Expert Income Tax Update Presented at January Meeting
Interest Rate Hedging Tools Topic of Mini-Session
The Chapter’s January Dinner Meeting was held at the Stony Hill Inn in Hackensack, NJ on Wednesday, January 15, 2014. Members and guests enjoyed a splendid cocktail hour preceding the full-course dinner. The cocktail hour offered the opportunity for Members and guests to mingle and relax while enjoying a lavish array of fine appetizers served by the expert staff at the Stony Hill Inn.

Charles Frago, a Tax Principal in the Financial Institutions Group from Wolf & Co., PC presented an expert review of the latest federal and state income tax issues affecting community banks at the Chapter’s January Dinner Meeting. He thoroughly reviewed a number of revisions in key subject areas of concern to the financial manager. These items included IRS examination issues, depreciation, repair and capitalization rules and the Medicare tax provisions of the Affordable Care Act, also known as “Obama Care”. He also gave practical examples of methods to reduce an institution’s effective tax rate and the effect that potential tax rate changes in the pipeline may have on an institution’s tax provision.

Featured dinner speaker Charles Frago, Tax Principal, Wolf & Co. PC explains IRS Examination Issues at the January Dinner Meeting.
Future CFOs learn important tax implications at the January dinner presentation by Charles Frago.
Charles discussed the factors that IRS may consider regarding an institution’s bad debt deduction and the allowance for loan losses. He noted the items that IRS examiners will review in an institution’s loan files and he stressed the importance of maintaining documentation that is proper and current. He also cautioned that charge-offs that reduce the book value below fair market value will likely be challenged. Charles pointed out that the deduction of operating costs for real estate owned is no longer challenged by the IRS.

Charles reviewed the new repair and capitalization rules that were finalized this past September and are effective for fiscal years beginning after January 1, 2014. He reviewed the components of the 3.8% Medicare surtax on net investment income which is a part of the Affordable Care Act. The surtax affects higher income individual taxpayers beginning in 2013. Charles presented a series of tax planning and state tax strategies that financial managers should consider in order to maximize after-tax income.

Gerrit van de Wetering, Director of Financial Products from BMO Capital Markets presented and Introduction to Interest Rate Hedging Tools at the afternoon mini-session that preceded the cocktail hour.

The session provided attendees with practical examples of the application of hedging tools in the current interest rate environment. The session introduced interest rate derivatives and their application using macro level hedging and loan level hedging. Gerrit discussed the resulting accounting treatment and the corresponding regulatory requirements for implementation as well as a review of the necessary documentation process.

Topics and Speakers

Income Tax Update

Charles Frago Photo
Charles Frago
Wolf & Company PC

Slide Presentation

Introduction to Interest
Rate Hedging Tools

Gerrit van de Wetering Photo
Gerrit van de Wetering
Director Financial Markets
BMO Capital Markets

Slide Presentation

Gerrit van de Wetering from BMO Capital Markets presented and Introduction to Interest Rate Hedging Tools at the afternoon mini-session.
Members earn valuable CPE credits while attending the free mini-session.