Preferability and the Private Company Alternative

Don’t Lose Momentum onRevenue Recognition Standard

FASB Agrees to ProposeRevenue Recognition Standard Delay

FASB Proposes Accounting Standards Changes for Not-For-Profi ts

Financial Reporting Insights:FASB Simplifi es the Presentation

of Debt Issuance Costs

Aft er 45 days, major defi ciencies in employ-ee benefi t plan audits start costing employers $1,100 per day in fi nes.

Up until recently, employee benefi t plan audits were a routine matter for CFOs — something you had to have done each year to comply with the Employee Retirement Income Security Act, but nothing to worry about overmuch. Well, not anymore.

With the quality of those audits reportedly on a decade-long decline, faulty audits of employer-sponsored retirement and health-care benefi t plans represent “one of the big-gest risks to CFOs and companies that is not mentioned out there,” says Adam S. Lilling, a partner of Lilling & Company, a fi rm that specializes in auditing employee benefi t plans.

Increasingly, companies are being exposed to stiff fi nes. In recent years, the Employee Benefi ts Security Administration (EBSA) of the U.S. Department of Labor “has signifi -cantly stepped up its enforcement of the au-dit requirement for employee benefi t plans,” according to a recent report by the American Institute of Certifi ed Public Accountants.

Once a plan sponsor fi les its annual benefi t plan report, the DOL does an inspection of the audit using the auditor’s work papers, ac-cording to Lilling. If the Labor Department fi nds the audit defi cient, it sends a letter to the plan sponsor listing the audit’s defi cien-cies and notifying the sponsor that it has “45 days to get a new audit done that meets all the standards, or we’re going to start fi n-ing you $1,100 a day,” he says. “Th at’s not a nice letter to get.” And there’s no limit on the number of days as long as a clean audit isn’t being fi led.

Sloppy Benefi t Plan Audits Putting Employers at RiskBy David M. Katz

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McGladrey is taking an important step to bring the middle market to the global mar-ket. On October 26, 2015, they will unite with fellow fi rms in their global network, RSM International, under a common brand name – RSM. Together, they will dedicate themselves to delivering the power of being understood to entrepreneurial, growing or-ganizations around the world.

McGladrey to adopt RSM as its brand name on October 26, 2015

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With the Vermont General Assembly ad-journing late on May 16, lawmakers will not return to Montpelier until January 5 to begin the second year of the biennium. Th ere are two exceptions to this calendar. Th e fi rst, al-beit unlikely, is a return on June 23 to address any unexpected vetoes. Th e second is a pos-sible session on June 30. Th e adjournment motion stated that the House Speaker and Senate Pro Tem may jointly call legislators back on that day. One possibility may be to address any legislative issues related to Ver-mont’s troubled health insurance exchange, Vermont Health Connect. Th e Governor is facing a self-imposed May 31 deadline for a functioning Vermont Health Connect web-site. While the Governor may have back-tracked a bit from his own deadline the Leg-islature is holding fi rm to this date and may see a need to take action on alternatives in the event the website is not functioning. In-terim sessions are rare in Vermont and when they do occur they are usually conducted for a specifi c and narrow purpose.

All legislative sessions are unique in their own way and this recently concluded one proved to be no diff erent. I think if you were to ask, most legislators would say this one was particularly diffi cult. From the begin-ning (and even before) to the end this ses-sion just had an uneasy feel. It started with November elections that delivered several messages: a surprise to many in that vot-ers just barely returned Gov. Shumlin to offi ce; Republicans saw their numbers increased in the House and Senate; and legislators in general were given a reminder that the economy is still the number one issue for vot-

ers. Th is was quickly followed in December by the Governor pulling the plug on single payer health care. While that may have been greeted with relief by some in the Legisla-ture, it nevertheless created a void on health care policy that the Legislature would grap-ple with all session long.

Th e session started in January with the elec-tion of the Governor (because he failed to get more than 50% of the popular vote), and numerous interruptions of the Governor’s Inaugural address by individuals protesting his single payer health care decision. A size-able budget defi cit immediately dominated thoughts in the Legislature, made particular-ly worse when many of the Governor’s pro-posals to help fi ll that defi cit were rejected by the Legislature. A couple months of stag-nation or even paralysis ensued as legislative leaders sought a path to a balanced budget. It seems to be a session of doing the bare mini-mum to close the budget and get out of town as fast as possible. Th e arrest of incumbent Sen. Norm McAllister (R-Franklin) on seri-ous charges in the fi nal couple weeks of the session helped to cast a pall on the Legisla-ture and further add to its diffi culties.

2015 Vermont Legislative SummaryVermont Society of Certifi ed Public Accountants - Primmer Piper Eggleston & Cramer, PC

T A X • T A X • T A X • T A X • T A X • T A X

55 COMMUNITY DRIVE, SOUTH BURLINGTON, VT 05403 802.863.1331 // 45 Lyme Road, Hanover, NH 03755 603.643.0043 PA G E T H R E E55 COMMUNITY DRIVE, SOUTH BURLINGTON, VT 05403 802.863.1331 // 45 Lyme Road, Hanover, NH 03755 603.643.0043 PA G E T W O

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When we hear about unethical executives whose careers and companies have gone down in fl ames, it’s sadly unsurprising. Hu-bris and greed have a way of catching up with people, who then lose the power and wealth they’ve so fervently pursued. But is the opposite also true? Do highly principled leaders and their organizations perform es-pecially well?

Th ey do, according to a new study by KRW International, a Minneapolis-based lead-ership consultancy. Th e researchers found that CEOs whose employees gave them high marks for character had an average return on assets of 9.35% over a two-year period. Th at’s nearly fi ve times as much as what those with low character ratings had; their ROA aver-aged only 1.93%.

Character is a subjective trait that might seem to defy quantifi cation. To measure it, KRW cofounder Fred Kiel and his colleagues began by sift ing through the anthropologist Donald Brown’s classic inventory of about 500 behaviors and characteristics that are recognized and displayed in all human so-cieties. Drawing on that list, they identifi ed four moral principles—integrity, respon-sibility, forgiveness, and compassion—as universal. Th en they sent anonymous sur-veys to employees at 84 U.S. companies and nonprofi ts, asking, among other things, how consistently their CEOs and management teams embodied the four principles. Th ey also interviewed many of the executives and analyzed the organizations’ fi nancial results. When fi nancial data was unavailable, lead-ers’ results were excluded.

At one end of the spectrum are the 10 ex-ecutives Kiel calls “virtuoso CEOs”—those whose employees gave them and their man-agement teams high ratings on all four prin-ciples. People reported that these leaders frequently engaged in behaviors that reveal strong character—for instance, standing up for what’s right, expressing concern for the common good, letting go of mistakes (their

own and others’), and showing empathy. Ex-amples include Dale Larson, who took over his family’s storm door business decades ago aft er his father died of cancer, growing it from about 30 employees to more than 1,500 and gaining a market share of 55%; Sally Jewell, a former CEO of REI, America’s larg-est outdoor retailer; and Charles Sorenson, a surgeon who moved into management at Intermountain Healthcare when the com-pany began to grow and eventually took on the top job.

At the other end of the spectrum, the 10 lowest scorers—Kiel calls them “self-focused CEOs”—were oft en described as warp-ing the truth for personal gain and caring mostly about themselves and their own fi -nancial security, no matter the cost to oth-ers. Th is group includes the CEO of a public high-tech manufacturing fi rm, the CEO of a global NGO, and an entrepreneur who heads a professional services fi rm. (All study par-ticipants were guaranteed anonymity from the beginning. Only a third later gave per-mission to use their names.) Employees said that the self-focused CEOs told the truth “slightly more than half the time,” couldn’t be trusted to keep promises, oft en passed off blame to others, frequently punished well-intentioned people for making mistakes, and were especially bad at caring for people.

Early in the project the researchers expected to fi nd a relatively small relationship be-tween strength of character and business performance. “I was unprepared to dis-cover how robust the connection really is,” Kiel says. In addition to outperforming the self-focused CEOs on fi nancial metrics, the virtuosos received higher employee ratings for vision and strategy, focus, accountability, and executive team character.

Measuring the Return on CharacterFrom the Harvard Business Review April 2015 issue

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Creating Value for Business Owners and Board Members

In this article, Edward Mendlowitz, CPA, ABA, CFF. shares his views regarding the importance of having a business valued. He identifi es 50 ways that a valuation pro-fessional can provide something far more valuable than a number. While the valua-tion profession is under pressure to reduce costs or prepare a report, the business owner is better served in the long run retaining a valuation professional that provides greater insight to operations.

Th e true market value of a business is only determinable when it is sold to an indepen-dent buyer–and even then it is only for that time with that buyer. However, there are many reasons for valuing a closely held busi-ness that can provide valuable insights to the owner; these same reasons also underscore how credentialed professionals add value

to business owners and board of directors. Th ese are also not commodity services that warrant a low fee.

A business is an important asset of the own-ers–it provides their living, independence, a degree of fi nancial security, and, if prop-erly handled, a payout when the owners are ready to retire. It is oft en more valuable than the value of their personal residence.

Running a business causes owners to make dozens of decisions daily, many times with-out much advance thought and consider-ation. Unfortunately, it can become easy to lose perspective amidst competing priorities and deadlines. Having the business objec-tively and comprehensively valued—leading to a Conclusion of Value or a Calculation of Value— provides a look into how others would view the business, the size and scope

50 Reasons for a Business AppraisalNational Association of Certifi ed Valuators and Analysts

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Eight Ways of Valuing a Family Owned BusinessNational Association of Certifi ed Valuators and Analysts

Managing Expectations of Sellers and Buyers Using the Right Standard of Value

Th e author presents eight standards of value that a valuation analyst may need to consider and discuss with a client. Each standard has a diff erent set of rules and the valuations can vary greatly. Valuing a business is an art – not a science – even though careful calcula-tions are made to arrive at an appraisal of the business. Th e author also provides some in-sight regarding how these are used and how the valuation analyst can protect their client.

Valuations of closely held family businesses are confusing because of the varied reasons, uses, and purposes for the valuation. Th ere is no one “right” way, since the value arrived at is contingent on the assumption used. Th is isconfusing to many business owners. In every engagement, an appropriate method should be determined depending upon the reason and use for the valuation. If necessary, the valuation analyst should discuss the stan-

dards of value with their client. Th is can re-duce confusion and provide certainty. In this article, I share my views on the eight stan-dards that may need to be explained.

It is important to understand the diff erenc-es of each method particularly based on its purpose. In some valuations, even the date of the valuation is an issue. For example, theproper valuation date in a divorce could be the date the parties separated, date the com-plaint was fi led, or a later date depending on the individual circumstances. In some juris-dictions, the valuation date is the trial date. Th is can become further complicated if sev-eral dates are used and the gap between the earliest and latest valuation dates is acouple of years.

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Owners of all-purpose motor vehicles oft en appreciate their cars most when they leave smooth city freeways for rough gravel coun-try roads. In investment, highly diversifi ed portfolios can provide similar reassurance.

In blue skies and open highways, fl imsy city sedans might cruise along just as well as sturdier sports utility vehicles. But the realtest occurs when the road and weather con-ditions deteriorate.

Th at’s why people who travel through diff er-ent terrains oft en invest in a SUV that can accommodate a range of environments, but without sacrifi cing too much in fuel econo-my, effi ciency, and performance.

Structuring an appropriate portfolio involves similar decisions. You need an allocation that can withstand a range of investment cli-mates while being mindful of fees and taxes.

When certain sectors or stocks are perform-ing strongly, it can be tempting to chase returns in one area. But if the underlying conditions deteriorate, you can end up like a motorist with a fl at on a desert road without a spare.

Outside the FlagsGravel Road InvestingBy Jim Parker, Vice President DFA Australia Limited

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Outside the FlagsTh e Seven Roles of an AdvisorBy Jim Parker, Vice President DFA Australia Limited

What is a fi nancial advisor for? One view is that advisors have unique insights into mar-ket direction that give their clients an advan-tage. But of the many roles a professional advisor should play, soothsayer is not one of them.

Th e truth is that no one knows what will happen next in investment markets. And if anyone really did have a working crystal ball, it is unlikely they would be plying their trade as an advisor, broker, analyst, or fi nancial journalist.

Some folks may still think an advisor’s role is to deliver market-beating returns year aft er year. Generally, those are the same people who believe good advice equates to making accurate forecasts.

But in reality, the value a professional advi-sor brings is not dependent on the state of markets. Indeed, their value can be even more evident when volatility and emotions are running high.

Th e best of this new breed play multiple and nuanced roles with their clients, beginning with the needs, risk appetites, and circum-stances of each individual and irrespective ofwhat is going on in the world.

Oft en, such letters catch fi nance chiefs by surprise. “And if [it] comes as a surprise, all of a sudden you have to disrupt everything you’re doing [and] drop it,” Lilling says. “And by then you might have a substantial liability.”

Late last month, EBSA published a study that found that for 2011, 39% of the audits contained major defi ciencies — errors that could trigger rejections of the audits — “which put $653 billion and 22.5 million plan participants and benefi ciaries at risk,” according to a DOL press release. (Th e re-maining 61% of the 400 audits studied fully complied with professional auditing stan-dards or had only minor defi ciencies.)

In contrast to the current study, which was completed in 2014, EBSA’s previous study found in 2004 that 33% of benefi t audits were signifi cantly defi cient. Th e 2004 study, which was based on less plan assets and fewer plan participants than the 2014 study, estimated that a total of $410 billion in as-sets held by plans had not been properly audited.

What’s causing these major blunders?

“Th ere is a clear link between the number of employee benefi t plan audits performed by a CPA and the quality of the audit work performed,” according to the current EBSA report, which found “a wide disparity be-tween those CPAs who perform the fewest plan audits and those fi rms that perform the largest number of plan audits.”

In other words, a lack of benefi ts experi-ence on the part of the auditor can hurt plan sponsors a great deal. CPAs who did the fewest number of such audits per year had a 76% defi ciency rate, while accoun-tants performing the most plan audits had a defi ciency rate of only 12%, according to the study.

When auditors lack such specialized ex-perience, they need to be trained, EBSA suggested. “Training specifi cally targeted

at audits of employee benefi t plans (EBPs) may contribute to better audit work. As the level of EBP-specifi c training increased, the percentage of defi cient audits decreased,” according to the report.

Generalized audit experience alone isn’t enough for auditors to avoid major defi -ciencies in their benefi t plan audits, accord-ing to Lilling. Benefi t plan auditors “need to test a few specifi c employee benefi t plan areas that you wouldn’t do in a commercial entity. For example, you wouldn’t need to test participant data,” he says.

Under ERISA, every plan sponsor is re-quired to keep an active census of its em-ployees, including such information as their dates of birth and hire, compensation, and contributions to the plan. Benefi t plan audi-tors need to test the accuracy of that census “because the census is the backbone of the plan,” says Lilling. If the sponsor’s census is inaccurate, “then how can you be sure the plan is operating eff ectively?”

Another unique activity of benefi t plan au-ditors is testing the timeliness of the spon-sor’s remittance of employee contributions to the plan. “When an employer takes money out of someone’s paycheck, it needs to send it to the plan as soon as you can rea-sonably segregate those assets,” he said.

“But a lot of times employers and plan sponsors don’t know this. And what hap-pens is they might hold participants’ money in their own bank account for a long period of time,” he added. “Th ey’re essentially get-ting a risk-free loan. So an auditor needs to test for that. Th at’s something you wouldn’t need to do [for] a regular commercial en-tity.”

***

Sloppy Benefi t Plan Audits Putting Employers at Risk continuedAudit & Accounting • Summer 2015

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McGladrey to adopt RSM as its brand name on October 26, 2015continued

Extensive research with current and pro-spective clients led them to this decision, which will enable the marketplace to more clearly see the strength and broad reach of the global services they off er. Unifying un-der the RSM brand name will build on the strong foundation they have created here in the U.S. and accelerate progress towards their vision to be the fi rst-choice advisor to middle market leaders – globally.

We value our relationship with you and want to make sure you are among the fi rst to hear this news. Th ey plan to continue to serve clients with the same teams they know and trust.

You may be hearing more details as they get closer to the October 26 launch. In the meantime, they will continue to do business as McGladrey. If you have any questions about their adoption of the RSM brand name, please contact a member of your GFC team or call us at 802-863-1331.

***

Legislative leaders and the Governor will, of course, try to highlight many accom-plishments from this session. Th ose will likely include a clean water bill, an educa-tion reform bill with restructuring incen-tives that may bring property tax relief in future years, a renewable energy bill, a child protection bill, and a balanced budget that overcomes a diffi cult $113 million defi cit. In most instances, however, legislators settled for lesser versions than what had originally been proposed. No clearer example can be found in health care where the Governor initially proposed a new $90 million payroll tax to fund health care reform eff orts that was ultimately whittled down to $3 million (plus a comparable federal match) funded through a $0.33 increase in tobacco taxes. While the payroll tax did not pass this year, it is possible that genie may have been let out of the bottle.

While it is too soon to talk of next year when the dust from this session has yet to settle, the answers to a number of political questions will help dictate next year’s tone and legislative agenda. Will Gov. Shumlin seek reelection to that offi ce? Will Lt. Gov-ernor Phil Scott (R) seek the higher offi ce? Will House Speaker Shap Smith (D) also throw his hat in the ring? All fodder for fu-ture discussions.

As usual, there was plenty of action and discussion on a variety of tax and revenue issues relevant to the Vermont Society of CPAs, and to which representatives of the Society commented before the Legislature. Th e $30 million revenue bill, H.489, again became the dominant legislative vehicle for tax policy and revenue measures. Here is a summary of certain portions of that bill (the vast majority of which will become eff ective this July 1), as well as tax and revenue provi-sions from other bills that passed.

Increase the suggested use tax reporting on 2015 returns from .10% to .15%, and on 2016 returns to .20% and thereaft er in-dexed at twice the CPI. Estimated to raise $500,000. (H.489, Section 95 and 96)

Require the Tax Department to study and report back to the Legislature by 1/15/16 on how it would implement an extension of the sales to select consumer services – not in-cluding business to business services – most commonly taxed in other states. Th e report shall model two scenarios designed to raise $15 and $30 million in annual revenue. Th e report shall also include draft rules which shall identify specifi c services by industry type that are taxable and not taxable. In ad-dition, the economists for the Legislature and Administration shall report back to the Legislature by 1/15/16 on the fi scal impact of extending the sales tax to services, along with an analysis of the economic impact of doing so, and not doing so. (H.489, Section 94)

Compliance or Administrative ProvisionsAuthorize the Tax Commissioner to gar-nish a delinquent taxpayer’s earnings or at-tach property of a delinquent taxpayer, pro-vided, however, a taxpayer advocate is fi rst created at the Department to assist such taxpayers and other, certain implementa-tion issues are addressed. Estimated to raise approximately $2 million annually. (H.489, Sections 41-44)

Establish a Collections unit within the Tax Department to establish a procedure for other state agencies to refer debts to the Tax Department for collection. (H.489, Sections 45 and 46)

Authorize the Tax Department to intercept payments to Medicaid providers who are delinquent in their taxes. (H.489, Section 47)

Income Tax ProvisionsAs a package, the following three provisions will raise approximately $23 million annu-ally:

• Eliminate the itemized deduction for State and local income taxes. (H.489, Section 64)

• Cap itemized deductions at 2.5 times the standard deduction, but excluding deductions for charitable contributions and medical expenses. (H.489, Section 64)

• Impose a minimum tax of 3% of fed-eral adjusted gross income for taxpay-ers with more than $150,000 in federal adjusted gross income. (H.489, Section 65)

Require income tax withholders to provide to the Tax Department the aggregate cost of applicable employer-sponsored health care coverage. (H.489, Section 67)

Require payment of withholding tax on a semiweekly basis if the taxpayer is a semi-weekly fi ler for federal withholding tax. (H.489, Section 68)

Require trusts and estates to make estimat-ed tax payments of income tax liability (like for individuals). (H.489, Section 69)

Provide that a publicly traded partnership is not liable for withholding and paying income taxes for its members if certain in-formation about its members is provided to the Tax Department. (H.489, Section 70)

Sales and Use Tax ProvisionsExtend the sales tax soft drinks (proposals to tax the sale of candy and bottled water did not pass, nor did a proposal to tax sat-ellite television). Th e soda tax is estimated to raise nearly $8 million annually. (H.489, Section 91)

2015 Vermont Legislative Summary continued

Tax • Summer 2015

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Raise from $20,000 to $50,000 per day the total prize money for games of chance of-fered by nonprofi ts for four days per year if the days are 20 days apart. (H.489, Section 38)

Property Tax and Education FinanceEstablish the fi scal year 2016 property tax rates to be: nonresidential rate – $1.535 (an increase of $0.01); homestead rate – $0.99 (unchanged); applicable percentage – 1.80 percent; and the base education amount - $9,459.00. (H.361, Sections 35 and 36)

Replace the base education amount current-ly used to calculate base tax rates each year with a diff erent “dollar equivalent yield” for two groups: (1) taxpayers who pay on the value of their property; and (2) taxpayers who receive an income sensitivity adjust-ment. Th e “dollar equivalent yield” is the amount of per pupil spending that could be supported each year by a fi xed homestead base tax of $1.00 for property payers, and by a fi xed applicable income percentage of 2.0 for income payers. Th e Tax Commis-sioner will propose each dollar equivalent yield annually, but it will be the General Assembly’s responsibility to establish each dollar equivalent annually. Applies to fi scal year 2017 and thereaft er. (H.361, Sections 26-32)

Establish governance structures by July 1, 2019, for either education districts (pre-ferred structure) or supervisory unions (al-ternative structure) with elements of each defi ned in the bill. Accelerated activity by July 1, 2017, for existing supervisory unions merging into districts will receive enhanced incentives, such as homestead tax rate re-ductions. A lower level of incentives are available to merged districts that become operational between July 1, 2017 and July 1, 2019. (H.361, Sections 5-7)

And in other bills:Economic and Business Incentives/Cloud Tax - S.138 passed the last day of the ses-sion. Th e Governor is expected to sign it when he receives it.

Th is bill became this year’s omnibus eco-nomic development bill. A portion of the bill clarifi es that there is no sales and use tax on prewritten soft ware accessed through the cloud. Th e bill also includes other pro-visions increasing the permitted limits for licensed lenders, startup and venture capi-tal community amendments, and Vermont Employment Growth Incentive (VEGI) amendments, including a provision that al-lows lower paying jobs to be VEGI-available if they are located in an area with higher unemployment than the state average.

Another provision of the bill creates a com-mittee to study the viability of an employee relocation tax credit, with a report to the Legislature by January 15, 2016. Lastly, a new $125,000 program is enacted authoriz-ing the VHFA to make downpayment assis-tance loans to qualifying fi rst-time home-buyers.

Health Care/Reform – S.139 (all health care) and H.490 (Budget bill) both passed the last day of the session. Th e Governor is expected to sign them when he receives it.

S.139 contains a 33 cent increase in the to-bacco tax to fund certain health care initia-tives and appropriations to providers. Th at raises just over $3 million in state dollars, which gets a federal match of the same amount. A Senate proposal to revise the existing employer assessment on employers who do not provide health care coverage to their employees did not pass. Other propos-als to tax e-cigarettes, or to apply a sales tax to candy and other goods did not pass.

Miscellaneous Revenue ProvisionsExtend the meals and rooms tax to vend-ing machine sales and clarify that vending machine operators do not need a separate license for each machine. Estimated to raise $1 million annually. (H.489, Sections 88-89)

Current UseSet the land use change tax at 10% of all land that is developed. For a portion of a parcel, the 10% tax is of the fair market value as a separate parcel. In addition, clarify that portions of parcels are valued at fair market value when coming into or out of current use. (H.489, Sections 48 and 50)

Adopt a so-called “easy out” provision whereby an owner of enrolled property who elects to discontinue enrollment of the par-cel, or a portion of a parcel, may be relieved of the fi rst $50,000.00 of land use change tax; provided that if the property owner does elect to discontinue enrollment and be relieved of the fi rst $50,000.00 of land use change tax, the owner shall pay the full property tax, based upon the property’s full fair market value, for the 2015 assessment, and no State reimbursement shall be paid for that land. No property owner shall be relieved of more than $50,000.00 in land use change tax. An election to discontinue en-rollment is eff ective only if made in writing to the Director of Property Valuation and Review between July 1, 2015 and October 1, 2015. An owner who elects to discontinue enrollment or any successor owner may not reenroll the entire withdrawn parcel, or any portion less than the entire withdrawn par-cel, in the succeeding fi ve years. Th e “easy-out” shall not be available for any land that has been developed. (H.489, Section 53)

Require owners of agricultural land to cer-tify by September 15, 2015, and annually thereaft er, that their land complies with the statutory requirements. PVR will develop the certifi cation form. (H.489, Section 57)

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Neither did any version of a new payroll tax even though it was a priority of the Gover-nor. Th ree million is a far cry from the $90 million payroll tax proposed by the Gover-nor.

Elements of the bill include:

• A study of cost estimates of providing primary care to all Vermont residents (an attempt to keep some form of sin-gle payer health care discussed).

• Each health insurer with more than 200 covered lives in this State shall establish an Internet-based tool to en-able its members to compare the price of health care in Vermont by service or procedure, including offi ce visits, emergency care, radiologic services, and preventive care such as mammog-raphy and colonoscopy.

• Th e sum of $761,308.00 is appropri-ated from the General Fund to the De-partment of Vermont Health Access in fi scal year 2016 for Exchange cost-sharing subsidies for individuals at the actuarial levels in eff ect on January 1, 2015.

Th e budget bill also became home to cer-tain health care provisions as a safeguard in the event a health care bill did not pass. Specifi cally, there is continued oversight and contingency planning for the insurance exchange, Vermont Health Connect, in the event an alternative is needed. Elements in-clude:

• Monthly reports from the Chief of Health Care Reform to the Legisla-ture on status and updates of Vermont Health Connect

• Vendor deadlines and outcomes

Findings and recommendations, as well as an example of a Vermont tax expenditure evaluation, are due back to the Legislature by January 15, 2016.

Professional Regulation (H.282) – Passed and awaiting Governor’s signature. Th e annual bill from the Offi ce of Professional Regulation contains amendments to certain of the practice acts for professions in which it regulates. Th is year’s bill does not con-tain any proposed amendments to the ac-countants’ practice act. Th ere are, however, amendments that apply to all professions in general. Th ese include provisions related to license reinstatement, unauthorized prac-tice, confi dentiality of disciplinary matters, and business registration with OPR.

Public Records (H.18) – Passed and await-ing Governor’s signature. Th is is the latest eff ort by the Legislature clarifying what documents and records are exempt from the Public Records Act for certain state agencies and departments.

Public Records (Rulemaking) (H.17) – En-acted into law and becomes eff ective July 1, 2015. Th is bill requires newly promulgated draft rules submitted to the Secretary of State and Legislative Committee on Ad-ministrative Rules identify whether the rule contains and exemption to the Public Re-cords Act.

Study of State Public Retirement Plan (H.490 (Budget Bill), Section C.108) - Passed and awaiting Governor’s signature.Th is issue actually passed last year but a re-port was not prepared. Th is language keeps the study active by pushing back the report due to January, 2016. Th e language directs that a feasibility study be done on establish-ing a state public retirement plan.

• In the event deadlines and outcomes are not met, alternatives to the Ver-mont Health Connect are required, such as a federally-supported state ex-change

Water Quality (H.35) – Passed in the last week of the session. Th e Governor is ex-pected to sign it upon receipt. Th e bill con-tains measures to improve the quality of Vermont’s waters, with Lake Champlain a major focus. Th e bill is primarily funded through a .2% increase in the property transfer tax (raising $6 million) and the bal-ance through a series of environmental fees. A per parcel fee had some traction in the Senate but was replaced by the transfer tax at the last moment.

Tax Expenditures (S.41) – Passed the Leg-islature earlier this month. Th e Governor is expected to sign it. Th e bill directs the Joint Fiscal Offi ce, in consultation with an orga-nization or organizations with experience in the evaluation of tax expenditures, de-velop a strategy to evaluate the eff ectiveness of each Vermont tax expenditure. Th e Joint Fiscal Offi ce shall consider the experiences of other states and shall propose a strategy that identifi es but is not limited to:

(1) an appropriate schedule and approach for evaluating tax expenditures;

(2) specifi c metrics for diff erent tax expen-ditures based on the statutory purposes;

(3) sources of data and economic models, if any, that are matched to the identifi ed met-rics; and

(4) the composition and mandate of an ap-propriate body, if other than the General Assembly, to consider the eff ectiveness of tax expenditures.

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Privacy of Personal Information/Security Breach (S.73) – Passed and awaiting Gov-ernor’s signature. An omnibus consumer protection bill (S.73) contains clarifying language related to use of email when no-tifying customers that a security breach of personal information may have occurred.

What did NOT pass but remains pending in 2016:

Estate Tax (S.55) – Th e bill will remain pending in the House Ways and Means Committee next session. Th e bill proposes to create an estate tax with a fl at rate (16%), to initially revise the exclusion amount downward from $2.75 million to $2.45 mil-lion, then raise it to $3.9 million in 2017, and then bring it in line with the federal amount in 2019. Th e provisions become eff ective in 2016, and also have a one year federal taxable gift addback in the fi rst year, a two-year lookback in the second period, and a three-year lookback from 2019 on-ward.

Tax Havens (H.489) – A study in the House-passed version of H.489 (revenue bill) did not make it into the fi nal version. Th e issue, however, is expected to be back next year in the form of more concrete proposals.

Years ago when Vermont adopted unitary combined reporting and captured corpo-rate income tax revenue from companies with a nexus in Vermont but also in other states Vermont limited its reach to the U.S., or so-called water’s edge. Discussion this year was focused on expanding that reach to other countries, and particularly those so-called tax havens. Not enough informa-tion or time was available this year to fully act. Among the reasons to pursue such a change include enhancing corporate in-come tax revenue.

Ban the Box (H.121) – Th e bill was not sub-ject to a hearing this past session but will re-main pending in the House Committee on General, Housing and Military Aff airs. Th e bill proposes to prohibit the “have you ever been convicted of a felony” box on employ-ment applications. It should be noted that Governor Shumlin recently issued an Ex-ecutive Order that “bans the box” in initial applications only, with as yet unidentifi ed exceptions. Subsequent reviews or discus-sions with applicants do not have such an exception. Forthcoming rules from the De-partment of Human Resources will provide additional clarity.

***

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Do leaders who need to work on their char-acter know it? In most cases, no—they’re pretty deluded. When asked to rate them-selves on the four moral principles, the self-focused CEOs gave themselves much high-er marks than their employees did. (Th e CEOs who got high ratings from employ-ees actually gave themselves slightly lower scores—a sign of their humility and further evidence of strong character.) Fortunately, Kiel points out, leaders can increase their self-awareness through objective feedback from the people they live and work with. But they have to be receptive to that feed-back, and those with the biggest character defi ciencies tend to be in denial.

How can such leaders get past their de-nial and overcome their character defi cits? Seeking guidance from trusted mentors and advisers helps a great deal, Kiel says. He discovered that fi rsthand early in his own career. Aft er earning a PhD in psy-chology, he built two large clinical practices and briefl y served as the CEO of a publicly held company. Back then, he says, he was more like the self-focused CEOs than the virtuosos: “While I never engaged in any illegal behavior, I’m sure many of my col-leagues in those days felt that I was more than willing to throw them under the bus if it meant success for me.” As Kiel reached middle age, though, he began to feel a sense of moral and spiritual emptiness—and he knew he needed to change. It was a long, diffi cult process. Aft er all, he was trying to undo deeply ingrained habits. But with practice and counsel he succeeded, and he was inspired to help other business leaders do the same.

If Kiel’s experience (and his clients’) is any indication, character isn’t just something you’re born with. You can cultivate it and continue to hone it as you lead, act, and de-cide. Th e people who work for you will ben-efi t from the tone you set. And now there’s evidence that your company will too.

Learn more about KRW’s fi ndings in Re-turn on Character, by Fred Kiel (Harvard Business Review Press, 2015).

A version of this article appeared in the April 2015 issue of Harvard Business Re-view.

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of the asset that has been created, and iden-tifi cation of important and sometime latent value drives. Th e process of having the busi-ness valued can provide benefi ts far greater than the nominal cost.

Here are 50 reasons for valuing a business.

1. To know what the business is “worth”

2. To have an idea how the market would value the business should you want to sell

3. To establish a process that would make the company more marketable should the owner decide to sell or when they are ready to sell

4. To evaluate an off er from someone who has expressed an interest in buying the business

5. To create a bigger playing fi eld for the owner to assess the results of their decisions or potential for wealth creation

6. To show how wealth is created and that can indicate a strategic direction to go in

7. To show how an initial operating cost can become an investment and how it can be recouped by increased value of the business

8. To place the owner in a position to mea-sure the business in terms of value creation and not on the immediate profi t (or loss) from a transaction

9. To identify value drivers

10. To possibly uncover areas of the busi-ness that can be exploited for greater cur-rent profi t as well as long term growth

11. To identify weaknesses or areas that dis-sipate value

12. To establish a buy-sell agreement and a method of automatic adjustments

13. To update buy-sell agreements

14. For shareholder or partner disputes

15. To freeze out minority owners

16. To consider and use the value in con-nection with the purchase of business or owner life insurance

17. To determine built-in gain for conver-sion of a C Corporation to an S Corporation

40. To use as a benchmark to measure the business’ “growth”

41. To provide measures of key numbers and ratios with peer companies

42. To be used in or to get started with stra-tegic planning

43. To see if an independent appraiser can uncover hidden value

44. To determine if there is value greater than, or separate from, the present opera-tions such as strategic value

45. To indicate how to recognize, maximize, build, or grow and realize full value of stra-tegic value

46. To raise owners’ mindsets from daily operations to that of creating long-term and sustained value

47. To understand the illusion of value and ways to make the value a reality. For in-stance, value can be lost very quickly when exposed to risks such as damage to repu-tation and regulatory overreach and valu-ations can assist in identifying the impor-tance of this

48. To create a vaster vision for the business owners

49. To be used periodically as a tool to track the ways value is created assisting in strengthening the business

50. To help identify whether the business is a growing, stagnant, or wasting asset

Valuations are serious undertakings and can be extremely revealing; the business owner(s) seeking a low-cost engagement will miss some of the important benefi ts associated with a valuation by opting to retain a professional–especially one that is not credentialed—to develop the number or value. When properly and thoroughly done, the valuation engagement has the potential of identifying a host of issues and opportunities with the potential of adding value. Th ose that own an interest in a busi-ness should consider having it valued on a regular basis so that they will gain insight, possibly realign the strategy, and position itto grow and create value.

***

18. For owners’ personal fi nancial planning

19. To use on owners’ personal fi nancial statements

20. To use as a guide to determine retire-ment or buy out payments to the owner

21. To indicate the value for credit purposes

22. To value assets and asset impairment for GAAP, that is, fi nancial statement purposes

23. To be used as a guide to determine rea-sonable compensation

24. To plan for a (tax-free) merger with a supplier or competitor

25. To allocate costs in an acquisition or merger

26. To assist the dream of going public and capitalizing the business’ value

27. For gift tax purposes such as ownership transfers to a child, donations to a charity, transfers to grantor trusts, or installment sales to a defective trust

28. For estate tax reporting purposes

29. For an estate’s division of assets where the business will go to one benefi ciary and to off set assets to another

30. To assist a benefi ciary in selling an in-herited share of a business

31. For succession planning

32. To set up, or value, an employee stock ownership plan (ESOP)

33. For stock compensation awarded to em-ployees including restricted stock and stock option plans (including 409A purposes)

34. To determine a base line and value growth for phantom stock arrangements

35. To value assets in a marital dissolution

36. For prenuptial agreements

37. To value a business in a bankruptcy (Chapter 11 or small business case)

38. To distinguish between enterprise (or business goodwill) and personal goodwill

39. To establish economic damages should there be a loss from a disaster and lost cash fl ow

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Th e identity of the ultimate recipient of the valuation is also an issue. If the person sell-ing a business requests the valuation, will it be provided to the potential buyer, or used as a strategy guide in setting the starting and bottom prices? Likewise if the buyer requests the valuation will he be provided with all the information needed to form an opinion including negative data? Th at is where the investigative skills and experi-ence of the buyer’s appraiser comes in.

In formulating an owners’ buy-out agree-ment it is necessary to determine a value where either party could be the buyer or seller. Th ere, a balance of the interests needs to be considered and the valuation might not be the value used if there were a sale or divorce, but it is the “right” value between the parties for the purposes of the agree-ment.

Fair Market ValueMany people refer to a business’ value as its “fair market value”; I fi nd that this is gener-ally a misused term. Its derivation is from a 1959 IRS Revenue Ruling 59-60 which specifi cally addresses valuations for gift and estate tax purposes and does not necessar-ily provide a reasonable valuation for other uses.

Fair market is defi ned as “the price at which property would change hands between a willing and able buyer and willing and able seller with neither being under any compul-sion to buy or sell and both parties having reasonable knowledge of relevant facts, with both seeking their maximum economic self-interests.” Implicit with this defi nition is that there is a “hypothetical” buyer and seller that are assumed to be well-informed about the property and the market for such property and are willing and able to com-plete the transaction using cash or cash equivalents and that the property would have been exposed on the open market of a period long enough to allow market forces to establish a value.

Part of the determination of a fair market valuation are upward adjustments for a partial interest with control or swing vote ability and downward adjustments for mi-

Selling the BusinessValuing a business that the owner wants to sell can be done in a number of ways, but, at the end of the day, few buyers will base their purchase price on a valuation prepared by the seller. Additionally, many valuations prepared by advocates of the seller lack credibility because they are not considered to be independent. As a general rule, the “valuations” prepared by a business broker or consultant are generally less robust than either a Conclusion of Value or a Calcula-tion; few brokerage companies train the brokers and the values reached are occa-sionally high and used as a means to secure the listing.

It is advisable for the owner to consult with a credentialed valuation analyst to review the broker’s opinion, get a range of the value, guidance on how to address the ne-gotiation process, and perhaps even help determine the opening price and a price for which they should try to settle on, or a walk away value.

Considerations should also be given to the ultimate use of the net proceeds and cash fl ow that can be expected from the pro-ceeds. Occasionally, the appraiser will sug-gest methods of structuring the transaction so the greatest cash fl ow can result from the sale proceeds.

Sellers using this method would be more concerned with using the projected profi ts and would try to base the business on what the earnings will be in the next couple of years. Th is is a forward looking valuation rather than what is used for the fair market value approach. Occasionally an earn-out price is used based on future profi ts for a number of years aft er the business is sold.

Buying the Business as an InvestmentTh is refers to the value of the business’ cash fl ow and future profi ts considering the owner’s expectation of risk, return, poten-tial, and type of involvement they will need to provide. On some basis most businessesare acquired with this in mind, but not all.

nority interest or lack of control shares and to recognize special diffi culty in marketing those shares.

Limitations in this method exist when a current value is needed in a divorce or busi-ness dispute; when an actual sale is being negotiated; or where special attributes exist that are not refl ected in the earnings history such as a patent or new procedure that is just taking shape.

Be aware that in determining values, con-sideration needs to be given to the reasons for the valuation, the actual buyers and sell-ers and pressures they have, family mem-bers, employees and other parties of inter-est, hidden agendas, negotiation skills of the participants, payment terms and peri-ods, income taxes and tax based allocations, transaction costs and legal precedents, and rulings that guide and establish values. In the presence of any one of these, a fair mar-ket valuation might not be appropriate.

In lieu of “fair market value”, for example, the valuation might include the proposed consideration and a weighted average based on the previous fi ve years’ earnings. Th is would present a backward looking valua-tion using lagging earnings to determine the current value of the business.

Standards in a DivorceTh ere are varying methods for matrimo-nial issues that extend from what a business might be worth in an immediate sale to what it costs to create or to recreate to what it is worth to the present owner – conceptsnot used in the fair market value method. Matrimonial valuations arise in state courts with each state setting their own rules and methodology and judges many times decid-ing the value in part by using their experi-ence, knowledge and judgment.

Th is method would use the current or most recent year’s, and possible projected, earn-ings and could include the cost of recreat-ing the business or goodwill. Th e valuation analyst in these engagements will need to consider whether to tax-aff ect and/or deal with the DLOM and DLOC.

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Here the buyer is interested in their ROI (return on investment). Th ey would look at the value as the present value of what they expect to receive over the three to 10 years aft er they acquire the business. Th ese in-vestors usually accord more weight to the historical earnings and less to the projected values or cap rates (in the case of “invest-ment property”), although that is also con-sidered. Where real property is a primary component, I fi nd as a general rule that the real estate agents miscalculate the cap rate and do not understand other metrics used to assess the investment value. A valuation analyst that is involved in this type of trans-action is advised to work closely with a real property appraiser or seasoned real estate agent to counsel and assist the buyer.

Job Value to the BuyerTh is method values the business in terms of the job wanted in the business with the expected salary and benefi ts, in comparison to what the buyer could make if they had a comparable job, or any job they are reason-ably suited for.

Once the job is secured, the ROI is second-ary and would just need to be somewhat equivalent to what they could reasonably earn on their funds had they not acquired the business. Th is places a much greater value on the business than most of the other methods.

Strategic ValueIncluded in this value are synergies and special features of the business that will add incrementally to a buyer’s current business, and for which the buyer is willing or should be willing to pay substantially in excess of its current value based on traditional valu-ations.

Th is could be in situations where a company wants to enter a market and it is less costly to acquire a business already in that market; where a company has a patent or secret pro-cess that the buyer can better exploit; where a company wants to eliminate the threat of a competitor or to acquire “critical mass” quickly, irrespective of cost, or expand their product line; or get access to a certain type of customer or the location of the business; where a business wants to maintain a sup-plier, or a supplier’s competitor; where the

survivor will confront much more diffi cult issues with more costly consequences that many times would be out of their control. Valuations for these agreements if not done exactly the way they should end up being a compromise value that serves the purpose of the getting something done in case of an untimely death or disability or other pre-cipitous event.

Valuation in a Personal Financial PlanMany owners value their business when they are doing fi nancial planning for their future, retirement. or asset allocation. How the business is valued will depend on many factors, the least of which is the fair market value. Valuation for estate or gift tax pur-poses would be at the fair market value, but that might have no basis in reality of what the owner could expect to receive from a sale net of taxes or the ultimate cash fl ow from the proceeds.

Th e values in a fi nancial plan should not serve as an ego gratifi cation when adding up the net worth. What is most important is the cash fl ow from the eventual sale pro-ceeds. Valuations should lead to that cash fl ow making this diff erent from any of the other purposes of a business valuation.

ConclusionEach method has a diff erent set of rules and the valuations can vary greatly. Valuing a business is an art – not a science – even though careful calculations are made to arrive at an appraisal of the business. Th e above indicates just some of the uses of a valuation and the considerations involved in the process.

***Edward Mendlowitz, CPA, ABV, CFF, is partner emeritus with WithumSmith+Brown, PC, in New Brunswick, New Jersey. He has over 40 years of public accounting experience, is a licensed Certifi ed Public Accountant in the states of New Jersey and New York and is accredited by the American Institute of Certi-fi ed Public Accountants (AICPA) in Business Valua-tion and as a Personal Financial Specialist (PFS). Th e author of 24 books, Mr. Mendlowitz has written hun-dreds of articles for business and professional journals and newsletters and presented over 200 CPE programs.

combination of two or more companies creates a major niche player, specialty busi-ness or one stop shopping source; where someone wants to protect their job or own the company they helped create or build; or where there is an ego value of ownership or the ability to become a participant in a well-known but limited fi eld.

Many of these situations do not fall within the fair market value defi nition because there is no hypothetical willing and able buyer and willing and able seller with both having reasonable knowledge of relevant facts.

Th e value is based on what the buyer could earn because they own the business or even the ego value or ownership. A recent ex-ample is the acquisition of the Los Angeles Dodgers by an investment group headed by Guggenheim Partners where they envi-sioned using the team to start a television network; or the Los Angeles Clippers by Steve Ballmer, former Microsoft chairman and its largest individual stockholder, who simply liked basketball and can aff ord to wait out the time period until the value catches up with what he paid.

Partners’, Members’, or Shareholders’ Agree-mentsDiff erent considerations go into valuing a business for a buy-sell agreement. And one agreement can have diff erent valuations depending upon the reason for a partner leaving. Voluntary or forced withdrawal, retirement, disability and death, personal bankruptcy, or losing a professional license can call for diff erent methods of valuation. Further, when there is a death or transfer to family members, the valuation has to pass IRS scrutiny. And today’s valuation issues might not be applicable many years down the road when the agreement is acted upon if there is no means of keeping the valua-tions current.

Th ese valuations can get very complicated since various circumstances can have dif-ferent amounts, and while the values might be reasonable, most businesses do not have the cash or cash fl ow or borrowing capac-ity to make the payments. Accordingly many businesses put off executing such agreements. However, such agreements are “wills” for the business and if not done, the

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Likewise, when the market performs badly, the temptation might be to hunker down completely. But if the investment skies brighten and the roads improve, you can risk missing out on better returns else-where.

One common solution is to shift strate-gies according to the climate. But this is a tough, and potentially costly, challenge. It is the equivalent of keeping two cars in the garage when you only need one. You’re pay-ing double the insurance, registration, and upkeep costs.

An alternative is to build a single diversi-fi ed portfolio. Th at means spreading risk in a way that helps your portfolio capture what global markets have to off er while reducing unnecessary risks. In any one period, some parts of the portfolio will do well. Others will do poorly. You can’t predict which. But that is the point of diversifi cation.

effi cient vehicle in your garage. Th is way you’re smoothing out some of the bumps in the road and taking out the guesswork.

Because you can never be sure which mar-kets will outperform from year to year, di-versifi cation can help increase the consis-tency of the outcomes and help you capture what the global markets have to off er.

Add discipline and effi cient implementa-tion to the mix, and you may get a struc-tured low-cost, tax-effi cient solution.

Just as expert engineers can design fuel-effi cient vehicles for all conditions, astute fi nancial advisors know how to construct globally diversifi ed portfolios to help you capture what the markets off er in an effi -cient way while reducing the infl uence of random forces. Th ere will be rough roads ahead, for sure. But with the right invest-ment vehicle, the ride can be a more com-fortable one.

***

It is important to remember that you can never completely remove risk in any invest-ment. Even a well-diversifi ed portfolio is not bulletproof. We saw that in 2008–09, when there were broad losses in markets.

But you can still work to minimize risks you don’t need to take. Th ese include unduly exposing your portfolio to the infl uences of individual stocks, sectors, or countries—or relying on the luck of the draw.

An example is those people who made big bets on technology stocks in the late 1990s. Th ese concentrated bets might pay off for a little while, but it is hard to build a con-sistent strategy out of them. And those fads aren’t free. It’s hard to get your timing right, and it can be costly if you’re buying and sell-ing in a hurry.

By contrast, owning a diversifi ed portfolio is like having an all-weather, all-roads, fuel-

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None of these roles involve making fore-casts about markets or economies. Instead, the roles combine technical expertise with an understanding of how money issues intersect with the rest of people’s complex lives.

Indeed, there are at least seven hats an ad-visor can wear to help clients without ever once having to look into a crystal ball:

1. Th e Expert: Now, more than ever, inves-tors need advisors who can provide client-centered expertise in assessing the state of their fi nances and developing risk-aware strategies to help them meet their goals.

2. Th e Independent Voice: Th e global fi nan-cial turmoil of recent years demonstrated the value of an independent and objective voice in a world full of product pushers and salespeople.

7. Th e Guardian: Beyond these experiences is a longterm role for the advisor as a kind of lighthouse keeper, scanning the horizon for issues that may aff ect the client and keeping them informed.

Th ese are just seven valuable roles an advi-sor can play in understanding and respond-ing to clients’ whole-of-life needs, which are a world away from the old notions of selling product off the shelf or making forecasts.

For instance, a person may fi rst seek out an advisor purely because of their role as an expert. But once those credentials are es-tablished, the main value of the advisor, in the client’s eyes, may be as an independent voice.

3. Th e Listener: Th e emotions triggered by fi nancial uncertainty are real. A good advi-sor will listen to clients’ fears, tease out the issues driving those feelings, and provide practical, long-term answers.

4. Th e Teacher: Getting beyond the fear-and-fl ight phase oft en is just a matter of teaching investors about risk and return, diversifi cation, the role of asset allocation, and the virtue of discipline.

5. Th e Architect: Once these lessons are un-derstood, the advisor becomes an architect, building a long-term wealth management strategy that matches each person’s risk ap-petites and lifetime goals.

6. Th e Coach: Even when the strategy is in place, doubts and fears inevitably arise. At this point, the advisor becomes a coach, reinforcing fi rst principles and keeping the client on track.

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Knowing the advisor is independent—and not plugging product—can lead the client to trust the advisor as a listener or sounding board, someone to whom they can share their greatest hopes and fears.

From this point, the listener can become the teacher, architect, coach, and, ultimate-ly, the guardian. Just as people’s needs and circumstances change over time, the nature of the advice service evolves.

Th ese are all valuable roles in their own right and are not dependent on outside forces such as the state of the investment markets or the point of the economic cycle.

However you characterize these various roles, good fi nancial advice ultimately is de-fi ned by the patient building of a long-term relationship founded on the values of trust and independence and knowledge of each individual.

Now, how can you put a price on that?

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Th e Seven Roles of an Advisor continued

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Securities off ered through Securities America Inc. Member FINRA/SIPC. James L. Donohue, Registered Representative, Gallagher Flynn fi nancial Advisors, LLC and is affi liates are not affi liated with Securities America, Inc. Financial advisory services provided through Gallagher, Flynn Financial Advisors, LLC. Se-curities America and its Representatives do not provide tax advice. Tax services provided through Gallagher, Flynn & Company, LLP.