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Monthly Archives: February 2015

How the President’s Budget Proposal Would Affect Retirement Savings by Sean Deviney, CFP

Posted on February 27, 2015 by Richard Berkowitz, JD, CPA

President Obama’s budget proposal for fiscal 2016 includes several provisions that could improve taxpayers’ access to retirement savings programs and limit the amount some individuals can save in those plans. Following are some of the key measures proposed by the president that await Congressional approval:


Automatically enroll workers. Employees without access to employer-sponsored retirement plans would be enrolled in IRAs automatically through payroll deposit contributions, for which workers may opt out, if they choose.


Automatically enroll service members. The statutory ban on automatic enrollment in retirement plans for armed services members and Department of Defense personnel would be removed.


Improve access for part-time workers.  Employers who provide retirement plans to full-time workers would be required to allow part-time employees who worked a minimum of 500 hours per year for the previous three years or more to make voluntary contributions to the plans.
Cap tax-preferred plans. Tax-preferred retirement savings plans and individual retirement accounts (IRAs) would be capped at $3.4 million per individual. The limits would reset each year based on actuarial tables and other assumptions.


Limit Roth IRA conversions to pre-tax dollars.  Individuals would be prohibited from making after-tax contributions to traditional IRAs and converting them to a Roth IRA and rolling over after-tax contributions from a 401(k) to a Roth IRA.

Change rules governing employer stock in retirement plans.  Repealing the exclusion of net unrealized appreciation in employer securities would prohibit employees from taking in-kind distributions of employers’ stock from a retirement plan and transferring the shares to a taxable brokerage account. When employees sell the shares, the remaining net unrealized appreciation would be taxed at the long-term capital gains rate.

About the Author: Sean Deviney, CFP, is a financial advisor and retirement plan specialist with Provenance Wealth Advisors, an independent financial services firm affiliated with Berkowitz Pollack Brant Advisors and Accountants.  For more information, call (954) 712-8888 or email


Provenance Wealth Advisors, 515 E. Las Olas Blvd., Ft. Lauderdale, Fla. 33301 (954) 712-8888. Securities offered through Raymond James Financial Services, Inc., Members FINRA/SIPC. Opinions expressed are those of Sean Deviney and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice.




Mitigation: The Often Overlooked Component of Lost Profits Litigation by Scott Bouchner, CMA, CVA, CFE, CIRA

Posted on February 26, 2015 by Scott Bouchner

Mitigation in lost profit cases involving torts and contract disputes refers to the principal that an injured party must make reasonable effort to avoid or minimize the losses it suffered in order to recover monetary damages. Contrary to popular belief, the law does not place on plaintiffs a “duty to mitigate” in order to establish liability and determine gross damages. However, failure to do so may result in a significant reduction or complete elimination in a damage award, unless the plaintiff is able to demonstrate that it was unable to mitigate losses without incurring unreasonable efforts, expense or risk.


Factors Affecting a Plaintiff’s Ability to Mitigate Losses

The responsibility of an injured party to make reasonable, good faith efforts to mitigate its losses is the subject of much legal debate. While the burden of proof to prove damages falls on the plaintiff, it is the defendant or party alleged to have harmed the plaintiff that must demonstrate with some level of specificity the injured party’s failure to mitigate damages. In examining a defendant’s claims and/or a plaintiff’s failure to mitigate, the courts consider several factors, including plaintiff’s costs, financial abilities, risk of additional losses and good faith efforts to minimize losses as well as the availability of reasonable substitutes to replace lost resources and profits.


Costs. Mitigating damages typically requires a plaintiff to incur some costs, including out-of-pocket expenses to repair harm allegedly caused by the defendant and the costs of time and effort to replace lost goods, parts, customers or suppliers with comparable substitutes. The courts attempt to differentiate between reasonable and excessive costs by freeing a plaintiff from making “substantial expenditures of his own funds or incur substantial risk to avoid the consequences of the defendant’s conduct.” Should a plaintiff choose to incur and claim as damages excessive expenses in an attempt to mitigate future losses, he or she must be prepared to justify the reasonable of such expenditures.


Financial Ability. There are times when financial constraints may hinder a plaintiff’s ability to mitigate damages. This can occur when the plaintiff lacks funding required to take mitigating action, or when mitigation costs exceed the economic damages the plaintiff incurred due to the defendant’s alleged action. The courts have divided opinions in these cases. In some instances, the courts accepted plaintiffs’ lack of funding as sufficient cause for failure to mitigate. In others, the courts ruled that plaintiffs’ financial limitations were not a satisfactory defense when other, less costly options, such as selling the property in dispute, reducing sales staff or non-essential expenses, were available to them.


Risk of Additional Losses. Similar to the costs that a plaintiff would incur to mitigate damages, the courts also consider the risk of additional losses when evaluating a plaintiff’s reasonable efforts. Plaintiffs are under no obligation to take on undue risk, which the courts have interpreted broadly as:

…almost any risk of considerable loss to the injured person if he attempts to mitigate damages should be considered undue. (Franconia Assocs. v. United States, 61 Fed. Cl. 718)

While reasonable cost-avoiding steps include affirmative efforts to make substitute arrangements compensating for the lack of contract performance, such arrangements need not be entered into if they would expose the party to undue risk or significantly compromise its interests. (Brazos Electric Power Coop., Inc. v. United States, 52 Fed. Cl. 121, 129)

[The injured party] is not obligated to exalt the interests of the defaulter to his own probable detriment. (In re Kellett Aircraft Corp., 186 F.2d 197)

What constitutes undue risk is ultimately based upon the specific facts and circumstances of any given case. The more costly and extraordinary the actions required of the plaintiff, the more likely the undue risk. Conversely, in circumstances in which a defendant can prove that a plaintiff had the ability to take simple steps to avoid exposure to future losses, the more likely the courts will rule that such actions fall within the plaintiffs’ obligations to mitigate damages.

Good Faith Efforts. Plaintiffs claiming that they were unable to mitigate damages should still demonstrate that they engaged in good faith efforts to minimize future losses, rather than allowing those losses to increase. For example, in Campbell v. Louisiana Intrastate Gas Corp. (528 So.2d 626), the plaintiff prohibited the defendant, a private utility company, from entering his property to restore drainage from underground gas pipes on the plaintiff’s farm. As a result, the property owner incurred additional losses in crop productivity.   The courts, considering the plaintiff’s lack of good faith in dealing with the defendant to mitigate losses, reduced the plaintiff’s damage award from $21,280 to $3,000, an 80 percent decrease.

Reasonable Substitutes. One way in which injured parties may minimize future losses is to replace lost goods, parts, services, customers or suppliers with comparable substitutes from alternative sources. However, in most cases, plaintiff and defendant will almost certainly differ in their interpretations of what each considers to be reasonable substitutes. Common wisdom presumes that the more generic or commodity-like the product or service, the easier it presumably would be to find a replacement. However, the fact is that a reasonable replacement may be limited by the type of product being sold, the demand for the product, the intensity of competition from other manufacturers and other factors. Moreover, plaintiffs should be aware that they may unwittingly limit their claims to any damages if defendants can prove the existence of a replacement product at a lower cost.

When trying lost profits cases, attorneys must address the defendant’s responsibility to prove or disprove a plaintiff’s efforts to mitigate losses while understand the limitations plaintiffs may face in doing so. In these instances, damages experts may benefit from supporting testimony from industry experts and fact witnesses who may be better suited to address the rationale behind a plaintiff’s failure to mitigate.


The Forensic Services practice of Berkowitz Pollack Brant has vast experience working with commercial litigators and providing expert testimony in a variety of lost profits cases across a range of business industries.


About the Author: Scott Bouchner, CMA, CVA, CFE, CIRA, is a director in the Forensic Services and Business Valuation practice of Berkowitz Pollack Brant and a frequent lecturer and published author on related topics. For more information, call (305) 379-7000 or e-mail


Taxpayers Receive Incorrect Health Care Forms for 2014 by Adam Cohen, CPA

Posted on February 24, 2015 by Adam Cohen

The Federal Government today announced that approximately 800,000 taxpayers who signed up for health insurance in 2014 at received incorrect IRS Forms 1095-A, Health Insurance Marketplace Statements, which explain coverage and details about the premium tax credit they received.

Affected taxpayers will receive calls and emails about the error from the government in the next few days. The government advises taxpayers to wait to file their 2014 returns until their corrected forms are posted to their Marketplace accounts, which is expected to occur in early March.

About the Author: Adam Cohen, CPA, is an associate director in the Tax Services practice of Berkowitz Pollack Brant. He can be reached at the CPA firm’s Ft. Lauderdale office at (954) 712-7000 or via e-mail


Private Companies Have New Option to Account for Identifiable Intangible Assets in Mergers by Hector E. Aguililla, CPA

Posted on February 23, 2015 by Hector Aguililla

Under new guidance issued in late 2014 by the Financial Accounting Standards Board (FASB) and the Private Company Council (PCC) private businesses involved in an acquisition with another business may elect an accounting alternative for recognizing certain intangible assets.  Specifically, these companies would no longer have to recognize the following items separate from goodwill:

  • Non-competition agreements
  • Customer-related intangible assets unless they are capable of being sold or licensed independently from the companies’ other assets.


Excluded from this definition of customer-related intangibles are mortgage servicing rights, commodity supply contracts, core deposits and details about customers, which businesses will continue to recognize separate from goodwill.


Private companies electing to adopt this accounting alternative must also adopt the private company alternative to amortize goodwill.  Moreover, adopting requires private businesses to do so upon the first transaction within the scope of the election for fiscal years beginning after December 15, 2015. Early application is permitted.


The advisors and accountants with Berkowitz Pollack Brant work with private companies of all sizes and in a broad range of industry to meet their tax and regulatory compliance obligations.


About the Author: Hector E. Aguililla, CPA, is an associate director with Berkowitz Pollack Brant’s Audit and Attest Services practice.  He can be reached in the Miami CPA firm’s office at (305) 379-7000 or via email at

Consider Affordable Care Act when Filing 2014 Tax Returns by Adam Cohen, CPA

Posted on February 19, 2015 by Adam Cohen

The Affordable Care Act, also referred to as ACA, Obamacare and the health care law, requires that all U.S. taxpayers and each member of their families have had minimum essential health insurance coverage during each month of 2014 or qualified for one of 19 coverage exemptions. Failure to meet either of these provisions requires taxpayers to make an individual shared responsibility payment with the filing of their 2014 federal income tax return. When planning for their annual return filing, taxpayers will fall under one or more of the following categories:


Check the Box. Taxpayers, who along with each member of their families, had qualifying health coverage for the entirety of 2014 need simply to check the appropriate box on their tax return.


Qualify for an Exemption. Taxpayers that did not have qualifying health coverage for 2014 will need to check with their tax advisors to determine if they qualify for one or more of the exemptions from coverage requirements. Those that meet the exemption criteria will need to complete and attach to their tax return IRS Form 8965, Health Coverage Exemptions, even if they have not applied for the exemption previously through the Health Insurance Marketplace.


Make a Shared Responsibility Payment. Taxpayers who lack essential coverage or who do not qualify for a coverage exemption during any month during the calendar year must make a shared responsibility payment with their tax return and include the amount on IRS Forms 1040, 1040A or 1040 EZ. For tax year 2014, the payment is capped at $204 per month per individual or $1,020 per month for a family with five or more members during each month that coverage was not retained. The payment is calculated as the greater of:

  • 1 percent of a household’s modified adjusted gross income (including foreign earned income and tax-exempt interest received during the taxable year) above the filing threshold
  • A flat payment of $95 per adult and $47.50 per child, up to a maximum of $285 per family

An experienced accountant can help ensure that taxpayers’ insurance coverage meets the minimum essential requirements under the law, identify if taxpayers qualify for an ACA exemption and/or calculate taxpayers’ shared responsibility payments’, when necessary. Moreover, these professionals can help taxpayers plan now for meeting ACA compliance during the 2015 tax year.


About the Author: Adam Cohen, CPA, is an associate director in Berkowitz Pollack Brant’s Tax Services practice. He can be reached at the CPA firm’s Ft. Lauderdale office at (954) 712-7000 or via e-mail at


Using Rules of Thumb to Value a Business – Thumbs Up or Thumbs Down? by Sharon Foote, ASA, CFE

Posted on February 16, 2015 by Scott Bouchner

What is the origin of the phrase “rule of thumb?” There are a number of theories, but my favorite is that farmers used their thumbs to measure how deep to plant the seeds to grow crops in their fields. They planted the seeds and hoped they had a “green thumb,” bringing them success. No matter how the phrase got started, the point is that a rule of thumb is an inexact, albeit convenient, measurement used to make an estimate.


An estimate may be useful in some contexts but, when it comes to valuing a business, exclusively relying on a rule of thumb generally leads to an unreliable and indefensible conclusion of value. A “rule of thumb” is defined in the International Glossary of Business Valuation Terms as “a mathematical formula developed from the relationship between price and certain variables based on experience, observation, hearsay, or a combination of these; usually industry specific.”


Rules of thumb are often specific to an industry and quoted as a multiple of sales or earnings before interest, taxes, depreciation and amortization (EBITDA), making this method similar to the market transaction method. However, the market transaction method involves analyzing multiples from transactions involving comparable entities and adjusting for the subject company’s differences. An accurate valuation using this method depends on the valuator’s ability to determine whether other companies and transactions are sufficiently comparable and to identify appropriate adjustments, requiring access to the detailed information on those market transactions selected. Rules of thumb have developed over a span of time from the experiences of industry insiders and/or from unidentified market transactions. Considering the volatility of the economy over the past decade, rules of thumb that have been used over many years may no longer be fundamentally accurate or dependable.

Neither do rules of thumb consider other characteristics of the company being valued, such as asset utilization, profitability, industry condition and outlook, management depth, nor other qualitative and quantitative factors commonly examined during a comprehensive business valuation.  None of the recognized business appraisal organizations recommend reliance on rules of thumb for developing a value opinion. Solely depending on a rule of thumb results in a value conclusion that is difficult to support and defend, particularly in a litigation or IRS matter.

Although rules of thumb are not meant to be used as a principal valuation method, they may be useful to business owners and valuation professionals.  Rules of thumb can provide a “quick and dirty” value estimate useful to business owners in planning or in developing a very preliminary value estimate. They may also be used as a reasonability check by valuators in comparing it to the value they determined by using the asset, income, and/or market approaches.

In a situation requiring an accurate valuation, such as the purchase or sale of a business, in litigation or for tax purposes, the use of a rule of thumb is no substitute for a comprehensive valuation prepared by a credentialed professional using generally accepted valuation methods to obtain a supportable value conclusion.


About the Author: Sharon Foote is a manager in the Business Valuation and Forensic Support practice of Berkowitz Pollack Brant. She can be reached at 305-379-7000 or by email at

Why it Matters Where You Die in 2015 by Joanie B. Stein, CPA

Posted on February 13, 2015 by Joanie Stein

The federal estate tax, also known as the death tax, applies to assets persons hold upon their death. In 2015, individuals will be able to exclude from federal taxes $5.43 million of their estates, or $11 million for couples. While this exemption limit alleviates the worries of most taxpayers who wish to pass their wealth onto future generations tax-free, the same is not true on the state level. Currently, 19 states and the District of Columbia impose on their residents their own set of estate and inheritance taxes with varying levels of exemption amounts. This has led to challenges for many affluent taxpayers who wish to avoid having the government take a larger bite out of their inheritances.


Federal Estate Taxes: A Brief History

Congress has repealed and reinstated a range of estate, gift and inheritance taxes numerous times and with varying exemption limits. Most recently, the government eliminated the federal estate tax in 2010 with the expectation that it would return the following year with a $1 million exemption. At the eleventh hour, Congress increased the exemption to $5 million, indexed for inflation, and made that exemption permanent in 2013, with a 40 percent tax rate applied to amounts over the exception amount.


Conflicting Rules across State Lines

Of the 19 states that levy estate and inheritance taxes, only Delaware and Hawaii have an exemption amount equal to that of the Federal government. The remaining states exempt significantly less and impose a top tax rate of between 9.5 and 20 percent for assets over those limits.


For example, in New York, the amount taxpayers can exclude from their taxable estates is $2,062,500 until April 15, 2015, when that amount increases to $3,125,000.00. While the state legislature plans to raise estate-tax-exemption limits each year until it meets that of the Federal government in 2019, affluent New Yorkers whose gross assets exceed those limits by 5 percent will forfeit the benefit of any exemption and be liable for estate taxes on the full amount of their estates. Even estates that exceed the exemption by a smaller percentage will forgo part of the tax break. Moreover, when a New Yorker’s taxable estate is greater than 105 percent of the exclusion amount, he or she loses an applicable credit against the estate tax.


Demonstrating the discrepancy in death taxes across state lines requires looking no further away from New York than next door. Pennsylvania does not offer its residents any exemption from state estate taxes. Conversely, New Jersey has an estate tax exemption of $675,000 and imposes a separate inheritance tax on estates above $25,000 that name siblings, sons- and daughters-in-laws as beneficiaries. For nieces, nephews and friends named as beneficiaries, the exemption amount is just $500.   Maryland imposes a similar inheritance tax on beneficiaries. Finally, Connecticut imposes its own estate tax on assets with total gross value of more than $2 million (down from $3.25 million in 2011.) It is also one of two states that imposes a tax on large gifts its residents make while they are alive – a move individuals often make to avoid paying estate taxes when they die.


Planning Opportunities

Several states are examining the possibility of reforming their estate tax laws and bringing their exemption amounts in line with that of the federal government. Until any of these jurisdictions take action, taxpayers must proceed cautiously and plan appropriately, with the assistance of professional advisors, to navigate the intricate variances in laws from state to state.


Move. Moving to a more tax-friendly state where one might own a vacation home may appear to be an easy solution to avoiding state death taxes. However, states look at several factors to determine taxpayers’ true tax homes or domicile, including time spent in the state, where the taxpayers register their cars, where their children attend schools and their level of involvement in the community where they claim domicile. In some instances, married taxpayers may have the ability to spilt their tax home between two states to avoid such scrutiny.


Trusts. While married couples benefit from federal portability provisions that allow the assets of one spouse to pass tax-free to the surviving spouse, the estate would loose its exemptions on the state level upon the death of the second spouse. To side-step this challenge, couples in states with death taxes may consider establishing a trust, such as a traditional bypass trust, to gain the full benefit of federal estate exemptions and the state inheritance exemption.




Gifts. Affluent taxpayers in death tax states may consider making large gifts after the death of a spouse. The federal gift tax allows donors to make annual tax-free gifts of $14,000 in cash or other assets to as many recipients as they choose. That means that in any given year, an individual may gift $14,000 tax-free to each of his or her children, grandchildren, nieces and nephews. In addition, all gifts an individual makes to his or her spouse are excluded from the federal gift tax as are tuition and medical expenses paid on behalf of another.


When making non-cash gifts, donors should pay special attention to rules regarding the cost basis of those assets and the resulting capital gains tax or step-up in basis that passes with the gift.


The advisors and accountant with Berkowitz Pollack Brant help individuals establish tax-efficient estate plans that anticipate potential challenges and capture opportunities that align with each family’s unique desires and goals.


About the Author: Joanie B. Stein, CPA, is a senior manager in Berkowitz Pollack Brant’s Tax Services practice. For more information, call 305-379-7000 or email


Inflation-Adjusted Numbers to Know in 2015 by Joseph L. Saka, CPA/PFS

Posted on February 10, 2015 by Joseph Saka

Each year, the IRS issues inflation adjustment for more than 40 tax provisions. Following is a sample of some of the increased figures that will apply to taxpayers in 2015 (for filing on April 15, 2016):


Tax Rates. The highest tax rate of 39.6 percent will apply to married couples whose incomes exceed $464,850 and to singles with income of more than $413,200. Inflation adjustments will apply to other marginal rates as well.


Standard Deduction. The standard deduction increases to $12,600 for married couples, $6,300 for singles and $9,250 for heads of households.


Income Limit for Itemized Deductions. Itemized deductions for taxpayers whose adjusted gross income exceeds $309,900 for married couples and $258,250 for singles will be limited to an amount equal to the lessor of 3 percent of the amount for which their adjusted gross income exceeds the limit or 80 percent of itemized deductions excluding medical expenses, investment interest, casualty or theft losses and gambling losses.


Personal Exemptions. The personal exemption amount rises to $4,000 and will be subject to a phase-out with incomes of $309,900 for married couples and $258,250 for singles. Exemptions phase out completely for incomes of $432,400 for married couples and $380,750 for singles.


Alternative Minimum Tax Exemption. The AMT exemption increased to $83,400, for married couples filing jointly and $53,600 for singles.


Estate Tax Exemption. The lifetime exclusion amount will rise to $5,430,000 for estates of decedents who die in 2015, or $10,860,000 for couples.


Foreign Earned Income Exemption. The foreign earned income exclusion increases to $100,800.

With these inflation-adjusted increases, taxpayers should take special care to meet with their accountants early in 2015 to plan appropriate strategies for maintaining tax efficiency.


About the author: Joseph L. Saka, CPA/PFS, is director in charge of the Tax Services practice at Berkowitz Pollack Brant. He may be reached in the Miami CPA firm’s office at (305) 379-7000 or via e-mail at


Don’t Forget Retirement Savings When Changing Jobs by Sean Deviney, CFP

Posted on February 05, 2015 by Richard Berkowitz, JD, CPA

It is far too common for individuals to leave behind retirement benefits with previous employers when they change jobs.   By forgetting and neglecting these orphaned benefit plans, individuals risk losing significant savings they accumulated over their hard-working years.  In fact, a recent report issued by the Government Accountability Office found that, under current law, each year more than $1.5 billion in workers’ savings are forced from employer-sponsored retirement plans into conservative, low-yield investments that often generate more management fees than investor returns.


Rather than leaving retirement savings unmonitored, unmanaged and possibly subject to a forced transfer, workers should track down forgotten accounts and consider the following strategies to maximize their investments over the long-term.


Roll Over to a New Plan.  Many businesses allow employees to roll the savings from previous 401(k) plans into the new employers’ plan.  By consolidating retirement accounts, workers will find it much easier to manage and monitor their savings and ensure they are on track to meet their retirement goals.


Roll Over to an IRA.  A direct roll-over into an Individual Retirement Account (IRA) enables individuals to preserve the tax benefits of their savings.  This strategy provides individuals the flexibility to rebalance their portfolios to meet their changing circumstances and needs as they get closer to retirement age.


Leave Savings with Previous Employer.  There are times when workers will find that the retirement plans with their prior employers offer a greater choice of investing options, better planning tools and/or lower fees than those provided by a new employer.  In these situations, employees should weigh the pros and cons of both plans, and, if they opt to leave their savings with their previous employers, take an active role in monitoring and directing the investments in the future.


Investors do have options when deciding what to do with employer-sponsored retirement plans when they leave a job.  Each requires careful consideration of the individual’s unique circumstances and an honest assessment of his or her discipline and diligence to continuously monitor and manage their investments.  The one decision an individual should almost never make is to cash out their retirement account. The taxes and potential penalties of a cash withdraw are great for Uncle Sam but terrible for individual investors.


About the Author: Sean Deviney, CFP, is a financial advisor and retirement plan specialist with Provenance Wealth Advisors, an independent financial services firm affiliated with Berkowitz Pollack Brant Advisors and Accountants.  For more information, call (954) 712-8888 or email


Provenance Wealth Advisors, 515 E. Las Olas Blvd., Ft. Lauderdale, FL 33301 (954) 712-8888.

Securities offered through Raymond James Financial Services, Inc., Members FINRA/SIPC. Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors and Accountants.


Businesses Can No Longer Afford to Ignore the Threat of Cyber Attacks by Sean Chari

Posted on February 04, 2015 by Steve Nouss

On November 24, 2014, Sony Pictures Entertainment was hacked, purportedly in response to a pending movie release. International headlines focused on the salacious details about the Hollywood executives and celebrities mentioned in the breached emails. Widely ignored by the news media was Sony’s lack of protection and monitoring of its IT environment, which exposed the company to significant operational and financial risks. More notably, this was not the first breach of the company’s network.


Sensitive information exposed by the Sony hack included critical corporate data, such as strategic plans and scripts, as well as personal, identifiable information about the company’s employees, including their names, social security numbers and bank account numbers.   For Sony CEO Michael Lynton, unencrypted emails revealed personal bank and credit card account numbers and login passwords as well as images of his family members’ passports and social security cards.   The attack shines a light on the all too common corporate culture of inadequate security practices and the misguided perspective that IT-related risks are not critical to business operations.


News Flash: IT Security is Critical to Business Success


Budget constraints and perceived lack of exposure to business risks are failing arguments against increased IT controls and network-security vigilance. The costs of an effective IT security control environment are far less than the financial and reputational damages a company will suffer after a hack. Just ask Home Depot and Target. Both spent millions of dollars in clean-up efforts, damages and fines following IT security attacks that resulted in the theft of millions of customers’ credit card data.


Organizations of all sizes and industries are equally vulnerable to a hack. The moment that an organization connects its business to the Internet (for email communications, sales processing, purchasing, research and/or social media) it becomes a potential target for a hacker.


The results of the “2014 Global Report on the Cost of Cyber Crime” conducted by the privacy, data protection and information security policy firm Ponemon, point to some staggering trends:


Cyber crimes continue to rise. The average cost per incident was $7.6 million in 2014, compared to $7.2 million in 2013.


Cyber crime costs vary by the size of an organization. On average, smaller organizations were impacted more negatively by a data breach than larger organizations.


The costs of cyber attacks increase when they are not resolved quickly. On average, businesses took 31 days to contain attacks, at an average cost of $639,642, up 23 percent from 2013. Malicious insider attacks took an average of 58 days to contain.


Security intelligence systems help to reduce costs of an attack. Security intelligence systems that efficiently detect and contain cyber attacks saved companies an average of $2.6 million in cyber-attack mitigation costs. Moreover, the study found that both encryption technologies and advanced perimeter controls with reputation feeds provided businesses with additional mitigation control effectiveness.


Enterprise security governance practices moderate the cost of cyber attacks. Investment in enterprise security governance models, which define and implement effective practices and employ qualified personnel, was found to reduce the cost of cyber attack damages by an estimated $1.3 million.


Businesses’ growing dependency on real-time data analytics and their increased Internet presence and reliance on technology as a whole combined with the level of sophistication of cyber-hackers is cause for alarm. To protect themselves from the myriad of cyber attacks that have and continue to occur, all organizations must take steps to protect their assets and those of their clients. This is especially true for small- and mid-size companies that have fewer resources available to them to contain and respond to cyber attacks than their larger counterparts. For these organizations, the reputational and economical damages of a breach could hamper significantly or shut down their operations.



Regardless of size and complexity, all organizations need to be proactive in employing IT security governance models. These simple solutions provide immediate protection with minimal additional costs.


  • Strong Password Controls
  • Email Encryption
  • Encryption of Critical, Sensitive Files on Networks, Computers and Mobile Devices
  • Effective IT Security Monitoring Tools
  • Cyber-Liability Insurance Policies. Businesses should discuss this often-forgotten topic with their agents to determine the appropriate types of liability coverage programs that work best for them.


Operating in today’s hyper-connected environment does not come without risks. However, by discussing and employing IT security governance, businesses will be better equipped to contain and even prevent a cyber-attack. Could your organization survive with its current model?


About the author: Sean Chari is a senior manager in Berkowitz Pollack Brant’s Consulting practice. He can be reached in the CPA firm’s Ft. Lauderdale office at (954) 712-7000 or via email at


Key Provisions of the President’s 2016 Budget Proposal by Ken Strauss, CPA/PFS, CFP

Posted on February 03, 2015 by

President Obama’s $4 trillion budget for fiscal 2016 proposes increased spending on infrastructure, defense, education, veterans’ services and workforce training, much of which would be funded by tax increases on wealthy families and businesses. While the budget awaits fierce Congressional debate, following are key provisions included in the president’s plan that affect individual and business taxpayers:


  • An increase in the top capital-gains rate to 28 percent, from the current 23.8 percent


  • A new capital gains tax on the growth in value of inherited assets since the date they were purchased, which would eliminate the current step-up in basis that allows heirs to calculate assets at full-market value at the time of the owner’s death


  • A return to a $3.5 million exemption for estates and generation skipping tax and $1 million for gift tax, without allowing indexing for inflation


  • Limits on income-tax deduction for wealthy families


  • A limit in Roth IRA conversions to pre-tax dollars


  • A one-time 14 percent tax on overseas earnings by U.S. based companies.


  • A permanent 19 percent tax on U.S. companies’ future foreign earnings, lower than the current 35 percent tax


  • A limit to corporate tax deductions with a reduction in the corporate tax rate from 35 percent to 28 percent and to 25 percent for manufacturers


  •  A new tax on financial firms with more than $50 billion in assets


The advisors and accountants with Berkowitz Pollack Brant help individual and business clients implement tax-efficient strategies to adapt to and comply with federal, state and local policies and legislation.

About the Author: Kenneth J. Strauss, CPA/PFS, CFP, is director of the Taxation and Personal Financial Planning practice with Berkowitz Pollack Brant. He can be reached in the CPA firm’s Fort Lauderdale, Fla., office at (954) 712-7000 or via email


How Women Can Establish Financial Independence Following Divorce by Kathleen Marteney, CRPC

Posted on February 02, 2015 by Richard Berkowitz, JD, CPA


The emotional rollercoaster one endures during and after a divorce can be debilitating. Equally devastating are the financial fallouts that can ensue from these life transitions. However, there is a ray of sunshine beyond the storm when women assess the facts of their newly single life and take the time to re-establish themselves while rebuilding a strong financial foundation for their future.


Re-title financial accounts. Closing joint bank and credit card accounts ensures that ongoing liabilities of one party do not become the responsibility of the other party down the road.   Equally important is checking credit scores to identify and resolve any issues that could tarnish one’s credit worthiness and affect one’s ability to stand on her own financially going forward. Once all prior debts are satisfied, women should open new accounts in their names and start establishing their own credit history, especially if prior credit was dependent on the former spouse.


Update beneficiaries. When re-titling accounts, women should update transfer on death (TOD) registrations and change the named beneficiaries on bank, investment and retirement accounts as well as insurance policies to ensure ex-spouses will have no claim to their assets upon their deaths. Making these revisions is a simple process that typically requires individuals to complete a form that they may obtain from their banks or financial advisors.


Review and update estate plans. If a will or trust is already in place, women should review these documents with legal and financial counsel to ensure that they continue to reflect their wishes. This can include naming persons to serve as guardians for minor children and executors and trustees of their estates, as well as beneficiary designations for trusts, employee group benefits and retirement plans. In addition, women should ensure they have health care and durable financial powers of attorney to name someone to act on their behalf and make medical decisions, should they become sick, hurt or incapacitated. Similarly, by having a living will in place, women can document their preferences with regard to life-sustaining medical care.


Update Insurance Policies.   Women should make certain that they have health insurance in place for themselves and their children, either through former spouses, COBRA, their employers or new individual policies. Evaluating property/casualty, personal life and umbrella insurance policies can further ensure that women have the right type and amount of coverage to meet their new needs. Women should also consider disability insurance to provide peace of mind and protect their ability to earn a living, should they become disabled, as well as long-term care coverage, if they are over 50, to help pay for needed assistance.


Evaluate Career and Lifestyle. Following a divorce, each spouse may have less resources available to them than what they are accustomed to. Women should take this as an opportunity to assess their career options and evaluate their lifestyle “needs” versus “wants.” A new home may be better suited for one’s new lifestyle or a new career path may provide a renewed sense of purpose, fulfillment and earnings to preserve assets for long-term retirement needs.


Plan and Budget. Women can more easily manage and achieve their financial goals when they map out a blueprint of their post-divorce finances and budget accordingly. While these plans may address the short-term realities of doing more with less, the focus is on long-term financial goals, such as establishing an emergency reserve and saving for retirement or children’s education. Oftentimes, a review of investments can help to identify opportunities to manage risks and maximize returns.


With any budgeting, special consideration should be given to understanding one’s tax liabilities following divorce to help ensure that newly established budgets address these obligations. One’s financial advisor and accountant are great resources to help guide women through the budgeting process.


Life transitions are never easy. However, taking the time to understand one’s financial options and address post-divorce issues and opportunities head on, often with the help of financial advisors, will empower women to move ahead and take control of the financial aspects of their new lives.


About the Author: Kathleen Marteney, CRPC, is a registered representative with Raymond James Financial Services and a financial planner with Provenance Wealth Advisors, an independent financial services firm affiliated with Berkowitz Pollack Brant Advisors and Accountants.. She can be reached at (305) 379-8888 or via email at


Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC. Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors and Accountants.


This material is being provided for information purposes only and is not a complete description,

nor is it a recommendation. Any opinions are those of Kathleen Marteney and not necessarily those of Raymond James. You should discuss any tax or legal matters with the appropriate professional.

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