N E W S L E T T E R

In thIs Issue…The Home Front................................................ 2

Proud Moments................................................ 2

Notes from Uncle Sam.............................. 3

Milestones to Recognize......................... 3

BusIness AdvIsoryharvest 2007 tax savings by Planning Aheadby Russell Hopkins, C.P.A.

Each.year.offers.fresh.opportunities.for.tax.planning,.and.those.that.take.the.time.to.plan.stand.to.benefit.the.most..Congress.continues.to.tinker.with.the.tax.code.making.it.more.critical.than.ever.to.develop.a.comprehensive.planning.approach.that.considers.today’s.tax.laws.and.anticipates.future.changes.. Below.are.several.points.to.consider.as.you.plan.for.your.2007.tax.bill.

At your business+ Update your retirement plan –.The.Roth.401(k).became.permanent.under.a.tax.

law.passed.in.2006..Contributions.to.Roth.accounts.are.made.on.an.after-tax.basis.and.can.be.as.high.as.regular.401(k).contributions.($15,500.for.2007)..While.there.is.no.current.year.tax.benefit.since.Roth.contributions.are.not.deductible,.the.interest.grows.tax.free.and.is.not.taxed.upon.distribution.

+ Budget for higher asset expensing –.Do.you.need.new.business.equipment?.For.2007,.you.may.be.able.to.take.a.direct.write-off.of.as.much.as.$112,000.for.qualifying.business.assets.

+. Review manufacturing deduction recordkeeping –.For.2007,.the.deduction.for.qualifying.production,.construction.and.service.activities.was.raised.to.six.percent.of.your.profits..Updating.your.wage.and.expense.records.now.can.make.it.easier.to.benefit.from.the.increase.in.the.deductible.amount.at.year.end.

+. Timing matters –.Deferring.income.to.the.next.year.often.makes.sense.from.a.tax.perspective..Cash.method.businesses.may.consider.delaying.year-end.billing.and.prepaying.January.2008.expenses.

on the Job+ Retirement contributions –.For.2007,.you.can.contribute.as.much.as.$15,500.to.

your.401(k),.an.increase.of.$500.from.2006..The.catch.up.contribution,.available.if.you’re.over.50,.remains.at.$5,000..

+ Maximize pretax benefits –.During.open.enrollment.season,.electing.to.take.advantage.of.all.the.pretax.benefits.offered.by.your.employer.is.an.excellent.way.to.

(Business Advisory continued on page 3)

From Our Family to Yours.............................4

Notice!................................................................................4

Take A Break...............................................................4

Guacamole Recipe...............................................4

seasonal Changes

For.many.of.our.clients.and.friends,.thoughts.are.turning.to.the.upcoming.holiday.season...For.us,.this.time.of.year.signals.

the.beginning.of.preparation.for.tax.season..We.are.ramping.up.our.systems.to.meet.the.needs.of.our.clients;.and.staff.are.preparing.

for.the.arduous.months.ahead..As.a.

company,.keeping.up-to-date.on.current.tax.laws.

and.planning.processes.is.critical.in.effectively.meeting.the.needs.of.the.clients.we.serve,.

and.this.season.is.no.exception..Each.year.brings.new.changes.to.

current.tax.laws.and.the.Treasury.Department’s.interpretation.of.those.laws..Our.commitment.to.comprehensively.understanding.the.new.laws.and.interpretations.allows.us.to.collect.and.accurately.assess.your.data.in.order.to.apply.it.in.the.most.advantageous.way... This.issue.of.Dollars & Sense contains.helpful.information.and.tips.on.how.to.begin.planning.for.your.end.of.year.taxes..We.are.always.available,.so.please.call.us.with.questions..Enjoy.the.upcoming..fall.season.

.Volume.ONE.|.Issue.3. A.publication.of.Bates,.Carter.+.Co.

page2 page3notes from unCle sAmIrs Gears up to Increase Auditsby John Nix, C.P.A.

We.are.always.conscious.of.the.possibility.that.the.returns.we.prepare.will.be.subject.to.audit.by.the.taxing.authorities..Over.recent.years.we.have.seen.very.few.audits..This.has.been.primarily.due.to.a.lack.of.funding.and.personnel.to.run.IRS.enforcement.activities..At.a.recent.accounting.show,.an.IRS.representative.gave.warning.that.the.enforcement.area.would.soon.see.a.much.greater.level.of.activity..IRS.data.has.shown.that.the.“tax.gap,”.the.difference.between.actual.taxable.income.and.what.is.reported,.has.grown.significantly..New.funding.has.allowed.the.IRS.to.increase.their.manpower.and.implement.programs.that.will.ensure.an.increasing.number.of.returns.will.be.examined... The.IRS.will.also.move.forward.with.its.National.Research.Project.(NRP).to.randomly.select.returns.from.all.areas.for.review.and.possible.audit..This.means.that.tax.filers.should.pay.close.attention.to.their.accounting.records.to.insure.proper.substantiation..Tax.positions.should.be.researched.and.well.documented.to.prevent.negligence.and.other.penalties..At.BCC,.we.believe.that.we.will.need.to.further.strengthen.relationships.with.our.clients.to.reduce.the.possibility.of.unfavorable.audit.findings.with.the.taxing.authorities..As.always,.we.pledge.to.work.with.you.as.a.trusted.advisor.to.insure.your.financial.security..Your.BCC.partner.is.available.to.answer.your.questions.

Proud momentsDuring.an.audit.of.the.Jackson.County.School.District,.BCC.vice.president,.Duane.Schelereth,.uncovered.an.additional.$341,000..The.Toyota.facility.at.Valentine.Farms.Industrial.Park.was.not.billed.for.$341,000.in.2006.school.taxes..In.addition,.he.uncovered.a.weakness.in.the.county’s.method.of.tracking.tax.abatements..Thanks.to.Duane,.the.school.district.has.additional.funds.and.they.are.working.with.relevant.entities.in.order.to.develop.a.more.effective.process.for.monitoring.tax.abatements..Way.to.go.Duane!

Congratulations to…+ Duane Schelereth.for.his.appointment.as.president.of.the.Lake.Lanier.Rowing.Club.

+ Kristy Walker.for.being.elected.president.of.the.Gainesville.Club.of.Toastmaster’s.International..Michele Bruce.was.elected.treasurer..Toastmaster’s.International.builds.leadership.and.communication.skills.to.increase.employee.effectiveness..Learn.more.by.visiting.www.toastmasters.org.

making a difference —

Bates, Carter employees are all heart+ BCC.employees.opened.up.their.hearts.and.wallets.to.raise.more.than.$1,500.for..

the.American.Heart.Association..In.order.to.raise.funds,.employees.participated.in.a.variety.of.activities.including.the.Heart.Walk,.chili.cook.off,.Biggest.Loser.Weight.Loss.Contest,.chocolate.swap.and.raffle.

+ BCC.employees.donated.more.than.16.pints.of.blood.to.the.American.Red.Cross..In.addition,.Sandy Whiten.volunteers.at.the.Red.Cross.every.Friday.afternoon..

+ Midlife.Crisis,.featuring.BCC.partner,.Ron Bracewell,.used.their.musical.talents.to.help.raise.money.for.Interactive.Neighborhoods.for.Kids.(INK)..The.event.was.held.on.August.18.and.raised.over.$18,000.to.help.fund.educational.exhibits.for.the.children’s.museum..INK.is.located.at.Featherbone.Communiversity,.which.evolved.from.the.Warren.Featherbone.Company.on.Chestnut.Street..BCC.client,.Gus.Whalen,.the.general.partner.of.Featherbone.Communiversity,.is.one.of.the.local.civic-minded.investors.that.have.made.INK.a.reality..To.learn.more.visit.www.inkfun.org.

mIlestones to reCoGnIze

(Business Advisory Harvest 2007 continued from page 1)

www.batescarter.com

reduce.your.tax.bill..In.addition.to.retirement.contributions,.dependent.care.and.out.of.pocket.medical.costs.can.be.funded.through.flexible.spending.accounts.

through your investments+ Capital losses –.While.nobody.likes.investment.losses,.they.can.help.at.tax.

time..You.can.use.capital.losses.to.offset.capital.gains.and.up.to.$3,000.worth.of.ordinary.income..Be.cautious.of.the.wash.sale.rule.which.prevents.you.from.repurchasing.a.security.sold.at.a.loss.within.30.days.

+ Charitable contributions –.Donating.stock.to.qualified.organizations.avoids.capital.gains.on.any.price.appreciation,.while.allowing.you.to.deduct.the.stock’s.full.value.on.the.date.of.the.gift..If.the.stock.has.declined.in.value,.you’ll.do.better.to.sell.the.shares.and.contribute.the.proceeds.

looking forward to 2008 and beyondThe.2008.presidential.campaign.promises.to.offer.some.interesting.tax.rhetoric.from.both.the.Democrats.and.Republicans,.but.don’t.expect.a.major.overhaul.of.the.tax.code..While.there’s.talk.of.simplifying.the.tax.code.and.easing.the.Alternative.Minimum.Tax.(AMT),.the.leading.candidates.don’t.offer.any.radical.solutions,.such.as.abolishing.the.IRS.in.favor.of.a.flat.tax.or.national.sales.tax..Instead,.the.focus.is.on.what.to.do.with.President.Bush’s.tax.cuts,.lower.marginal.rates.and.the.15%.capital.gains.rate,.which.are.set.to.expire.in.2010... The.lesson.for.the.2008.election.for.taxpayers.in.2007.is.to.realize.we.are.in.a.period.of.relatively.low.tax.rates.and,.regardless.of.the.election.results,.change.is.imminent..Can.you.capitalize.on.today’s.lower.rates.for.tax.savings.on.a.land.sale.or.stock.option?.Call.us.and.let’s.plan.n.the.Tools.section.of.our.website...Visit.www.batescarter.com.

on the home front

Announcing…

Julia Jeannette CobbJune.26,.2007.8lbs,.12.oz.,.21”

Proud family: Stephen.and.Suzanne.Cobb.and.big.brother,..Evan.Nathaniel

Ecstatic grandmother: Linda.Cobb

Elizabeth Ann Jessup August.25,.2007.7lbs,.14oz,.20”

Proud family: Randy.and.Amy.Jessup.and.big.brothers,.Ben.and.John.

the twins turn one!

Katie and Connor Griffin.were.born.September.17,.2006.to.proud.parents,.Kristi.and.Chris.

More than 4,000 children visit the museum each month.

new team members

Rebekah Galyean.Staff AccountantAudit.Department

Dustin David.InternAudit.Department

Promotions

Michele Bruce.to.audit.senior.in.the.Government.Audit.Department

Lindsey Gough.to.tax.senior..in.the.Tax.Department

Lori Sayer.to.audit.senior.in.the.Government.Audit.Department

David Geer to.audit.senior.in.the.Commercial.Audit.Department

Way to go!

Congratulations.to.Michelle Bruce.for.passing.the.final.section.of.the.CPA.exam.

Katie.arrived.first.and.weighed.5lbs,.14.oz..She.now.weighs.22.lbs...Connor.topped.the.scales.at.6.lbs.and.now.weighs.23.lbs.

page4

A.Professional.Corporation.of.Certified.Public.Accountants.and.Consultants

525.Candler.Street,.N.E.P.O..Drawer.2396.•.Gainesville,.GA.30503Phone:..770.532.9131.•.Fax:.770.536.5223

from our fAmIly to yoursBusiness succession planning by Ron Bracewell, C.P.A., A.B.V.

Business.succession.planning.is.perhaps.the.most.critical.financial.process.you.will.undertake.in.your.life..After.all,.it.encompasses.all.elements.of.finance.as.well.as.personal.and.family.issues..Successfully.transferring.your.business.to.a.buyer.or.to.the.next.family.generation.requires.years.of.planning..

Plan ahead. You.should.begin.this.process.10-20.years.before.your.planned.retirement.date..Why.so.soon?. One.reason.is.taxes..Most.small.businesses.sell.their.assets.rather.than.stock.in.the.company..For.tax.reasons,.buyers.prefer.to.buy.assets..The.income.tax.burden.on.an.asset.sale.for.a.C.corporation.is.a.double.tax..You.may.be.able.to.avoid.this.double.taxation.by.electing.S.corporation.status.. Another.reason.is.enhancement.of.business.value..Over.the.years,.you’ve.built.your.company.and.it.probably.has.value.if.you.can.transfer.that.value.to.the.buyer..Buyers.face.uncertainty.and.risk..To.maximize.your.sales.price,.you.want.to.minimize.both..You.need.to.know.what.your.company.is.worth.and.why..What.are.the.critical.value.drivers.in.your.company?.How.can.you.leverage.those.drivers.to.maximize.the.value.of.your.company?.Who.are.the.potential.buyers?.Are.they.financial.buyers.or.strategic.buyers?.Identifying.a.qualified.buyer.is.the.most.important.factor.in.maximizing.your.company’s.value... If.the.buyer.can.successfully.envision.that.success.before.he.buys,.then.the.value.of.your.company.is.higher..Business.succession.planning.is.important.even.in.the.sale.of.a.business.. When.it.is.time.to.sell.your.company,.you.have.already.done.your.homework..You.know.what.your.company.is.worth.and.can.negotiate.with.confidence... Keep.time.and.money.on.your.side.by.planning.ahead!. As.your.trusted.business.partner,.we.can.help.you.with.these.complex.and.critical.issues..Our.experienced.tax.and.valuation.consultants.are.ready.to.serve.you.. Watch for our next issue, where we will discuss the process of transferring your business to the next family generation.

notICe!

We.are.aware.that.the.IRS.has.erroneously.sent.out.notices.to..S.corporations.regarding.delinquent.C.corporation.tax.returns..If.you.have.received.such.a.letter,.contact.your.BCC.accountant.to.request.a.letter.specifying.your.business.has.filled.out.a.timely.S.corporation.return..The.IRS.is.working.to.correct.the.problem.

tAKe A BreAK…

you might be an accountant if...+ you.refer.to.your.child.as.

Deduction.214.+ you.have.no.idea.that.GAP.is.

also.a.clothing.store.+ you.are.doing.it.now.because.

you.checked.the.file.and.found.that.you.did.it.last.year.

+ you.decide.to.change.your.name.to.a.symbol.and.you.choose.the.double.underline."======".

3.ripe.avocados

1/4.cup.finely.chopped.white.onion

2/3.cup.diced.tomatoes

Guacamole from the kitchen of Russell Hopkins

1/4.tsp.salt

2.tbsp.fresh.lime.juice

fresh.black.pepper

Scoop.out.all.three.avocados.and.mash.with.a.fork...Leave.them.chunky..Stir.in.onions.and.tomatoes...

Add.salt.and.lime.juice.and.blend..Grate.fresh.black.pepper.over.the.top..(Note:.if.your.avocados.are.ripe,.most.of.the.chunkiness.will.disappear.when..the.other.ingredients.are.added.)