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WELCOME November 14, 2014


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THE EXPERIENCE ECONOMY: NEW WAYS OF GENERATING DEMAND JOSEPH PINE II


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HAVE THE INVESTMENTS IN OUR COMMUNITY PAID OFF FOR OUR LOCAL ECONOMY? MODERATOR: RUSS WELSH PANEL: MAYOR MARK HOLLAND, MAYOR CARL GERLACH & MAYOR SLY JAMES


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INCENTIVES AVAILABLE FOR COMMERCIAL DEVELOPMENT & How TO GET STARTED MODERATOR: BETTY NELSON-EKEY PANEL: STEVE KELLY, MIKE DOWNING & PETER NOONAN


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Doing Business in Missouri


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MO: One of only 4 states.


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Missouri Tech Job Growth: Dice.com Top 10 Highest rate of Technology Job Growth in US - 3 Years in a Row


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Performance – Missouri – FY-14 All-Time Record Results. 28,400 new jobs $6.4 billion capital investment Assisted Companies


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Initiatives


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http://business.mo.gov


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Uses ACT’s “National Career Readiness Certificate” Benefit to Communities: Promotes workforce availability and skills. Benefit to Companies: Reduces hiring risk.


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Innovation Campuses Partnership between: Tech companies (apprenticeships) Universities and colleges (AP courses and post HS) High Schools Accelerates 2/4 yr degrees. Provides trained/educated tech workers. NEW: Contribution 50% tax credit


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Missouri Building Entrepreneurial Capacity


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Incentives


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Incentive Resources Resources and Assistance State of Missouri Cities MO E.D. Financing Assn. Local ED Agency Website www.medfa.com


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Program Variables Type of company/project: “Primary” Redevelopment New Development Residential Development Public/Non-profit/Institutional Amount/type of new tax revenue generated from project Development needs/problems


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State Incentives Job creation incentives Missouri Works Worker training Missouri Works Development incentives Historic TC, Brownfield TC Low Income Housing TC Downtown Preservation Neighborhood Preservation TC MDFB contribution TC Sales tax exemptions


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Local Incentives Tax abatement or redirect: Tax Increment Financing/ST Rebate Property Tax Abatement 353, Chap. 100, EZ, LCRA, others Sales Tax Exemption (Chap. 100) New tax/assessment for development: Community Improvement Districts Neighborhood Improvement Districts Transportation Development Districts Loans


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Federal Incentives Economic Development Administration Dept. of Housing and Urban Dev. New Markets Tax Credits Small Business Administration


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www.ded.mo.gov


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Kansas Business Incentive Overview


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Incentives Promoting Employment Across Kansas High Performance Incentive Program Kansas Industrial Training/Retraining Job Creation Fund STAR Bonds Community Development Block Grant


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Promoting Employment Across Kansas (PEAK) Purpose: Encourage job growth & retention using employee withholding taxes retained by employer Eligibility Criteria: 10 jobs within 2 years in Douglas, Johnson, Leavenworth, Sedgwick, Shawnee & Wyandotte 5 jobs within 2 years in all other counties Median wage of new jobs being created must meet or exceed county median wage Alternative wage options exist


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Promoting Employment Across Kansas (PEAK) Eligibility Criteria: Ineligible: gambling, religious organization, retail trade, educational services, public administration, utilities, or food services and drinking establishments Shall not be delinquent in tax payment or in federal bankruptcy proceedings Must make available adequate healthcare and pay 50% of employee premium per FTE


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Promoting Employment Across Kansas (PEAK) Benefit: retain 95% of state payroll withholding on PEAK jobs up to 10 years – discretionary Less than 100 jobs within 2 years, maximum benefit of 7 years 100+ jobs within 2 years, maximum benefit of 10 years Alternate qualification, maximum benefit reduced


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High Performance Incentive Program (HPIP) Purpose: encourage capital investment, higher paying jobs and a skilled work force Eligibility Criteria: Must pay above average industry (NAICS) wage Invest amount equal to 2% of payroll in employee training or participate in state training program Cannot be agriculture, mining, construction or retail


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High Performance Incentive Program (HPIP) Benefit: 10% tax credit on capital investment over $1MM in Douglas, Johnson, Sedgwick, Shawnee, and Wyandotte counties, over $50K investment in all other counties Project exemption from sales tax Up to $50K workforce training tax credit


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Kansas Industrial Training (KIT) Supports training needs of eligible companies creating at least one net new job Awards typically range up to $400 per trainee Jobs pay the county median wage or higher Reimburses instructor salaries, curriculum planning and development, materials, supplies, textbooks, manuals and minor training equipment


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Kansas Industrial Retraining (KIR) Supports re-training needs of eligible companies that are restructuring or retraining at least one employee as a result of: incorporating new technology, diversifying production or developing and implementing new product Awards typically range up to $400 per trainee and require a dollar for dollar match by the company Retrained positions pay the county median wage or higher Reimburses same type of expenses as KIT


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Job Creation Fund (JCF) Purpose: provide discretionary funding (cash) that can be used strategically to meet specific project needs and fill funding gaps not met by other sources – Closing fund


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Job Creation Fund (JCF) Eligibility Criteria: Identified/demonstrated need Final resource/deal closer Benefit: Provides cash, typically on milestone schedule to offset early project costs Performance-based, money not received until performance met, and/or Payback required if performance criteria not met


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Sales Tax Accelerated Revenue (STAR) Bonds Purpose: encourage development of attractions and destination retail to attract outside funding and keep Kansas dollars in Kansas Eligibility Criteria: Locals request area/district be designated as an eligible project area by Commerce Identified project must be approved locally and by Commerce Must meet project size/revenue generation criteria Must meet out-of-state and out-of-region visitorship requirements Demonstrate financial and market feasibility


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Sales Tax Accelerated Revenue (STAR) Bonds Benefit: Both state and local sales tax increment dedicated to fund eligible project costs Commitment of transient guest tax and other revenues may also be necessary


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Community Development Block Grant (CDBG) Purpose--federal funds made available for community improvement purposes. Commerce administers these funds for non-entitlement communities. Eligibility Criteria- -- Project benefits low-to-moderate income -- Project removes or prevents slum or blight conditions -- Project eliminates an urgent need created by a disaster when local funds are unavailable


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Community Development Block Grant (CDBG) Categories of Funding: --Annual Competitive Round Water and Sewer, Community Facilities, Housing Rehabilitation --Economic Development Grants to cities to support private businesses creating jobs Eligible activities include: infrastructure, land acquisition, fixed asset/working capital financing Financing structures and repayment requirements vary


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Community Development Block Grant (CDBG) Categories of Funding: --Urgent Need --Addresses threats to health/safety from sudden/severe emergencies --Help meet community needs created by the emergency --KAN-STEP-Kansas Small Towns Environment Program --Self-help program for water, sewer and public building projects --Matches CDBG resources with local volunteer labor (sweat equity)


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Other Benefits Personal Property Tax Exemption No state income tax on most LLCs, LLPs, Subchapter-S and Sole Proprietorships Local Property Tax Abatements


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Thank You (785) 296-5298 KansasCommerce.com


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Real Estate Economic Outlook Focus on Tax Credits & Incentives November 14, 2014 Peter Noonan 816.234.2361 | 314. 746.3223 Before: Crown Candy neighborhood, RHCDA, St.. Louis, MO


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Tax Credits and Incentives are playing an increasing role in real estate development State Historic Tax Credits (KC & MO) [25% or 30% of QRE, all property types, fully transferable] Federal Historic Tax Credits [20% of QRE, CML property only, recapture, no transfer] Brownfield Tax Credits (MO) [100% of cleanup expense, must create at least 10 new/25 relocated jobs] Infrastructure Development Tax Credits (MO) [Now subject to increased caps] Affordable Housing Tax Credits (Federal, MO) [Rental residential, workers with a % of median income] New Markets Tax Credits (Federal) [CML property, lower census tract, up to 39% federal credit] Local programs (TIF, CID, Abatement, etc.)


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General Description of a State Tax Credit Tax Credits provide a dollar for dollar reduction in the State tax obligation of an individual or corporate taxpayer. It is different than a tax deduction, and represents an actual reduction in taxes due to the State Both Missouri and Kansas historic tax credits are freely transferable


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Kansas Historic Rehabilitation Tax Credit Program Arises from the rehabilitation of a building listed on either the Kansas State or National Register of Historic Places, or a contributing building within a State or National district Buildings may be income producing of non income producing Personal residences may be included Project expenses must exceed $5,000 No program cap, no project cap All work must meet the Secretary of the Interior’s Standards for Rehabilitation Tax credit is equal to 25% of Qualified Rehabilitation Expense (QRE), increasing to 30% of QRE for 501© 3 corporations


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Missouri Historic Rehabilitation Tax Credit Program Arises from the rehabilitation of a building either i) listed individually on the National Register of Historic Places, ii) certified by the MO Department of Natural Resources as contributing to the historic significance of a certified historic district listed on the National Register, or iii) contributing to a local historic district that has been certified by the US Department of the Interior Building may be income producing or non income producing Personal residences may be included, capped at $250,000 in credits per resident QRE must exceed at least 50% of original purchase price of subject property Annual allocation of $140MM in credits, no cap on deal size All Small deal exemption” Projects with QRE of $1.1 million or less do not count towards the program cap All work must meet the Secretary of the Interior’s Standards for Rehabilitation Tax credit is equal to 25% of Qualified Rehabilitation Expense (QRE) Not for profit entities do not qualify


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Federal Historic Tax Credit Program Only for income producing properties (not for personal residences, condos, townhomes) Only available to for profit applicants Calculated at 20% of QRE Minimum QRE to be at least equal to the tax basis in the property Subject to recapture for the 5 years after the property is placed in service (property sale, foreclosure, deed in lieu, casualty) All non transferable, often liquidated through partnerships Currently difficult to syndicate when below $1 million in credits Current trend: Issues in syndication include getting a legal opinion that the project meets the IRS Safe Harbor, that the master lease terms are at market rate, and how the investor will recognize 50d income


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Qualified Rehabilitation Expense (QRE) This generally includes: Hard Renovation costs – from exterior inwards Construction period soft costs Up to 20% developers fee – with agreements and special accounting This generally excludes: Items not permanently attached Landscaping Parking lots Additions


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To rehabilitate or not to rehabilitate Reasons to renovate historic buildings Federal and State tax credits Quality building when completed Greater marketability of completed building Preservation of our heritage (neighborhood, City, State) Reasons not to rehabilitate Renovation costs excessive (wet building, structural) Conflicting requirements (accessibility, local codes) Your design for the building does not meet standards Costs to meet historic standards exceed value of the credits Steps to analyze historic property Thoroughly examine structure Consider hiring a preservation consultant Either avoid wet buildings, or use as an opportunity to mitigate Beware of emotional attachment to the building Always know your market – apartments, offices, retail, hotels Select an experienced development team


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Process for Rehabilitation Determine Historic Status (on register, in district?) Plan the project with your architect or historic consultant Document the history and evolution of the building Evaluate original materials, features, finishes Assess physical conditions of historic materials Work with your State Historic Preservation Officer (SHPO) on your plan


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Developer questions when getting started Evaluate local support and localized incentives that may be available If not listed – put on register yourself? Hire a Preservation Consultant? For profit entity vs. not for profit entity? Environmental issues, Brownfield credits? If residential – rental vs. condo If rental residential – market rate vs. affordable Conventional financing vs. HUD May your incentives all be layered?


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State Tax Credits assist in the financing process KS & MO State Tax credits are fully transferable, issued upon completion These tax credits may be sold to third parties at a discount upon issuance Tax Credits may be pre-committed to a buyer early in the process, often to a credits rated entity that then becomes required to make the purchase upon issuance of the credits Lenders will often take this into account in the project equity requirement and underwriting Lenders, partners and investors (Fed HTC, LIHTC) will then underwrite the tax credit purchaser and may take direct assignment of these proceeds via multi Under these agreements, tax credit purchasers may be required to make payment directly to the lender, who applies the funds to the loan per the loan agreement with the developer Current Trend: Industry currently vibrant, especially market rate apartments, but struggling with tax structure issues upon gain on sale of the State tax credits


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Peter T. Noonan 816.234.2361 | 314. 746.3223 Peter.Noonan@CommerceBank.com Drury Plaza Broadview Hotel, Wichita , KS


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ARE LENDERS ON BOARD IN HELPING TO STIMULATE THE ECONOMY? MODERATOR: SCOTT SLABOTSKY PANEL: KEVIN BARTH, BRIAN LEE & Jim Rine


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2014 Kansas City Real Estate and Economic Outlook Conference Kevin Barth November 14, 2014


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55 Trends in Commercial Real Estate Development Equity capital for real estate is readily available from both traditional institutional sources as well as private investors Loan structures today usually have more equity than in the past, but recourse levels are more subject to negotiation and tied to property performance metrics More real estate development projects are receiving some form of incentive such as TIF, TDD, CID or NID Questions abound as to what impact trends such as renter by choice, the impact of the baby boomers retiring and working from remote locations will have on demand for real estate More questions about the impact of rising rates on the performance of projects conceived in a historically low rate environment


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56 Trends in Commercial Real Estate Development Competition for quality loans with capable sponsors has brought spreads on loans down while structuring has remained sound Multifamily projects, primarily Class A have been the most active. Demographic shifts driving this have been millennials delaying marriage and a growing renter by choice cohort Large bulk industrial warehouses have also been popular driven by needs for higher ceiling heights to allow new racking systems and desire for improved locational efficiencies CMBS issuance grew from $48B in 2012 to $86B in 2013 but still well off 2007 level of $229B Speculative office development is slowly making a comeback in markets with strong job growth potential such as Dallas, Houston and Denver


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57 Why Is Commerce Actively Seeking New Commercial Real Estate Lending Opportunities? CRE continues to be a major portion of total commercial loan portfolio – approximately half of $6Billion total


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58 Why Is Commerce Actively Seeking New Commercial Real Estate Lending Opportunities? CRE continues to be a major portion of total commercial loan portfolio – approximately half of $6Billion total Record level of deposits to invest - Commercial Loans are best alternative for return


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59 Why Is Commerce Actively Seeking New Commercial Real Estate Lending Opportunities? CRE continues to be a major portion of total commercial loan portfolio – approximately half of $6Billion total Record level of deposits to invest - Commercial Loans are best alternative for return


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60 Why Is Commerce Actively Seeking New Commercial Real Estate Lending Opportunities? CRE continues to be a major portion of total commercial loan portfolio – approximately half of $6Billion total Record level of deposits to invest - Commercial Loans are best alternative for return


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61 Why Is Commerce Actively Seeking New Commercial Real Estate Lending Opportunities? CRE continues to be a major portion of total commercial loan portfolio – approximately half of $6Billion total Record level of deposits to invest - Commercial Loans are best alternative for return Historically low loan losses on CRE lending


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62 Why Is Commerce Actively Seeking New Commercial Real Estate Lending Opportunities? CRE continues to be a major portion of total commercial loan portfolio – approximately half of $6Billion total Record level of deposits to invest - Commercial Loans are best alternative for return Historically low loan losses on CRE lending Credit quality and problem loans back to pre-recession levels – even for troubled institutions Source: Federal Reserve: October 2014 Senior Loan Officer Opinion Survey on Bank Lending Practices


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63 Tips for Being More Efficient in the Loan Process Deal with an experienced banker who understands your business and has successfully operated through many economic cycles Understand the bank’s loan approval process and provide a detailed picture of the team – developer, contractor, lawyers, tenants, leasing and management Submit a detailed line by line budget that shows both the timing and sources of equity injection Have current financials on borrower, guarantor and tenants Justify pro forma income and expense projections based on current comparables in market Be aware that banking is a regulated industry; issues like FIRREA, KYC and Patriot Act have implications on every loan Include site plan, current photos, renderings, etc. Pictures are worth a thousand words Identify any potential environmental issue – minimum requirement of a Phase 1 ESA Be realistic in terms of time frames. In most cases the longest lead time will be the appraisal process so get it ordered in a FIRREA compliant manor ASAP


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Quality endures. Third Quarter 2014 UMB Financial 2014 Kansas City Real Estate & Economic Outlook Conference Jim Rine President – Kansas City Region


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Cautionary Notice about Forward-Looking Statements 65 This presentation contains, and our other communications may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. All forward-looking statements are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond our control. You should not rely on any forward-looking statement as a prediction or guarantee about the future. Our actual future objectives, strategies, plans, prospects, performance, condition, or results may differ materially from those set forth in any forward-looking statement. Some of the factors that may cause actual results or other future events, circumstances, or aspirations to differ from those in forward-looking statements are described in our Annual Report on Form 10-K for the year ended December 31, 2013, our subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, or other applicable documents that are filed or furnished with the Securities and Exchange Commission (SEC). Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Quarterly Report on Form 10-Q, Current Report on Form 8-K, or other applicable document that is filed or furnished with the SEC.


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UMB At A Glance 66 Assets under management Banking presence Branches/ATMs Acquisitions last 10 years Market cap Dividend payout ratio* $42.1B 8 states 107/306 23 >$2.48B 32.7% Total assets $16.3B Revenue from fee businesses – current quarter 59.1% *Average over past 4 quarters – diluted EPS As of September 30, 2014


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Consistent Loan Growth 67 5 Year CAGR 9.9% Average Net Loans & Loan Yields


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Average Balance, AFS: $6.7 billion Average Yield: 1.86% Investment Mix Securities Available for Sale, At September 30, 2014 Agencies High Quality Investment Portfolio 68 Municipals Mortgage-Backed Securities Treasuries AFS Portfolio Statistics


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Changing Loan Mix Quality Loan Composition 69 3Q 2014 Year-End 2006


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UMB Bank 70


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UMB Bank – Commercial Banking Results 71 Loan Balances $ in billions, Average C&I and CRE Loan Balances for Three Months Ended September 30 5 yr CAGR 11.1%


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Low-Cost Funding Sources 72 >2X vs. Industry Non-Interest Bearing Deposits as % of Total Deposits *Industry Median as of 2Q14; Source: SNL Financial


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Additional Thoughts Biggest changes at UMB regarding commercial real estate lending Types of loans we are seeing


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TAX STRATEGIES AVAILABLE FOR THE FINAL 45 DAYS OF 2014 PAT O’BRYAN & SETH LEIBSON


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Tax Strategies for the Final 47 Days of 2014 75


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NO NEWS IS GOOD NEWS? 76


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Individual Provisions Maximum Rates 2013- 2014 Ordinary Income 39.6% * Qualified Dividends/ Long Term 20% * ** Capital Gain * Applicable when taxable income exceeds $406,750 (single) and $457,600 (married filing jointly) ** Plus an additional 3.8% Medicare surtax when taxable income exceeds $200,000 (single) and $250,000 (married) 77


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Maximum Tax Rate Regular 39.6% AMT 28% 78


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Timing of Income and Expenses is Key Smart timing can reduce your tax liability Poor timing can unnecessarily increase it 79


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AMT Triggers State and local income tax deductions Real estate and personal property tax deductions Interest on home equity loan or line of credit not used to buy, build or improve your principal residence Miscellaneous itemized deductions subject to 2% of AGI floor Accelerated depreciation adjustments and related gain or loss differences when assets are sold 80


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What to Consider Doing If subject to AMT this year Accelerate ordinary income and short-term capital gains into 2014 Defer expenses you can’t deduct for AMT purposes until 2015 If subject to AMT next year Defer ordinary income until 2015 Prepay expenses you can’t deduct for AMT purposes in 2014 If subject to AMT every year 81


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3.8% Net Investment Income Overview Beginning last year, a new 3.8% Medicare “surtax” applies to those who have investment income and whose income exceeds a certain “threshold amount”. $200,000 (single) / $250,000 (married) Applies to the lesser of Net Investment Income or Modified AGI 82


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3.8% Net Investment Income Net Investment Income Defined: 83 Includes Interest Dividends Annuity Distributions Rents Royalties Income derived from passive activity Net capital gain derived from the disposition of property


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3.8% Net Investment Income Net Investment Income Defined: 84 Does NOT Include: Salary, wages, or bonuses Distributions from IRAs or qualified plans Any income taken into account for self-employment tax purposes Gain on the sale of an active interest in a partnership or S corporation Nonpassive trade and business income Note on Real Estate Professionals


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3.8 % Net Investment Income Reduced by Investment interest expense State income taxes Miscellaneous investment expenses 85


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0.9% Payroll Surtax on Earned Income Beginning last year, wage earners are subject to an additional 0.9% Medicare tax on wages and self-employment income exceeding $200,000 per year ($250,000 for joint filers). Employers are obligated to withhold the additional tax beginning in the pay period when wages exceed $200,000 regardless of an employee’s filing status. 86


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Individual Provisions Itemized Deductions 3% of AGI Itemized Deduction Phase-outs returned last year (up to 80%) For single taxpayers, the level is $254,200 For joint returns, the level is $305,050 This phase-out tends to lessen the ultimate impact of AMT. Personal Exemption $3,950 per exemption but are phased out for taxpayers at a rate of 2% for each $2,500 or fraction of $2,500 by which the taxpayer’s AGI exceeds the above levels 87


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Individual Provisions Itemized Deductions Married Taxpayer: AGI $ 505,050 Threshold <305,050> Excess AGI $ 200,000 Phase Out Rate 3% Itemized Deductions Lost $ 6,000 Personal Exemptions lost 100% 88


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Investments Capital Gains and Losses Careful handling of capital gains and losses can save taxes For married taxpayers filing jointly, the long-term capital gains rates are as follows: Income up to $73,800 0% Income $73,801-$457,600 15% Income over $457,600 20% Also be subject to the 3.8% Net Investment Income Tax if income exceeds 200,000 (single) or 250,000 (married) 89


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Investments Capital Gains Tax and Timing Consider transferring appreciated assets to adult children in the 15% ordinary tax bracket to enjoy the 0% capital gains rate Donate appreciated assets to charity 90


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Tax Strategies For Real Estate and Business Transactions 91


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Real Estate Activity Losses Losses are typically passive Real estate professionals can deduct losses fully if annually they Perform more than 50% of personal services in real property trades or businesses Meet material participation requirements Spend more than 750 hours of service in such businesses Good record keeping Keep in mind: Each year stands on its own. Plus there are other nuances to be aware of. If you’re concerned you’ll fail either test, consider increasing your hours so you’ll meet the test. 92


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Passive Losses Deductible only against income from other passive activities Carry forward disallowed losses to next year To avoid passive treatment, participate in a trade or business more than 500 hours per year If you don’t pass the test, consider Increasing your involvement Disposing of the activity Investing in an income-producing passive activity 93


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Taxation of Governmental Incentive Use corporate entity to avoid taxation of the following: Tax increment financing (TIF). Sales tax and revenue bond. Transportation development districts (TDDs). Community Improvement Districts (CIDS). 94


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Expensing for Business Property 95


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Election (Section 179) Immediately expense of tangible personal property. Must have active trade or business income. Deduction phases out when eligible purchases exceed limits. 96


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2013 2014 2015 Bonus Depreciation 50% 0% 0% Leasehold improvements 15 yr. 39 yr. 39 yr. Retail improvements 15 yr. 39 yr. 39 YR. Bonus Depreciation 97


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Cost Segregation Determines whether an item is personal property or a structural component of the building. Reduces recovery period for depreciation from 39 years to 15, 7 or even 5 years. Automatic accounting method change – catch up depreciation understatement in one year. 98


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Typical misclassified assets: Cabinets Decorative fixtures Partitions or removable walls Security equipment Parking lots and landscaping Cost Segregation 99


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Where Does Cost Segregation Apply? New Construction New Acquisition Currently Owned Property 100


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$100,000 Allocation to Personal Property 1st Year Depreciation Expense: Personal Property $ 14,290 Real Property (2,560) Additional Depreciation $ 11,730 101


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Ranges for Cost Segregation Office Buildings 10-20 Apartments 15-25 Hotels/Motels 20-30 Retail 20-30 Warehouses 5-10 102


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General Rule: Like-Kind Exchanges Like-kind property Exchange property designated within 45 days Property received within lesser of: 180 days, or Due date of return 104


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Like-Kind Exchanges: Factors to Consider Tax Basis of Property Fair Market Value Status of Passive Losses Need for Liquidity 105


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Tangible Property Regulations What/Why/When/How it affects you. 106


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Extensive Guidance on Capitalization vs. Repair & Maintenance 107 Over 200 pages of guidance & over 170 examples replaces 4 pages of guidance.


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Effective tax years beginning on or after 1/1/2014 108


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109 Applies to all taxpayers that acquire, produce, or improve tangible property.


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Review current and prior year capital expenditure and repairs and maintenance Adopt capitalization policies Report compliance with regulations with 2014 tax return 110


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WHAT ABOUT THE FUTURE? 111


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New World Balance of Power Senate 54/100 Republican Party House 244/435 Republican Party White House Democrat Veto override votes needed (2/3 of those present, quorum necessary) Senate 67 House 290 112


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Likely must be bipartisan Including President Obama Involvement along the way. Corporate Rate Reduction /Repatriation - Statutory rate from 35% to 25% - Consistent with Baucus, Camp and Joint Committee on taxation proposals - Preferences/ deductions at risk (advertising) Individual - Few proposals in this area - Likely little if any change during next 2 years - No relief for net investment Income tax (3.8%) or Medicare payroll tax (.9%) - Carried Interests are safe Real Tax Reform 113


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MEDICARE “SURTAX” (3.8%) ON INVESTMENT INCOME Payroll Medicare “surtax” (.9%) on wages and self-employed income Phase out of itemized deduction and personal exemptions Individual health insurance mandate excise tax Employer tax on failing to provide health insurance Tax on medical device manufactures Tax on Indoor Tanning service increase in early distribution from HSA accounts (from 10%- 20%) Increase in federal tobacco excise tax (156%) 12 other significant tax Hikes Obama ERA New or Increased Taxes 114


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Number of Returns Filed 115


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- Paper 10,036,510 6.2% -Electronically 151,114,490 93.8% How Were They Filed? 116


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Number of Returns Filed KS MO CA WY C or Other Corp 17,193 33,479 319,631 5,060 S Corp 34,291 66,477 456,439 12,585 Partnership 35,515 67,764 388,946 13,478 Individual 1,326,135 2,726,692 16,934,571 305.473 Estate and Trust 28,170 153,867 330,614 7,160 Tax Exempt 15,101 32,540 159,529 4,181 117


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1960 $ 92,000,000,000 1970 $ 196,000,000,000 1980 $ 519,000,000,000 1990 $ 1,056,000,000,000 2000 $ 2,097,000,000,000 2010 $ 2,345,000,000,000 2013 $ 2,855,000,000,000 US GOVERNMENT GROSS TAX COLLECTORS 118


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C Corp Returns 119


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Nontaxable Returns Partnership Returns – 0.4% S Corp Returns – 0.4% 120


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Individual Returns Less than $200,000 Total Income No Schedule C, E or F – 0.4% With Schedule C, E or F – 1.0% $200,000 - $1,000,000 of Total Income Non-Business Returns – 2.5% Business Returns – 3.2% Over $1,000,000 of Total Income – 10.8% 121


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Questions 122


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Real estate: is another bubble on the horizon? MODERATOR: JOHN PETERSEN PANEL: MICHAEL STAENBERG, DAVID HARRISON & OWEN BUCKLEY


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THANK YOU


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