child or another trusted representative — to make medical decisions or consent to medical treatment on your behalf if you’re unable to do so. It’s broader than a living will, which generally is limited to end-of-life situations, although there may be some overlap.

An HCPA might authorize your surrogate to make medical decisions that don’t conflict with your living will, including consenting to medical treatment, placing you in a nursing home or other facility, or even implementing or discontinuing life-prolonging measures.

It’s a good idea to have both a living will and an HCPA or, if allowed by state law, a single document that combines the two. Contact us if you have questions regarding either document.

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