Weaver: Beyond the Numbers: Recent Episodes

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Weaver: Beyond the Numbers — where Weaver professionals examine financial and business trends, regulations, best practices and the issues that keep CFOs, CEOs and other business professionals up at night. Tune in to hear interviews with Weaver leaders who work with companies every day to manage risk, address financial reporting needs, solve tax issues and help business offices operate more efficiently.

Technology continues to change the way organizations conduct business. Governments across the country can enhance their effectiveness by leveraging new tools and modernizing processes.

Morgan Page, Partner-in-Charge of Digital Transformation and Automation at Weaver joins host Adam Jones for a look at how governments can take that next step in their digital transformation journey.

Page doesn’t believe digital transformation is a new concept but a rebranded one. Digital transformation happens when organizations look to improve or accelerate business processes using technology, a regular occurrence in forward thinking government organizations. Page explains, “Now we are at this next layer of digital transformation that looks at how we can best use data to accelerate even faster.”

While digital transformation is linked to an organization’s strategy and cultural priorities, digital automation focuses on the tactical execution of the activities within that transformation. Page says, “We may have a goal of eliminating processing tasks. Our digital transformation objective is that process change. Our tactical execution is the automation, using some kind of RPA (robotic process automation) solution or intelligent OCR (optical character recognition) to extract that information.”

In the government industry, digital transformation and automation deployment is running slower than in the private sector, but that doesn’t mean it isn’t occurring. “We’re seeing an increased acceleration in the space,” according to Page. “More and more components are readily available that are a little bit more plug-and-play.”

While the solutions may be more standardized in government, Jones says many sizeable agencies are utilizing digital transformation and automation tools. “Everyone from the Texas DMV to the IRS has deployed RPA in some form or fashion.”

The transformation journey will look different for every organization as digital applications become streamlined and technology will continue to accelerate government capabilities through increased efficiencies and improved outcomes for constituents.

Subscribe and listen to future episodes of Weaver: Beyond the Numbers, The Business of Government on Apple Podcasts or Spotify.

It was time for a little myth busting on Location3 when Rob Nowak and Howard Altshuler spoke with Tyler Martin, Assurance Senior Manager at Weaver. There are some misconceptions people think of when they hear the term ‘manufactured housing,’ and Martin was more than happy to separate fact from fiction.

Martin says, “When you say manufactured housing, what a lot of people think of is, you know, the mobile home, the trailer. That’s a different thing; it’s a legacy name. So, one of the big misconceptions is from a quality standpoint that these (manufactured) homes are not built to last, they’re not comfortable, they don’t have the amenities, and that’s starting to change.”

Another misconception Martin says surrounds manufactured housing is exploitative practices. And while some of these communities may have government funding backing them, builders are moving towards the manufactured housing community approach due to myriad factors: rising interest rates, affordability and a general need for housing. These communities open doors for many looking for a home that was previously out of their reach. “Without a doubt, manufactured housing is one of the solutions to our affordable housing and attainable housing problems.”

The technological advancements that increase the quality of today’s manufactured housing mean a re-think of the traditional loan programs for this type of housing needs to occur. Previous concerns were that these homes would not last twenty-five years or more. That is no longer the case.

“Another interesting thing we’re seeing,” Martin says, “is the technology catching up and moving to the next level. 3D printing is one of those. There are a lot of new companies that are popping up. You’ve got homes now that will 3D print in concrete on-site and can lay down all the walls, interior, and exterior on a 2,500 square foot house in less than twenty-four hours.”

Subscribe to the Location Cubed podcast on Apple Podcasts and Spotify for the next episode of this series.

Learn about upcoming real estate webinars and subscribe to Weaver’s event invite list.

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On this episode of Weaver: Beyond the Numbers, host Becky Reeder, Partner-In-Charge, Alternative Investment Services, of the Alternative Investment Practice at Weaver speaks with Paul Olschwanger, Founder and Chief Inspiration Officer at Wendell Rhoads Consulting about the significance of developing human capital to meet an organization’s demands.

With over 30 years of experience in the asset management industry, Olschwanger’s knowledge lies in helping firms achieve balance and financial success by developing human potential differently. He also helps with recruiting and coaching to help individuals and small teams thrive. The conversation opens with the inspiration behind the company’s name – Wendell Rhoads Consulting.

“Six years ago, I watched the show Billions. The first episode really caught my attention and it really hit to the essence of my puzzle, my career in terms of helping other people figure things out to be their best – whether it’s individually or the way they impact others as a leader,” said Olschwanger.

He connected with the character Wendy Rhoads, who helped individuals achieve the success they were capable of while recognizing their value whenever possible. It was then that he knew he would one day name his company after the character. So, what exactly does Olschwanger do, and how does it help? He likes to explain it this way:

“I’m a little bit like an eye doctor. At some point in time, we may not have 20/20 vision. We have to recognize that, we have to care about it, and we have to go do something about it,” Olschwanger explained. “When it’s a vision issue, we go to the eye doctor where the problem is diagnosed and treated.”

“Now, our vision is better. Now, we’re seeing things we didn’t see before. And that’s the analogy I use with people. You’re probably not seeing everything but you’ve got to take that step to do something about it and let me be that person who can help you. At the end of the day, you can get 100% credit for it. I’ll be in the corner clapping for you,” Olschwanger said.

Subscribe and listen to future episodes of Weaver: Beyond the Numbers on Apple Podcasts or Spotify.

© 2022

This episode of Location3 has a little bit of everything. Weaver’s Howard Altshuler spilled the beans about his vacation trip to Boston, which included stepping inside the iconic "Cheers" bar. Altshuler was surprised by the city's fantastic development, especially in the seaport district where there is a lot of mixed-use development, all accessible on foot.

But all isn’t sunny in the development world. Deals are falling apart. What are the causes? There’s that thing called rising interest rates. The feds have raised interest rates twice this year, and with indications that there could be additional raises on the way.

“From the standpoint of real estate, things aren’t working anymore,” Altshuler says. “Because the higher interest rate on the base creates a potentially bigger credit risk. Instead of LIBOR (London Interbank Offer Rate) plus one hundred fifty, now its LIBOR plus two hundred, so you’re getting a double whammy here.”

"The challenge comes when deals are proforma’d out at one rate, and later the rate is increased," says Weaver’s Rob Nowak. "Either the parameters of the agreement need to change, or the deal is dead. I’ve seen anecdotal evidence from the media, and our client base. Some folks are taking the lesser of two evils option, saying it’s better to walk away from this deal.”

Altshuler believes walking away isn’t necessarily the first step but perhaps a renegotiation tactic to return to the seller and look for a different pricing structure could be negotiated. Office space and industrial assets are a couple of areas where long-term pricing strategies come into the mix when considering the value of a current deal. These types of assets may not have the flexibility to stay in a deal without restructuring pricing.

Weaver’s Tax Partner, Rob Nowak, and Partner-in-Charge of Real Estate and Construction Services, Howard Altshuler, discuss upcoming events and the benefits of rehabbing versus building new on this episode of Location Cubed. First, there are two upcoming events to highlight, the Construction CPE event in Midland in late September and the Urban Land Institute (ULI) Conference in Dallas in October.

At the Construction CPE event, speakers will cover sales tax, construction accounting and MNA evaluation, and the event will conclude with a happy hour. The ULI Conference returns to Dallas for the first time since 2016. Altshuler is working on a program called "rEvolution of the Workplace." The panel for this program will highlight changes in work habits and office leases.

During their discussion, Altshuler and Nowak make the case for looking toward renovations and adaptive re-uses of spaces. “We have a few clients that do renovation work,” said Altshuler. Weaver supports clients in different renovation projects. Some focus on upgrading multi-family units to increase the rent and property. Others take on “...the larger signature projects going on with respect to office buildings,” said Altshuler.

Successful renovations have to make sense for the area. You wouldn’t want to place a multi-family unit in industrial and office space where there aren’t the necessary amenities to support residents. Instead, the space may be suitable for a retail center or a hotel. But with recent trends related to rezoning and fulfilling the needs that exist in a particular area, some projects are starting with questions like “...How creative can we be in creating value of the property to put something else there?” says Nowak.

“Historically, it’s cheaper to build something new than it is to renovate,” said Altshuler. There are a lot of extra fees involved in rehab. “You have to balance the cost of building new or rehab versus building the asset from the ground up. Consider acquiring the asset, re-zoning, re-entitlement processing, incurring rehab costs, and being down for a period of time.” said Nowak. However, new-age renovations and rehabs are going to look different than their traditional counterparts and Altshuler and Nowak are sure that the project’s viability depends on what the purchase is, what the plan is and whether the numbers work.

Subscribe to the Location Cubed podcast on Apple Podcasts and Spotify for the next episode of this series.

Learn about upcoming real estate webinars and subscribe to Weaver’s event invite list.

©2022

Steve Kinard, Director of Mining at the Texas Blockchain Council, joined Weaver’s Tim Savage for a look into the bitcoin mining process. Many people may be familiar with term bitcoin mining, but not everyone understands what that process entails.

“A simple explanation is that mining involves a piece of data that is difficult to find and relatively easy to verify,” Steve says. “Bitcoin is a protocol that allows peer-to-peer transactions between you and me or anybody else who is free to come into the network. The function of mining is to validate those transactions. Bitcoin transactions build up into what is called the mempool and eventually miners they form them into a block.”

Operating on the Secure Hash Algorithm 256 (SHA-256) cryptographic algorithm, miners race to form new blocks on the bitcoin network by searching for a piece of encrypted data that allows a miner to mint a new block on the chain when found. The new block confirms the transactions in the mempool and the miner is rewarded with transaction fees and a block mining reward.

Currently, the mining reward, excluding transaction fees, is 6.25 btc until mid-2024 when it is projected to halve, which occurs every four years and is known as the halving cycle. New blocks are minted on the bitcoin network approximately every ten minutes, averaging 144 blocks per day. Based on the number of miners participating in the network, the algorithm establishes a difficulty target to ensure the ten minute process, and miners simply run computers that perform this mathematical function.

At an industrial level, the bitcoin mining process utilizes higher amounts of energy. However, Tim and Steve discuss some common misconceptions about energy consumption from mining. Tim points out, “energy conversion is not a bad thing. Use of energy is essential to the network’s security and adds a real cost for someone who might want to attack the network. An attacker would need to win 51% of the computing power, meaning they would need to obtain local licenses and approvals to operate in places where power availability exists, buy a significant of mining equipment, and build the infrastructure to run it. This would cost tens of billions of dollars, and at that point the attacker would be much more monetarily incentivized to act according to the rules than to manipulate transaction data. Otherwise, people would leave the network and bitcoin could go to zero. This is the game theory that underpins the bitcoin network, and energy is a fundamental piece of the equation.” While this kind of attack is theoretically possible, Tim and Steve agree the bitcoin network has propagated to a point of decentralization where this is becoming exceedingly unlikely.

In actuality, bitcoin mining helps stabilize the grid when constructed properly. Before bitcoin was invented, the world was not able to instantaneously increase or decrease load demand in such a way that bitcoin mining offers. Steve comments, “consistent power consumption provides flexibility to the grid when requests for more power come from other areas. The miners can instantly shut down power to allow the grid to divert it elsewhere as needed. The more of that we can have, the stronger our grid will be, and the better it will be able to serve all users and all citizens.”

Tim and Steve also discuss how miners are seeking new energy sources in an effort to reduce energy costs. Miners are increasing demand for renewable sources such as solar, wind, and hydro, and some studies show that as much as 50% of bitcoin mining is powered from these sources. Additionally, miners are utilizing stranded sources of energy such as natural gas that would otherwise be wasted. Increasingly, miners and exploration companies are working together to reduce carbon emissions and monetize these stranded sources of energy.

Malicious cybercriminals see government entities as prime targets and many leaders are investing in the best protection against loss and interruption. In this edition of The Business of Government, our host, Adam Jones, is joined by Trip Hillman, Weaver’s Partner of IT Advisory Services to discuss the ever-changing cybersecurity landscape and the growing need for cyber insurance.

Hillman says the expanding role that cybersecurity plays in all areas of business and government requires the use of specialists to ensure networks are safe. “There are many standards, requirements, and frameworks that organizations, including governments, are subjected to, and each day presents a new best practice, a new book, or a new set of compliance standards that should be followed.” On top of all these standards are frameworks that IT specialists can help to utilize.

Part of the evolving cybersecurity landscape is a market for cybersecurity insurance. No longer an uncommon practice, Hillman says people recognize cyber insurance as one of the mechanisms for mitigating IT risk. “Many organizations consider it part of a portfolio for how they treat their overall cybersecurity risk posture.”

Like everything else in the IT world, cybersecurity insurance is gaining in complexity. “Cybersecurity questionnaires can easily be eighty plus questions and I’ve seen some run over one hundred questions,” Hillman says. Many metrics go into a cyber insurance quote today as well as the parameters around which types of attacks need coverage.

One trend Hillman is seeing is with organizations that already have cyber insurance. Brokers tend to ask many more questions during renewals to ensure the coverage is sufficient to cover all their needs. It is essential to ensure that your cyber insurance paperwork is detailed and thorough, but also that it is a true representation of your security posture.

Cybercrime will continue to evolve as criminals develop more sophisticated ways to access systems. In turn, cybersecurity insurance will also continue to change. Ensuring the right type of coverage and that the policy will cover costs should you need them is paramount.

On this episode of Location Cubed, Rob Nowak and Howard Altshuler sit down to discuss recent economic news. They focus on JP Morgan’s earnings as well as the Fed’s release of the Beige Book and what those insights tell us about the real estate industry.

To preface it all, Altshuler said, “real estate is always still local. We have to look at it from the standpoint that each market is going to be different.” The conversation turns to cracks that are showing in the façade of the real estate market. “One is home sale contract cancellations, which are up,” said Nowak.

Due to an increase in interest rates, negotiated home contracts are increasingly being canceled. The contracts, which determine a certain price, may be beyond the buyer's means due to the hike in interest rates. “That tells me that people may have overextended themselves,” said Nowak. According to the Washington Post, interest rates averaged 2.88% in July 2021 and were averaging 5.3% in mid-July 2022. “A good rate is 5-6%, a few months ago it was 3-4%,” said Altshuler. Altshuler predicts that some buyers who were ready to leave multi-family homes are now staying, which shows a promising turn for that sector of the market.

The episode continues to explore what the reports mean for other sectors of the economy. “The question isn’t ‘is there going to be a recession? Is there going to be a decrease in value?’ That’s probably a given. The question becomes, ‘how much?’” said Altshuler. “The National Bank said, ‘We’re starting to reserve for consumer credit.’ A consumer credit crisis will drag on the housing market.” said Nowak.

Subscribe to the Location Cubed podcast on Apple Podcasts and Spotify for the next episode of this series.

Learn about upcoming real estate webinars and subscribe to Weaver’s event invite list.

©2022

Brian Hunt is a Texas native whose career focus includes insurance and risk management. Today, Hunt is a VP at USI, the seventh largest insurance broker in the country, where he specializes in construction and real estate.

“It’s not my job to tell you what you want to hear. It’s my job to tell you what you need to hear,” said Hunt. Insurance used to be transactional: the client would go to dinner with the broker, and the policy would be decided for a year. Now it's more of a partnership and risk is considered on a holistic level. Hunt believes that approach is primarily due to natural disasters and global events.

“You need to have a risk advisor who’s thinking outside of the box a little bit, someone who is considering a global or regional conflict somewhere and how that’s going to impact [your business],” said Nowak.

The pandemic taught us a lot about how linked and connected our globe is. When it comes to insurance, that means understanding all the relationships or events that could impact your business. “Awareness is more important than anything else,” said Hunt. “With modern technology and tracking, we have more data than ever before.”

Using that data and knowledge, insurers can quantify the risk of some aspects of the business. Of course, this starts with transparency between the insurer and the company. “You need to think about your risk but specifically what is your plan if the worst-case situation occurs,” said Hunt. It comes down to knowing all the links in the chain and identifying the weakest links.

Further, Hunt describes how the advent of “Big Data” has led to new parametric-based insurance. These new solutions are now available to transfer risks (e.g., weather) that in the past were not covered by traditional insurance. In addition, event-based options are now available to help provide additional risk strategies from macro-level events.

Subscribe to the Location Cubed podcast on Apple Podcasts and Spotify for the next episode of this series.

Learn about upcoming real estate webinars and subscribe to Weaver’s event invite list.

©2022

Howard Altshuler, Partner-in-Charge, Real Estate and Construction Services at Weaver, and—world traveler? Did people know this about him? It’s true. Altshuler spent four years living and working in China, and during that time, he did quite a bit of traveling around that country. To prove it, Altshuler brought his China coffee mug along on his recent talk with Rob Nowak, Tax Partner of Real Estate for Weaver, where the conversation was all about hospitality.

Altshuler said, regarding hospitality services, China was a land of two extremes. A budget hotel in China took the term ‘budget’ to a new level. Not many services were available in budget hotels and room sizes were small-scale, to put it mildly. “But the nice hotels were over-the-top nice,” Altshuler said. “Lots of great services. You’d walk in, and twenty people would be standing behind the desk. The restaurants were fantastic. They would have breakfast buffets every day.”

A lot has occurred since Altshuler’s travel days before the pandemic, but what’s changed? Is service still the trend driving hospitality? Altshuler said that today, people are expecting less. Services such as daily room cleaning are no longer the norm or the expectation. Some reasons point to cost savings, staffing shortages and product availability. But travelers also understand these shortages and savings needs and are more forgiving than before 2020.

Even with sky-high gas prices and rising inflation, Nowak said hotels expect record occupancies this summer. “Despite some of the high prices, the cost of getting there, and the limited service, people still want a vacation. There are three years of pent-up vacation and travel demand here.” And with testing mandates to enter various countries winding down, international travel is also expected to increase over the coming months.

With fewer travel restrictions, Altshuler and Nowak believe business travel and business conventions will also see a significant uptick for the second half of 2022 and beyond. “I’m going to anticipate that by this time next year, we are probably seeing a full return to a full conference schedule,” Nowak said.

Subscribe to the Location Cubed podcast on Apple Podcasts and Spotify for the next episode of this series.

Learn about upcoming real estate webinars and subscribe to Weaver’s event invite list.

©2022

There is no doubt that the world is a different place in 2022 than it was before the pandemic. Now that people are going about their business as they did in 2019, what lessons can companies take from the pandemic? Howard Altshuler, Partner-in-Charge, Real Estate and Construction Services at Weaver, joined Rob Nowak, Tax Partner of Real Estate, to tackle which trends will stay, what goes back to the way it was and what can businesses learn from the past two years.

One trend that Altshuler said has shifted since the pandemic is office square footage size. “Before the pandemic, everybody looked at the cost per square foot or the number of square feet per person. Offices got smaller and smaller. People started working not so much in offices, not even cubicles, but on benches and at desks. And you’d fit four or five people into a little conference room.” Today, the trend is more space, and while Altshuler didn’t expect much more square footage increases, the pandemic halted the space-squeezing movement.

Altshuler still sees spacing out of patrons in restaurants but staffing shortages shoulder some of this issue as establishments still face hiring challenges. People are ready to return to restaurants, but there are not enough workers to service them. While outdoor dining became a lifeline for restaurants during the worst phases of the pandemic, with patrons returning to the indoor ambiance, will restaurants reduce their outdoor dining footprints? Altshuler said the future remains unclear.

Businesses learned during the pandemic that maintaining better-quality systems, such as HVAC and water, promotes a safer and healthier environment for workers, associates and patrons. “Whether or not it relates to a prevention measure with respect to the pandemic, we’re now trying to reimagine how can we make life easier for tenants,” Nowak said. “How can we make life easier for our employees?”

What does the future of office value look like in a post-pandemic world where remote work will likely continue in a large capacity, certainly more than before the pandemic? Howard Altshuler, Partner-in-Charge, Real Estate Services at Weaver, recently read an article that put the number at five hundred billion or more of future office space value erosion. He spoke with Rob Nowak, Tax Partner of Real Estate for Weaver, to dispel the myths and try to get to the bottom of what return to office looks like today and down the road.

Altschuler falls on the side of believing widespread stay-at-home work will not continue to expand as the world enters its post-COVID phase. “I’m also a big believer in business creation and the ultimate need for space,” Altshuler added. “I also understand the need for more space per person in any given spot. Therefore, as they say, my death has been greatly exaggerated.” Altshuler believes the forecasting of such office value erosion is too extreme.

Playing devil’s advocate, Nowak wondered how the recent rise in gas prices, which play a considerable role in commuting costs, would affect return-to-office decision-making, at least in the short term. Could it be something employees might insist on, requiring employers to offer flexible in-office / work-from-home schedules?

Altschuler held firm that workers who typically need to come into the office weren’t ones whose positions could work with a flex schedule of the sort Nowak mentioned. “I think the people working from home (currently) are probably in a spot where the higher gas prices hurt, but not that big of an issue on their decision making,” Altschuler said.

Some motivating factors bringing folks back into the office and away from their work-at-home gigs are the contacts and social interactions they’ve missed over the past couple of years. “There’s always going to be people who are super comfortable working at home, and that’s fine,” Altschuler said. “When you’re younger, and you’re starting, think about how difficult it would have been to start out and work remotely. I’m so proud of the people who started working at our firm at the beginning of the pandemic and had to deal with starting the job remotely.” It’s quite a challenge to learn a new industry when one does not have the benefit of working alongside a mentor. And building those personal relationships in the office again will make a difference for those beginning their professional careers.

Weaver’s Rob Nowak (Tax Partner, Real Estate) and Howard Altshuler (Partner-in-Charge, Real Estate Services) channeled their inner Siskel & Ebert with a movie review and brand-new studio to help talk about supply chain issues.

The new film Top Gun: Maverick was on Nowak’s mind as he was freshly back from his second viewing of the film. For his first viewing, Nowak watched the movie with Altschuler, and one thing they both recognized was that the theater struggled with supply chain issues. From half-stocked shelves of movie candy to fewer soda options, cinemas are not immune to the supply-chain woes plaguing all business areas.

Altschuler said distributors like Amazon are pumping the breaks on fulfillment center expansion and other property purchases on the commercial real estate front. Until the market settles, Amazon is shifting to subletting additional space and placing other build plans on hold. It is a little unclear, at this stage, if Amazon is weighing out the future to see if demand will hold up or if they don’t see supply-chain shortages ending anytime soon.

So, are product shortages the new normal? Indeed, product delays are something people need to adapt to, whether they like it or not. “Go back five, six years ago, you’d order something whether it be a part or material or book, and you were used to saying, well, I’m going to wait five-to-seven days to get that,” Nowak said. “Then we got spoiled with one-and two-day shipping.”

Material prices still impact the real estate industry. “I think the biggest issue right now, and what I’m hearing from talking to our construction group and construction clients, is there’s so much uncertainty around material prices and materials delivery,” Altschuler said. One of those uncertainties is interest rates, and Nowak and Altschuler said they’d keep an eye on what impact that will have on the real estate market and subsequent ripple effects on new construction.

The Employee Retirement System of Texas is one of the most significant pension funds globally, managing over $35 billion in assets. The fiduciary responsibility is no small feat, and it takes relationship-building around all aspects of government. Weaver's Adam Jones tapped Porter Wilson, the system's Executive Director, for his perspective on the role of government in the stability of the Employee Retirement System of Texas and what indicators he has on the future of government employees.

Wilson says that in his ten years as Executive Director, challenges come with the territory, but things have not changed a great deal on a macro level. "On the pension side, we're trying to manage the four pension programs we administer for long-term sustainability. We're trying to make sure the benefits, revenue streams, and investment pieces are all working together so that these programs can continue for long periods."

On the healthcare side, Wilson says it's essential to ensure stability while managing costs and focusing on ways to keep employees healthy. But one of the most significant challenges to emerge over the past decade from Wilson's perspective is procurement. "It's a big piece of what we do. It's virtually everything. From the healthcare programs we administer to many of the investment funds where outside money managers are procured, there's been a lot of movement in the procurement space in the last seven to ten years." The balance comes in being nimble while obtaining the best value for stakeholders.

Current issues, including the great resignation and losing employees due to retirement, all impact the future of a pension fund, which begs the question, what do the next few years look like in terms of government employees? It’s something Wilson is keeping a close eye on. "One of the things we're doing is trying to envision what we're going to be as an organization over the next 75 years. A key piece of the conversation we're having within our agency is what we will look like as an organization. We're trying to be flexible and realize that one size isn't going to fit all."

The world of cryptocurrencies has had many ups and downs over the last decade, but investment funds are becoming increasingly interested in cryptoassets. Tim Savage is joined by Viresh Ohri, Manager Partner at Catenam Capital, to talk through the current crypto landscape of crypto investment funds.

Viresh was an early adopter of cryptocurrency, first trading bitcoin in 2012. Since then, he has watched the crypto industry evolve into a robust ecosystem of digital assets powered by decentralized applications and web3 technology. “Web3 is the future. Everything we’ve worked towards in the last decade has set us up to where we are today. The whole internet was made for web3, it was just the next part in the evolution.”

Since launching Catenam Capital, an investment fund engaged in web3 private equity and digital asset trading, Viresh has taken his crypto experiences from the past ten years to develop pragmatic goals and investment strategies. “I like to say that we know what we’re doing and we’re experts in our field, but I don’t think anyone in crypto is truly an expert.”

Tim and Viresh also discuss the abundant need for better digital asset policy and regulation globally. “It’s hard to know who to trust in the world of crypto, especially considering the many scammers who are only in this market for a quick buck.” Viresh stresses how important it is to have a stronger framework of regulation to stimulate investments in the industry while also helping investors.

In this episode of Location Cubed, Hosts Rob Nowak, Tax Partner with Weaver, and Howard Altshuler, Partner-in-Charge of Real Estate Services, discuss the impact of the supply chain on the recent spike in residential home prices.

Pre-covid, everything was moving along fairly smoothly for the supply chain; however, COVID-19 brought restrictions, lockdowns, and an unknown future. “It kind of started to gum up the supply chain,” Altshuler said. “Traffic internationally started slowing down, and it's almost like it comes to a stop, and then it takes a while to start up.”

According to statistics, if you were to shut down the supply chain for a year, it takes about three to five years to set it back up to full capacity from both a production and logistics standpoint. “That's a lot of what we are dealing with from a standpoint of materials in any type of stuff,” Altshuler said.

Not surprisingly, this relates to the recent spike in residential home prices. “Building material prices are way higher if you can get them. That's obviously turning into higher home prices,” Altshuler said. Demand is the second component of this. Months of inventory fell to 1.4 months as active listings remained retracted while demands skyrocket, according to data from the Texas A&M’s Texas Real Estate Research Center.

The two discussed alternatives to homeownership, including the build-to-rent model being a remedy for the home supply shortages and the sustainability of positive growth rates in non-metro areas compared to negative rates for metro areas as remote work persists.

Government Industry Partners, Jennifer Ripka, CPA, and Jackie Gonzalez, CPA, discuss single audits and the challenges many government entities face with the influx of federal financial assistance received over the last two years. The Business of Government host, Adam Jones, points out, “There’s never been a year quite like the last couple of years in government assurance. We’ve seen a deluge of federal funds and it’s put a lot of government and not-for-profit agencies in a category they haven’t been in before – one that is required to have a single audit.”

The Single Audit Act was passed in 1984. It’s essentially an audit of federal financial assistance. The audit is triggered by spending $750,000 or more on federal awards in a single year.

The Journal of Accountancy reports, “More than 30,000 entities — primarily state, local, and tribal governments — have received funding as part of Treasury's $350 billion Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program. Recipients that spend $750,000 or more in such aid in a given year are normally subject to a single audit. However, many CSLFRF funding recipients are very small local governments that may previously have had little to no experience with single audits.”

Ripka advises that identifying grants and federal funding is key to understanding if they have to adhere to single-audit rules. Some federal funds are exempt and it can be difficult to recognize what compliance measures are necessary. “It can be challenging to understand the agreements, and yes that identification piece is really, really important,” Ripka urges. Gonzalez adds, “Understanding what is allowable under a grant is most important for compliance.”

Finally, accepting funding from grants also means that the entity must execute clear communication and transparency within its agency. Ripka warns that without it, entities could end up in “a situation where you are spending funds that finance doesn't know about, and revenue recognition isn’t lining up.” For the longevity of the entity, funding needs to be optimized between what’s allowable and the entity’s needs. This requires strategy and understanding of where the funds can be spent.

Subscribe and listen to future episodes of Weaver: Beyond the Numbers, The Business of Government on Apple Podcasts or Spotify.

Shehan Chandrasekera, Head of Tax Strategy at CoinTracker, is a subject matter expert in cryptocurrency taxation. Like many who first experience crypto, Chandrasekera saw the potential of cryptoassets, but realized transacting and investing in these assets presented an enormous administrative burden. With few professionals and CPAs skilled in the industry, Shehan set out to build a solution.

“CoinTracker is a software that connects with your wallets and exchanges and automatically reconciles your capital gains and capital losses,” Shehan said. “Especially if you have multiple wallets and exchanges, it’s really hard for you to reconcile those numbers manually, and we do that automatically. You can download the tax report and share those tax reports with your accountant or file using software like TurboTax or any other tax software.”

With U.S. tax laws, tracking cryptocurrency transactions isn’t as easy as with other forms of assets, and there are no reporting requirements from service providers or cryptocurrency exchanges. Finding a solution to help maintain them and provide visibility to the taxpayer is critical. “People can get into a lot of trouble if they don’t know about the tax implications related to cryptocurrency.”

In typical stock trading, at the end of the year, people download a 1099-B form which provides a complete summary of information related to the stock purchases and sales, losses, and gains made during the year. “In the crypto space, that doesn’t happen,” says Shehan. “The typical crypto user has three-to-five wallets and exchanges. Some of these crypto exchanges don’t have any 1099 reporting obligations. Therefore, you don’t get any tax forms.” It is the individual’s responsibility to reconcile these transactions.

Tim and Shehan are hopeful that documentation processes and information provided by exchanges will become more robust soon. Per Tim, “there is talk about a new 1099 form for digital asset transactions. I think this will greatly aid in reducing administrative burden and helping taxpayers report more accurately.”

Understanding the world of cryptocurrency is essential for all financial advisors today. Adam Blumberg, co-founder at Interaxis, helps educate investors and financial professionals about blockchain, cryptocurrency, and digital assets.

After going down the crypto rabbit hole and immersing himself in understanding cryptocurrency, Adam quickly realized these new financial instruments and services developed around them would change the financial services industry. While the financial world is beginning to accept cryptocurrencies on a wider basis, decentralized finance (defi) is still unfamiliar to many. So, what is defi exactly? “Decentralized finance is essentially the ability for you and me to interact financially without asking permission from the bank or the government,” Adam says. At it’s core, defi is the disintermediation of financial activities, allowing people to transact, spend, borrow, and invest at a direct, peer-to-peer level.

Decentralized finance is no longer a speculative venture; it's a natural evolution of cryptocurrency and blockchain technology. Although exciting, it is still early days for the defi world, and a lot of infrastructure and is needed for applications to function at scale. "For the last few years, the narrative around crypto has been driven by the price," Adam explains. “Similar to the early days of the internet, when price drove the conversation, it will be the technology and the innovations to come that will be the true importance of decentralized finance. For right now, it's very important to help people understand this and why it's important."

For this discussion on motor fuels taxation issues, Beyond the Numbers sits with two of Weaver’s industry leaders, Emilda Santiesteban and Leanne Sobel, J.D., both Directors of Motor Fuels and Excise Tax Services. They join host, Tyler Kern, to explore motor fuel taxation dynamics and offer their insights on a constitutional challenge to the federal oil spill liability tax.

Sobel discusses the four main areas taxed under the oil spill liability tax, which levies a barrel tax on oil and petroleum products. These taxes get placed on both crude oil and petroleum products imported into the United States. Domestic crude oil received at a refinery also gets taxed, and lastly, there is a provision in the statute to impose the oil spill tax on crude oil exported from the United States if previously untaxed.

On March 24, 2022, the Fifth Circuit Court of Appeals found the federal oil spill tax under IRC Section 4611(b) unconstitutional when imposed on exports of crude oil from the United States; a ruling that will require the government to refund $4.5 million of previously collected oil spill excise tax. The ruling indicates taxes levied on crude oil exports were unconstitutional under the U.S. constitution’s export clause. Sobel and Santiesteban explain that prior to 2016 strict controls existed on oil exports from the United States. However, export restrictions were lifted after 2016 which led to an uptick in export taxes on crude oil. The constitutionality of these taxes has come into question, and the courts ultimately agreed with an earlier decision that found export fees to be unconstitutional.

The United States has not filed an appeal to the Supreme Court in this matter. “With regards to taxpayers and industry participants, it is time to consider how to proceed if the case stands. What does that mean for tax they have already paid into the treasury for exports of crude oil?” Sobel said.

An organization’s intellectual property, trade secrets, and any proprietary information that requires protection are considered crown jewel data. Managing this data can be as crucial to the organization as the data itself. Trip Hillman, Director of Cybersecurity Services at Weaver, and Hunter Sundbeck, a Privacy Lead for IT Advisory Services at Weaver, checked in with Beyond the Number’s Tyler Kern to provide insights and strategies for managing essential company data.

“Often, an organization doesn’t know what it has,” Hillman said. “So, for these types of data, this crown jewel data, the key that we’re looking at, the valuable sense of this data, we want to make sure we have a method to protect it.” Companies must create a plan to identify the data and assign the proper security for data access.

Recognizing the need to manage data and robust data management is different. One of the challenges for organizations is properly defining their data into the proper classifications. Sundbeck said companies must identify what those crown jewel data assets are, which are top secret, and what data people can access. “I’ve done a couple of discovery audits where we’re figuring out what exactly you have, what your key processes are, what data feeds those key processes, and how that data is protected.”

Through this discovery process, companies may realize they have hidden or ‘dark’ data they’d forgotten. Some of this data could be critical or not. “There is a point where maybe you’re collecting data you don’t need,” Sundbeck said. Identifying valued data from bad helps companies put security and controls around the right data sets and clean up the rest.

David Kerr, Principal at Cowrie, has ten years of experience in tax strategy, financial accounting, anti-money laundering, international tax compliance, and risk consulting across the gaming, telecommunications, technology, and digital asset industries. He is an expert in decentralized autonomous organizations and advises on structuring for legal and tax purposes.

DAOs are represented by rules that are transparent, controlled by the members, and not influenced by a central authority or leadership. Without clear legal status, the determination of DAO regulations is widely uncertain. DAOs are also not structured as standard business entities since they are global and transcend borders. This makes them extremely difficult to define and therefore regulate at federal, state, and even local levels.

While there are more questions than answers at the moment, decentralized entities are forming their identities and developing a variety of use cases. Thousands of people across the globe have formed web-based communities and have utilized DAO structures to invest in common interests and govern real world assets. Will decentralized entities be around in the future, and if so, how will they impact the world of business and finance at larger scale?

With a flood of federal funds available for capital projects today, The Business of Government discusses the risks involved with such projects and offers strategies for mitigating those risks. Daniel Graves, Partner, Risk Advisory Services at Weaver, provides crucial insights and best practices for those in the government sector considering capital projects.

Graves has already seen an increase in construction activity from municipalities and other government entities. Much of the uptick is tied to infrastructure improvements as organizations have received new funding through the Infrastructure Investments and Jobs Act passed in November 2021. This is in addition to COVID relief funding that many organizations received in 2020 to upgrade facility and technology systems such as HVAC improvements and broadband networks.

“I think one of the biggest overtones to the current construction expansion has a lot to do with labor,” Graves said. “There are many shovel-ready projects, however, finding the labor and planning for the associated labor costs is a challenge when managing the risks associated with a capital project.”

Graves cautions project owners to be aware of reputational risks when using public funds for capital projects. Public-facing projects which use public funds can, and often do, come with public scrutiny. Fund management and a proper project strategy are critical. “No one wants to be on the side of a press release that says a taxpayer-funded project is over budget and behind schedule.”

Mitigating risk and eliminating fraud in a capital project is paramount. Still, human error can occur. Proper planning and bringing in the audit and engineering teams early in the process helps to maintain a smooth-running project, mitigate the opportunity for fraud and catch mistakes before they become costly errors.

Bitcoin is considered its own standalone asset class because features set it apart from others. Answering those benefits and more is Lee Bratcher, founder and president of Texas Blockchain Council (TBC), on this episode of Weaver’s On-Chain podcast episode with host Tim Savage.

Lee’s interest in blockchain peaked about six years ago while researching property rights as an academic. Since then, he has been actively working with Texas legislators to advocate for beneficial blockchain policy and business development through the TBC.

Tim and Lee focus on the importance blockchain technology solving consensus and double-spend issues that arise from decentralized network environments and how bitcoin was created to be a monetary good. With a inherently scarce denomination of 21 million bitcoins, the bitcoin network offers perfect scarcity as a digital monetary asset. It is further secured and given value through the conversion of energy through the bitcoin mining process, as miners consume energy to solve complex cryptographic puzzles to mint blocks on the proof of work blockchain network.

The conversation shifts focus to the ethereum 2.0 network as they discuss proof of work vs. proof of stake algorithms and turing-complete vs. slower moving architecture in monetary and blockchain computing systems. Are bitcoin and ethereum comparable, or are these really fundamentally different systems with different purposes?

In this exciting debut episode of Weaver On-Chain, host Tim Savage, CPA, Blockchain & Digital Assets, Tax Services welcomes world-renowned expert Dr. Sean Stein Smith DBA, CPA as his inaugural guest on a podcast dedicated to the exciting world of cryptocurrency and the blockchain industry.

Sean holds many titles including Assistant Professor at City University of New York - Lehman College in New York, Advisory Board Member for both The Wall Street Block Chain Alliance and Gilded, and Strategic Advisor to the Central Bank Digital Currency Think Tank. His award-winning research is recognized throughout the world, and he regularly appears as a guest author for popular media outlets such as Forbes and Accounting Today.

Tim and Sean walk through the various implications of blockchain technology, initially exploring basic functionality and what it would look like to live in a world that operates in a functional decentralized computing environment. They touch on bitcoin and how the invention of a decentralized currency system is scaling globally at an exponential rate. They also discuss the current impact of cryptoassets in the accounting and tax space.

“As there are more enterprise-level applications, whether DeFi, NFTs, or cryptoasset payments, that’s where our expertise and economic value can be most put forward – to help individuals, entrepreneurs, and institutional clients have a good handle on these trends and how they impact them.” Sean noted.

Tune in to hear this exciting conversation for experts and beginners alike as the Tim and Sean discuss the many facets of blockchain technology.

Two Partners at Weaver’s Assurance Service Department, Kerri Franz, and Aracely Rios, joined Beyond the Numbers to talk about the top five operational errors that occur and how to reduce them.

Untimely remittances of employee contributions can occur if the plan sponsor does not transmit those contributions or loan payments to the trust in a timely fashion. Franz advised that clients should make sure these contributions are deposited in the same amount of time, a day or two, as payroll taxes get deposited.

“A plan sponsor, and the manager of the plan, should be familiar with the definition of compensation according to their plan documents or adoption agreement, and make sure they’re following that to the T,” Rios said. “They’ll want to know, are bonuses allowed, is overtime allowed, is it all W2 wages; what compensation can the participant defer on.”

Improper match allocations are another operational error to keep on one’s radar. “Some common errors we note is the wrong compensation can also be used for the matching contributions the same way as the deferrals,” Franz said. “You have to make sure you’re looking at the correct definition when you’re applying your match allocation for participants.”

Rios added the IRS places plan match limitations. “I do run into issues where there is only a handful of people at a company that will reach those compensation limitations. It’s overlooked, and those people are being matched too much. The compensation limitations change from year-to-year, and the IRS will let you know what those limitations are.” Administrators should have a plan for those who might max out, and their matches would need to be limited.

Two terms many people are familiar with these days are crypto and blockchain. However, the familiarity does not always translate into understanding. There are plenty of questions about cryptocurrency and blockchain, so Weaver’s Beyond the Numbers reached out to Tim Savage, who oversees tax services for Weaver’s Cryptocurrency Task Force, to help answer those questions. Savage is in the process of building Weaver’s blockchain and digital assets division.

There are two sides to the “crypto coin.” There is the investment side of crypto that brings its own set of risks and potential rewards. This is the side of crypto that most people understand. However, the innovative blockchain technology that powers crypto ecosystems is what fascinates Savage.

“The technology is going to revolutionize existing business models.” Savage said. “I think it will help evolve our financial services sectors initially, and then it will extend to every area where rights to goods or property are necessary. Essentially, property rights are fundamental wherever money is involved, so that is an incredibly broad scope. That’s what excites me, how this technology is going to make our world a lot more efficient both in terms of cost and effort.”

Today the IRS doesn’t have a lot of guidance around cryptocurrency, or as they call it, digital assets or virtual currency. While the buying and selling of digital assets have capital gains implications like stocks, the process of buying and selling crypto isn’t the same. This difference makes accounting for large volumes of crypto transactions more difficult than maintaining financial records for stock transactions. A further challenge is presented when cryptocurrency is used as a form of payment or when participating in mining or decentralized finance. For those with a more complex set of crypto transactions, consulting with a professional tax advisor is highly recommended.

For more information or to discuss the tax, accounting, internal controls and cybersecurity considerations around cryptocurrencies, visit Weaver’s Cryptocurrency Task Force Resources or contact us.

In this episode of Weaver: Beyond the Numbers, hosts Rob Nowak, Tax Partner at Weaver, and Howard Altshuler, Partner-in-Charge of Real Estate Services at Weaver, took time to reflect on the evolution of sports stadiums in the United States.

Altshuler recalled how his visit to a sports stadium to watch the Dallas Stars, got him “thinking about stadiums and how [their qualities and features] have changed over the years.” He opined that the locations of new stadiums and how they fit in neighborhoods is almost bringing back stadium construction “full circle from where we were before.”

Nowak and Altshuler discussed several beloved neighborhood stadiums in the U.S.: Chicago’s historic Wrigley Field, as well as Boston’s legendary Fenway Park and then compared those to the more modern Dallas-Fort Worth metroplex stadiums in Arlington.

Part of older stadiums’ appeal stems from the need for them to fit into the neighborhoods where they are located – not only aesthetically but from a functional standpoint as well. In other words, neighborhood stadiums had to be built on spaces that already existed.

As time went on, smaller stadiums gave way to mega stadiums built with the suburban commuter in mind. However, those stadiums required a great deal of infrastructure but had little other use, such as a football stadium used for 10 games a year.

What will future stadiums look like? Tune in to learn what Nowak and Altshuler think as they reflect on the evolution of stadiums.

Government does not measure profit and loss, but it is still a business. Government leaders deliver change, develop strategies, and adapt. Sharing her insights on the topic, Weaver National Strategy Leader Alyssa Martin, CPA, joined Business of Government host and State Government Practice Leader, Adam Jones.

Martin has decades of public accounting experience and founded Weaver’s advisory services practice. She shared why she loves working with government agencies, “They serve the communities, and that provides a strong connection. One of my favorite parts is seeing leaders take the best of commercial and public and put them together.”

Martin’s experience working in various sectors also enables her to leverage that experience when working with government leaders as they face new and emerging challenges. “Our government clients have to keep up with the same things as a commercial entity.”

Regarding budgeting, Martin advises that governments move away from cost-based to performance-based. “With this approach, they can align better to strategies and trends.”

When Martin works with government leaders, she often provides best practices. She said, “Leaders being more accessible to their constituents is a communication and cooperation best practice. We urge them to be collaborative in their management approach, less hierarchical and more fluid.”

On key trait that government leaders should have, Martin said is courage. “It’s not naturally deployed and is sometimes conditioned to be suppressed. It means having the conviction and intentionality to step up and speak up about ideas, thoughts, and concerns.”

Listen to the full episode to hear the full interview between Jones and Martin.

Subscribe and listen to future episodes of Weaver: Beyond the Numbers, The Business of Government on Apple Podcasts or Spotify.

Weaver’s professionals are known for helping government clients address problems, achieve compliance, and prevent fraud or loss. Visit weaver.com for more thought leadership.

Politics and capital gains—how are these related and what do changes in both sectors mean for the real estate industry? Rob Nowak, Partner in Tax Services at Weaver, and Howard Altshuler, Partner-in-Charge of Real Estate Services at Weaver, dove into this topic on this episode of Weaver: Beyond The Numbers Podcast.

Recently, Virginia and New Jersey Governor elections took place, and these elections will undoubtedly shape future Congressional decisions and neighboring state Senators’ opinions on tax issues.

“What we have seen are numerous proposals that have gone through the budget reconciliation process, still through house ways and means, but through budget reconciliation as opposed to the formal budget legislative process that have watered down what initially proposed tax increases were,” stated Nowak.

Originally, capital gain rates for high earners in top brackets were set to mirror ordinary tax brackets and increase from 20 to 39 percent or more. After continued reconsiderations, any capital gain tax increase is now off the table. The proposal is to surtax the top earners in the form of a millionaire surtax and to impose a minimal tax on the wealthiest U.S. corporations in the form of a book tax. “The landscape has changed dramatically just through compromise prior to recent electoral activity,” said Nowak.

Ultimately, there will be an expense deduction change, but mostly clients will have an unchanged landscape of tax legislation and rates.

When should companies plan for changes? Nowak and Altshuler said the last 30 days of year are important, and because of the primaries in March of 2022, nobody wants to dive into tax raises during this time. If no changes occur by the end of the year, there will unlikely be changes until 2023 and 2024.

More information on the tax and real estate landscapes can be found through Weaver’s LinkedIn account or through podcasts on Weaver.com, Spotify, and iTunes.

Politics and capital gains—how are these related and what do changes in both sectors mean for the real estate industry? Rob Nowak, Partner in Tax Services at Weaver, and Howard Altshuler, Partner-in-Charge of Real Estate Services at Weaver, dove into this topic on this episode of Weaver: Beyond The Numbers Podcast.

Recently, Virginia and New Jersey Governor elections took place, and these elections will undoubtedly shape future Congressional decisions and neighboring state Senators’ opinions on tax issues.

“What we have seen are numerous proposals that have gone through the budget reconciliation process, still through house ways and means, but through budget reconciliation as opposed to the formal budget legislative process that have watered down what initially proposed tax increases were,” stated Nowak.

Originally, capital gain rates for high earners in top brackets were set to mirror ordinary tax brackets and increase from 20 to 39 percent or more. After continued reconsiderations, any capital gain tax increase is now off the table. The proposal is to surtax the top earners in the form of a millionaire surtax and to impose a minimal tax on the wealthiest U.S. corporations in the form of a book tax. “The landscape has changed dramatically just through compromise prior to recent electoral activity,” said Nowak.

Ultimately, there will be an expense deduction change, but mostly clients will have an unchanged landscape of tax legislation and rates.

When should companies plan for changes? Nowak and Altshuler said the last 30 days of year are important, and because of the primaries in March of 2022, nobody wants to dive into tax raises during this time. If no changes occur by the end of the year, there will unlikely be changes until 2023 and 2024.

More information on the tax and real estate landscapes can be found through Weaver’s LinkedIn account or through podcasts on Weaver.com, Spotify, and iTunes.

COVID-19 rocked the world in most industries, but particularly for biopharma and pharmaceuticals, which were at the forefront. Tyler Ridley, Senior Manager of Valuation Services at Weaver, joined this episode of Weaver: Beyond The Numbers Podcast with Weaver hosts Howard Altshuler, Partner-In-Charge of Real Estate Services, and Rob Nowak, Tax Partner with Weaver, to discuss the rebound and current financial state of the biopharma and med tech industries.

Since the pandemic, the spike in healthcare initial public offerings (IPOs) and performance solidified the IPO pathway and exit strategy for life science investors. “I think it’s a shift in the narrative in biopharma and medical technology from profit-driven industries characterized by nefarious price gouging executives to more strategic industries that really came to the aid of the government and society more broadly in a time of crisis,” Ridley added.

While there were deal drop-offs in 2020 because of factors like the lack of elective surgeries, there was an increase in 2021 deals for digital therapeutics and delivery of care models. MedTech is just one example of this. “MedTech’s deal value has also exceeded 2020 totals so far and is on pace to be the highest value since 2017 despite a decline in total deal volume which indicates that the value per deal on average is increasing,” stated Ridley.

The M&A market has been muted this year, which is related to concerns with regulatory action to curb pricing power and lower drug prices. Risk tolerance to acquire other companies is not as favorable as it is to license their technology.

As for M&A activity for the rest of 2021, valuations are high, making it difficult for executives to gain acquisitions. The turbulent regulation environment combined with the lack of an FDA head is also hard to cope with. Additionally, the current supply chain issue may result in vertical acquisitions boosting M&A activity.

For more podcasts, whitepapers, and thought leadership on this topic, visit weaver.com.

COVID-19 rocked the world in most industries, but particularly for biopharma and pharmaceuticals, which were at the forefront. Tyler Ridley, Senior Manager of Valuation Services at Weaver, joined this episode of Weaver: Beyond The Numbers Podcast with Weaver hosts Howard Altshuler, Partner-In-Charge of Real Estate Services, and Rob Nowak, Tax Partner with Weaver, to discuss the rebound and current financial state of the biopharma and med tech industries.

Since the pandemic, the spike in healthcare initial public offerings (IPOs) and performance solidified the IPO pathway and exit strategy for life science investors. “I think it’s a shift in the narrative in biopharma and medical technology from profit-driven industries characterized by nefarious price gouging executives to more strategic industries that really came to the aid of the government and society more broadly in a time of crisis,” Ridley added.

While there were deal drop-offs in 2020 because of factors like the lack of elective surgeries, there was an increase in 2021 deals for digital therapeutics and delivery of care models. MedTech is just one example of this. “MedTech’s deal value has also exceeded 2020 totals so far and is on pace to be the highest value since 2017 despite a decline in total deal volume which indicates that the value per deal on average is increasing,” stated Ridley.

The M&A market has been muted this year, which is related to concerns with regulatory action to curb pricing power and lower drug prices. Risk tolerance to acquire other companies is not as favorable as it is to license their technology.

As for M&A activity for the rest of 2021, valuations are high, making it difficult for executives to gain acquisitions. The turbulent regulation environment combined with the lack of an FDA head is also hard to cope with. Additionally, the current supply chain issue may result in vertical acquisitions boosting M&A activity.

For more podcasts, whitepapers, and thought leadership on this topic, visit weaver.com.

A lot is going on in the tax world that could have implications for companies and individuals. While nothing is official, there are many proposed changes to the tax code in the Build Back Better Act. In this episode of Weaver Beyond the Numbers Real Estate Edition, Weaver hosts Rob Nowak, Partner in Tax Services, and Howard Altshuler, Partner-in-Charge of Real Estate Services, break down what those proposed changes are.

“There are a number of proposed provisions that could impact tax rates,” Nowak explained.

First, there’s the possible graduated rate tax structure for corporations. “It starts at 18 percent for companies with $400,000 in profits and moves up to 26.5 percent for those with over $5 million. It’s still less than tax rates prior to the 2017 cuts,” Nowak said.

On the individual side, there are possible changes, as well. “The top marginal income rate would go up to 39.6 percent. The income brackets would change. For capital gains, the tax rate could rise from 20 percent to 25 percent, which is still less than Reagan-era rates of 28.5 percent,” Nowak noted. He continued, “1031 survived and is not limited. 1231 assets, real estate held for trade or business purposes, could see an impact for the real estate industry.”

These provisions are much different from those discussed months ago, and there will likely be more compromise for the bill to pass.

Altshuler then asked Nowak to “pull out his crystal ball on the likelihood of passage.” Nowak answered, “It comes down to a few key decision-makers. Most consider Senator Manchin a tie-breaking vote. If there’s a fifty-fifty split in the Senate, the Vice President casts the deciding vote. But that only happens if Manchin votes for it. If you want to read the tea leaves, follow Manchin.”

Politics and capital gains—how are these related and what do changes in both sectors mean for the real estate industry? Rob Nowak, Partner in Tax Services at Weaver, and Howard Altshuler, Partner-in-Charge of Real Estate Services at Weaver, dove into this topic on this episode of Weaver: Beyond The Numbers Podcast.

Recently, Virginia and New Jersey Governor elections took place, and these elections will undoubtedly shape future Congressional decisions and neighboring state Senators’ opinions on tax issues.

“What we have seen are numerous proposals that have gone through the budget reconciliation process, still through house ways and means, but through budget reconciliation as opposed to the formal budget legislative process that have watered down what initially proposed tax increases were,” stated Nowak.

Originally, capital gain rates for high earners in top brackets were set to mirror ordinary tax brackets and increase from 20 to 39 percent or more. After continued reconsiderations, any capital gain tax increase is now off the table. The proposal is to surtax the top earners in the form of a millionaire surtax and to impose a minimal tax on the wealthiest U.S. corporations in the form of a book tax. “The landscape has changed dramatically just through compromise prior to recent electoral activity,” said Nowak.

Ultimately, there will be an expense deduction change, but mostly clients will have an unchanged landscape of tax legislation and rates.

When should companies plan for changes? Nowak and Altshuler said the last 30 days of year are important, and because of the primaries in March of 2022, nobody wants to dive into tax raises during this time. If no changes occur by the end of the year, there will unlikely be changes until 2023 and 2024.

More information on the tax and real estate landscapes can be found through Weaver’s LinkedIn account or through podcasts on Weaver.com, Spotify, and iTunes.

In 2006 the major card brands formed the PCI Security Standards Council (SSC) with the goal of managing the evolution of the Data Security Standard (DSS). Today that has expanded to several other standards and compliance programs. As part of the DSS compliance program the PCI SSC certifies Qualified Security Assessor (QSA) companies to perform independent audits of merchants and service providers related to the PCI DSS.

So, as a go-to firm for PCI DSS compliance, how does Weaver help clients understand what they need to know?

On this episode of Weaver: Beyond The Numbers, host Tyler Kern talked with Trip Hillman, Director of Cybersecurity Services at Weaver, and Kyle Morris, Senior Manager in IT Advisory Services at Weaver. The trio dug into insights from Weaver’s cyber and QSA team and explored how Weaver advises clients on how to handle PCI DSS assessments and compliance.

PCI DSS applies to organizations that store, process, transmit or could affect the security of cardholder data. Kyle and Trip look at PCI DSS as an opportunity for these companies to use compliance as a competitive advantage.

Kyle is a QSA and explained that the Council establishes PCI DSS criteria and dictates what a QSA does for testing. Then organizations determine how they meet the criteria. There are over 250 requirements with PCI DSS, so depending on a company’s needs and capabilities, the organization can conduct an annual self-assessment or bring in an independent QSA to do a full-blown audit report on compliance.

Kyle and Trip discuss some of the main challenges that companies face with PCI DSS, including scoping, maintaining compliance and identifying the appropriate internal champions. They also share tips on how to prepare for compliance and define common acronyms: SAQ, ROC and AOC.

Tune in to hear why the Weaver team enjoys helping clients fit their unique environment into the complex PCI DSS framework.

“We help people with self-assessment questionnaires or SAQs and everything from full-on ROCs for Fortune 50 Cloud Providers to small merchants to SaaS solutions,” Kyle said.

Not too long ago, accounting standards established by the American Institute of Certified Public Accountants required real estate companies to navigate various requirements for purchase and sales agreements that often resulted in straight forward AS-IS, WHERE-IS terms. But that changed in May 2014, when the FASB issued new guidelines designed to make revenue recognition standards more consistent across industries. Known as “Topic 606,” the new guidance required all companies to disclose additional revenue information in their financial statements.

In this edition of Weaver: Beyond the Numbers, Rob Nowak and Howard Altshuler, spoke about how different the FAS 66 was prior to the new guidance saying that, “FAS 66 had prescriptive requirements that would enable a company to recognize revenue on a real estate sale. Primarily, they had to transfer title, that’s a given. You had to have a really strong down payment, or all cash. You had to limit the amount of future participation with the project once it was sold.”

Once FASB released the new guidance, the rules all changed drastically, and more freedoms were enabled. The new rules set in place allowed companies to structure sales agreements in more creative ways.

According to Altshuler, “When 606 came out, it went from that rules-based approach to more of a concepts-based approach. And some of those concepts were a little bit different. What it does is put things into the context of a performance obligation.”

To hear more of Weaver’s discussion about Topic 606 and its implications, as well as other news about the real estate industry, check out this podcast and others at weaver.com.

COVID-19 rocked the world in most industries, but particularly for biopharma and pharmaceuticals, which were at the forefront. Tyler Ridley, Senior Manager of Valuation Services at Weaver, joined this episode of Weaver: Beyond The Numbers Podcast with Weaver hosts Howard Altshuler, Partner-In-Charge of Real Estate Services, and Rob Nowak, Tax Partner with Weaver, to discuss the rebound and current financial state of the biopharma and med tech industries.

Since the pandemic, the spike in healthcare initial public offerings (IPOs) and performance solidified the IPO pathway and exit strategy for life science investors. “I think it’s a shift in the narrative in biopharma and medical technology from profit-driven industries characterized by nefarious price gouging executives to more strategic industries that really came to the aid of the government and society more broadly in a time of crisis,” Ridley added.

While there were deal drop-offs in 2020 because of factors like the lack of elective surgeries, there was an increase in 2021 deals for digital therapeutics and delivery of care models. MedTech is just one example of this. “MedTech’s deal value has also exceeded 2020 totals so far and is on pace to be the highest value since 2017 despite a decline in total deal volume which indicates that the value per deal on average is increasing,” stated Ridley.

The M&A market has been muted this year, which is related to concerns with regulatory action to curb pricing power and lower drug prices. Risk tolerance to acquire other companies is not as favorable as it is to license their technology.

As for M&A activity for the rest of 2021, valuations are high, making it difficult for executives to gain acquisitions. The turbulent regulation environment combined with the lack of an FDA head is also hard to cope with. Additionally, the current supply chain issue may result in vertical acquisitions boosting M&A activity.

For more podcasts, whitepapers, and thought leadership on this topic, visit weaver.com.

A lot is going on in the tax world that could have implications for companies and individuals. While nothing is official, there are many proposed changes to the tax code in the Build Back Better Act. In this episode of Weaver Beyond the Numbers Real Estate Edition, Weaver hosts Rob Nowak, Partner in Tax Services, and Howard Altshuler, Partner-in-Charge of Real Estate Services, break down what those proposed changes are.

“There are a number of proposed provisions that could impact tax rates,” Nowak explained.

First, there’s the possible graduated rate tax structure for corporations. “It starts at 18 percent for companies with $400,000 in profits and moves up to 26.5 percent for those with over $5 million. It’s still less than tax rates prior to the 2017 cuts,” Nowak said.

On the individual side, there are possible changes, as well. “The top marginal income rate would go up to 39.6 percent. The income brackets would change. For capital gains, the tax rate could rise from 20 percent to 25 percent, which is still less than Reagan-era rates of 28.5 percent,” Nowak noted. He continued, “1031 survived and is not limited. 1231 assets, real estate held for trade or business purposes, could see an impact for the real estate industry.”

These provisions are much different from those discussed months ago, and there will likely be more compromise for the bill to pass.

Altshuler then asked Nowak to “pull out his crystal ball on the likelihood of passage.” Nowak answered, “It comes down to a few key decision-makers. Most consider Senator Manchin a tie-breaking vote. If there’s a fifty-fifty split in the Senate, the Vice President casts the deciding vote. But that only happens if Manchin votes for it. If you want to read the tea leaves, follow Manchin.”

The world of real estate had another unprecedented year in 2021. However, big changes didn’t materialize due to the Build Back Better Act not passing. In this Real Estate Edition of Weaver Beyond the Numbers, hosts Rob Nowak and Howard Altshuler discussed the Build Back Better fallout and predictions for the industry in 2022.

“The legislation was on the minds of our clients and the industry, and we talked about how the most powerful person would be Joe Manchin, who announced he wouldn’t support it. So, it’s off the table for now. The House will have to reinitiate,” Nowak explained.

Altshuler added, “In the long term, nothing is likely to happen with decisions pushed toward mid-term elections. I don’t think we see any traction on tax changes.”

So, what can the real estate world expect in 2022? Howard pointed out two trends that will likely impact more demand for office space and landlords looking to increase leases. “The demand for office space will manifest itself in 2022 with a growing economy. Not so much in construction but a rise in occupancy.”

Landlords with Class A or AA properties could feel the squeeze with cap rates rising, Altshuler advised. “They’ll need to increase rental rates to make up for this and maintain their yield.”

Another area of real estate expected to be a hot topic is multi-family builds due to a housing deficit and the lack of affordability of single-family.

Nowak also noted that single-family rentals are “vital in the chain of housing.” Altshuler concurred, “It’s always been a big part but fractured, but there likely be more consolidation of the industry with institutions working with direct build communities.”

On this episode of Weaver: Beyond the Numbers, Host Tyler Kern talked with Rob Nowak, Partner in Tax Services at Weaver, about the bonus depreciation of business assets.

“Bonus depreciation is one of the incentives that’s been around in the tax code for about 20 years,” Nowak said. “It’s an enhanced expensing election that allows taxpayers to immediately write off the cost basis of qualifying assets placed in service during a year.”

So, what are qualifying assets? It’s a tangible property with MACRS class life of 20 years or less. It also includes some other property that is specialized to an industry, like particular water treatment property, software that is amortized over three years and certain types of plants.

“Both new and used property now qualify for bonus depreciation, which is a little bit of a departure from some prior law,” Nowak said. Under the 2017 Tax Cuts and Job Act, the law was changed to allow new assets but also used property. However, those would not qualify if a taxpayer previously used the property or a predecessor entity or related entity.

“There’s also a specific classification of property referred to as qualified improvement property,” Nowak said. “That’s certain improvements to commercial real estate.”

Listen to the full episode to hear all of Nowak’s insights on the bonus depreciation incentives.

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Weaver’s professionals are known for helping clients address problems, achieve compliance and prevent fraud or loss. Visit weaver.com for more thought leadership.

With tax season just around the corner, host Tyler Kern discussed the latest updates around charitable contributions with Justin Reeves, CPA, Tax Partner at Weaver.

For those who itemize their deductions, the limit of cash contributions in 2021 has increased from 60% to now a staggering 100% of adjusted gross income.

Reeves clarified the difference in cash and non-cash contributions, “The numbers are still the same for non-cash donations and cash donations to private foundations — those remain at the existing limits — but it’s a real great opportunity for taxpayers to give up to 100%... it’s almost unheard of.”

Reeves also commented on how taxpayers not itemizing can still receive the same benefit as last year — single-filers are able to give up to $300 (married and filing jointly can give up to $600) to deduct against their income.

To really kick it up a notch, Reeves explained some additional techniques to utilize:

Taxpayers can donate their appreciated property to a charity and deduct the fair market value to avoid capital gains tax.

As one of the most popular techniques, taxpayers can donate cash or property to a donor-advised fund. This allows the donor to receive a donation deduction in one year, but he/she pays that amount to the charity over a period of time.

For a more advanced technique gaining popularity, charitable lead trusts enable taxpayers to receive a charitable deduction while maintaining the ability to transfer tax-free assets to their heirs.

As his final words of advice, Reeves encourages contacting a CPA at Weaver before making your gift to ensure you receive the best benefit and fulfill any special requirements. Find more financial education information at weaver.com.

Listen to the full episode to hear all of Reeves’ insights on charitable giving strategies.

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Weaver’s professionals are known for helping clients address problems, achieve compliance, and prevent fraud or loss. Contact us. We're here to help.

On this episode of Weaver: Beyond the Numbers, Host Tyler Kern talked with Rob Nowak, Partner in Tax Services at Weaver, about the bonus depreciation of business assets.

“Bonus depreciation is one of the incentives that’s been around in the tax code for about 20 years,” Nowak said. “It’s an enhanced expensing election that allows taxpayers to immediately write off the cost basis of qualifying assets placed in service during a year.”

So, what are qualifying assets? It’s a tangible property with MACRS class life of 20 years or less. It also includes some other property that is specialized to an industry, like particular water treatment property, software that is amortized over three years and certain types of plants.

“Both new and used property now qualify for bonus depreciation, which is a little bit of a departure from some prior law,” Nowak said. Under the 2017 Tax Cuts and Job Act, the law was changed to allow new assets but also used property. However, those would not qualify if a taxpayer previously used the property or a predecessor entity or related entity.

“There’s also a specific classification of property referred to as qualified improvement property,” Nowak said. “That’s certain improvements to commercial real estate.”

Listen to the full episode to hear all of Nowak’s insights on the bonus depreciation incentives.

Subscribe and listen to future episodes of Weaver: Beyond the Numbers on Apple Podcasts or Spotify.

On this episode of Weaver: Beyond the Numbers, host Tyler Kern discussed the proposed implementation of a Global Minimum Tax with Vince Houk, CPA, Partner-in-Charge, International Tax Services at Weaver.

Houk explained that many countries within the OECD are considering certain measures, including a global minimum tax rate of 15 percent for larger companies because it would help to “level the playing field.” In addition to the competition between countries for tax revenue, many have seen the digital age hinder their ability to collect taxes. Together, these two issues have led to low tax rates worldwide and many countries are eager for changes.

The Organization for Economic Cooperation and Development (OECD) is looking at three key rules to ensure that countries receive their fair share of taxes:

Income inclusion rule;
Undertaxed payments rule; and
Subject to tax rule

The income inclusion rule and the undertaxed payments rule will effectively provide for a minimum rate of tax for multinational businesses, whereas the subject to tax rule will help ensure that a country’s tax base is not eroded through certain deductible payments (interest, royalties, etc.) where the recipient country subjects the payment to a low rate of tax.

While the income inclusion and undertaxed payments rule would affect multinational businesses with global revenue of more than 750 million euros, it is not clear whether the subject to tax rule will be subject to any threshold.

Under the current framework, a key consideration for multinational businesses will be the effective tax rate which could, for example, impact a country’s ability to boost their economies through tax incentives.

These situations and more are issues the OECD must discuss and iron out before initiating the rule. While it’s unclear why the members of the OECD are considering a 15 percent rate, it’s evident it will apply to many large companies and may have a significant impact on their tax bill.

Weaver’s tax professionals are known for helping multi-national clients achieve global business growth. Listen to the full episode to hear all of Houk’s insights, and visit weaver.com for more thought leadership.

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Dan Graves, CPA, Partner with Weaver Risk Advisory Services, and Rebecca Goldstein, CPS, Partner with Weaver’s Assurance Services Team, returned from the recently held 2021 CCBO (Community College Business Officers), where they gave a joint presentation on grant compliance. They shared their experiences and insights from the conference with Adam Jones, Weaver’s State Government Practice Leader.

“The presentation Dan and I gave went through the whole gamut of the grant lifecycle,” Goldstein explained. “We started with what does the grant cycle look like, and emphasizing, ‘you need to think about compliance, not just at the beginning or end, but throughout the grant lifecycle.’”

There are many new fund streams available for community colleges due to COVID relief packages, therefore, Goldstein and Graves discussed the importance of understanding what funding is available and the compliance rules involved.

“One of the things that a lot of questions and a lot of topics about the conference were about the HEERF and CARES funding,” Graves said. “The COVID relief funding was a huge topic throughout the conference, and with those dollars comes a lot of special new purchases and new things that colleges and universities typically haven’t spent money on with grant funds.” One challenge for educators is to ensure they have the appropriate internal controls and reporting in place so that whatever funds they spend are valid expenditures.

Another hot topic at the conference was the emergence of data and making data-driven decisions. “That encompasses anything from registration to a lot of the initiatives that the federal government is using federal funds to make sure they achieve educational outcomes,” Graves said. “They’re using data-driven decisions through the enrollment process and the registration process.” On the operational side, artificial intelligence helps generate automated workflows and better communication with students.

Howard Altshuler and Rob Nowak invited Charlie Anastasia to Weaver’s Beyond the Numbers — Real Estate Edition, to give his insight on life in New York City pre-Thanksgiving 2021.

“You definitely will see a lot more people in the city, which is really refreshing,” Anastasia said. The last six months have seen an increase in traffic, visitors and crowds, and now the holiday season should bring even more.

Similarly, Anastasia noted that the residential market is hot with people hunting for bargains in the city, coming back and looking to find apartments once again in the city. Conversely, retail has re-mained slow with some shops still closed.

While the office population is also still slow to return to “normal,” with office occupancy lighter than expected, there are positive signs for the city with Broadway and movie theaters reopening, restau-rants booming, and the holidays attracting shoppers and travelers.

When asked about what office life in the city will look like in the future, Anastasia doesn’t envision most companies returning to the traditional five-day in the office work schedule. Instead, it’ll likely be a hybrid flex schedule.

Despite the vaccine mandate for New York City, Anastasia noted that “people are playing this chess board strategically” as to when companies are bringing employees back into the office or checking on vaccinations.

On this episode of Weaver: Beyond The Numbers Podcast, hosts Rob Nowak, Partner, Tax Services at Weaver, and Howard Altshuler, Partner-in-Charge, Real Estate Services at Weaver, discuss climate change and adaptability for the real estate industry.

This past year we’ve seen extreme weather events creating stress on buildings, infrastructure and the supply chain. Texas faced unprecedented heavy winter storms, which caused major disruptions for the region. There have been extreme wildfires, and most recently a hurricane caused destruction with flooding and deaths on the Gulf Coast and up the East Coast. “Regardless of your position on climate change, it’s pretty much given that storms and weather events are getting worse and worse,” Altshuler stated.

“We’re building real estate today that’s going to be here for 30, 40, 50, 100 years, so should we be planning for the fact that there can be more extreme weather events, more stresses on real estate, and start to build that into our design and construction,” Altshuler stated.

What will it take to get there? “I would not be surprised if at some point in the near future we saw a tax deduction or tax credit around sustainability of real estate,” Nowak commented.

Listen to learn more about the future of sustainability and adaptability in real estate.

On this episode of Weaver: Beyond The Numbers, Host Tyler Kern talked with Sandra Dunphy, Director Energy Compliance Services, and Greg Staiti, Partner Energy Compliance Services. Dunphy and Staiti recently attended the Opis RFS, RINs & Biofuels Forum in Chicago.

Dunphy has been with Weaver for almost 11 years, and she leads the Renewable Fuel Standards (RFS) team. She and her team help companies navigate the regulations and how they work. As the first conference speaker this year, she gave an overview of the conference’s agenda.

But, the big news out of this year’s conference was the delay in the EPA’s regulation announcement.

“The timing of the conference this year was quite interesting,” Dunphy noted. “We have annual objectives that EPA publishes each year of the period of the regulations. We have now been waiting for an announcement related to 2021 about the standards the industry to try to meet.”

These standards are called Renewable Volume Obligations. Usually, they have them by the end of November before the compliance year, which means they should have had them by November 2020.

“Ironically, in the conference last year, we said we were waiting for the EPA’s announcement, and here we are a year later still waiting for that announcement,” Dunphy said.

Staiti has been with Weaver since 2012. He oversees the consulting part of the practice within Weaver’s Energy Consulting Services. They focus on the transportation fuels regulation that affects all the fuels that go into vehicles. His presentation focused on feedstocks and other issues that are an obstacle under current RFS regulations.

“Both of our presentations were very heavy on the regulatory framework for renewable fuels,” Staiti said. “But, mine, in particular, focused on some of the challenges within the existing regulatory structure that could inhibit the expansion of opportunities for renewable fuels and their associated feedstocks, under the current regulations.”

On this episode of Weaver: Beyond The Numbers, Host Tyler Kern talked with Sandra Dunphy, Director Energy Compliance Services, and Greg Staiti, Partner Energy Compliance Services. Dunphy and Staiti recently attended the Opis RFS, RINs & Biofuels Forum in Chicago.

Dunphy has been with Weaver for almost 11 years, and she leads the Renewable Fuel Standards (RFS) team. She and her team help companies navigate the regulations and how they work. As the first conference speaker this year, she gave an overview of the conference’s agenda.

But, the big news out of this year’s conference was the delay in the EPA’s regulation announcement.

“The timing of the conference this year was quite interesting,” Dunphy noted. “We have annual objectives that EPA publishes each year of the period of the regulations. We have now been waiting for an announcement related to 2021 about the standards the industry to try to meet.”

These standards are called Renewable Volume Obligations. Usually, they have them by the end of November before the compliance year, which means they should have had them by November 2020.

“Ironically, in the conference last year, we said we were waiting for the EPA’s announcement, and here we are a year later still waiting for that announcement,” Dunphy said.

Staiti has been with Weaver since 2012. He oversees the consulting part of the practice within Weaver’s Energy Consulting Services. They focus on the transportation fuels regulation that affects all the fuels that go into vehicles. His presentation focused on feedstocks and other issues that are an obstacle under current RFS regulations.

“Both of our presentations were very heavy on the regulatory framework for renewable fuels,” Staiti said. “But, mine, in particular, focused on some of the challenges within the existing regulatory structure that could inhibit the expansion of opportunities for renewable fuels and their associated feedstocks, under the current regulations.”

Often, traditional lending products keep homeowners on the debt treadmill and may not be the best way for homeowners to pursue renovations, consolidate debt, or put their kids through college. With that being said, Unison lets homeowners unlock their home equity without taking on any additional debt, allowing these homeowners to achieve their goals in a way that makes them more financially stable.

On this episode of Weaver: Beyond The Numbers, Hosts Rob Nowak, Real Estate Industry Tax Partner with Weaver, and Howard Altshuler, Partner in Charge of Real Estate services, sat down with Theo Haugen, Director of Home Partnership at Unison to further explore what Unison can do for homeowners.

In a nutshell, Unison allows homeowners to tap into their home equity without any monthly payments or interest. Unison invests in the home, along with the homeowner, and shares the future gain or loss when the homeowner decides to sell.

“This is a two-part thing here,” Haugen said. “We are giving homeowners the opportunity to tap into their home equity without taking on additional debt. But on the flip side, we are giving institutional investors access to residential real estate as an asset class.”

Unison starts by doing an appraisal of the home to get a starting value. In the future, if the house sells for more, they share in that increase, but if it sells for less, they share in the decrease. They are risk-sharing with the homeowners.

Haugen explains that at Unison, the main goal is to help the homeowners achieve their financial goals, avoid more debt, make better financial decisions, and eventually sell their home for more money. And if they make more money, Unison makes more money, and the investors make more money.

Once funded, Unison can help people understand the options that are available to them and point them to resources when they experience financial instability, such as medical or credit card debt. As Haugen states, “we’re helping people succeed financially, which helps them maintain their home, pay their mortgage.”

“It’s not adversarial,” Haugen said. “We succeed when the homeowners succeed as well.”

The tax assessor’s notice isn’t always the final say on what taxpayers must remit. Companies can easily appeal these decisions with a proactive appeal strategy for their real and personal property taxes .

Property tax can encompass a large portion of your company’s tax burden and with rising assessments there is a feeling of uncertainty in an already unpredictable economy. Weaver’s state and local tax professionals, Jason Armstrong, Senior Manager, and Shane Stewart, Partner-in-Charge, join Tyler Kern for an episode of Weaver Beyond the Numbers to discuss how and why organizations should take a second look at their property tax appeal process.

Both Armstrong and Stewart bring a wealth of knowledge and experience to the topic. First, Armstrong explained, “Businesses receive the appraisal and projected amount due. If you don’t agree with this, you have the right to appeal.”

“The tax is not yet due, and you have a period of time to reduce it,” Stewart added. 

The process can be as simple as a tax professional talking with the assessor and sharing information to disputes the value. Some appeals will need go to a board hearing. Armstrong explained, “It’s high-level, and you have only 15 minutes to state your case. Then the board makes a decision, which can also be appealed.”

In appealing, Stewart noted, “You want to have someone with the technical ability to present the facts, and someone with relationships with jurisdictions.”

Mistakes are also made in the assessment process, and having a professional who can uncover these oversights can help with the appeals process. So, what are the top mistakes in assessments? Armstrong highlighted several: “The assessor can make a mistake of course, but I see errors in understanding the useful life of assets. Obsolescence, either functional or economic, is another area where mistakes are made. Functional describes the loss of value due to the inefficiencies of an asset. Economic refers to loss of value due to external factors.”

Not looking at an assessment can mean overpaying for years. Stewart explained, “Most taxpayers don’t even know they can appeal, so be aware of this as a way to save money.”

With Weaver’s expertise in dealing with complicated property tax issues along with a deep understanding of the property tax appeal process, the team is equipped to make sure your business is minimizing its tax liability.  

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On this episode of Weaver: Beyond The Numbers, Host Adam Jones discussed grant compliance with Brandon Tanous, Partner Risk Advisory Services, and Travis Casner, Managing Director of Forensics and Litigation Services. Specifically, they covered the increased availability of grant money from the federal and state level, and more importantly, avoiding fraud in the grant management cycle.

The best way to avoid fraud and adhere to grant compliance is by having a good system of internal controls. Whether it’s higher education, state or local municipalities, or not-for-profits, the question is always where to start. Each organization is going to have a different level of maturity when it comes to these internal controls.

“Most of recipients learn very quickly that every grant has strings attached,” explained Tanous, whose focus is state and local government and has 13 years of experience building internal controls around grant compliance. “An internal control that we always want to see is, first and foremost, is an understanding the grant criteria, with documented policies and procedures, and segregation of duty.”

Tanous elaborated that too often, you see people trying to do too many things. Having those internal controls, and not having the same person initiating and executing and approving all transactions, and making sure there is a healthy number of people working on the project.

The first place to start is by working on policies and procedures, so people know what they’re supposed to do and how the protocols should be performed. Those policies and procedures should also reflect the current environment.

“The common deficiencies we see are that people don’t have those [policies and procedures] established,” Tanous said.

A primary concern is how quickly fraud can occur when proper controls are not in place. This becomes a bigger challenge when working with a decentralized organization that needs a centralized process.

“We are now able to use analytics to benchmark spending and identify abnormalities,” said Casner who has managed numerous financial forensics investigations involving allegations of fraud. “Why might an organization be paying more than their peers for a good or services? Is there a legitimate reason or something nefarious going on?”

Casner went on to say that some of the most common fraud happens in the procurement processes. From kick-backs to bribery, not having proper controls around purchasing can open your entity up for fraudulent activity.

Taking a proactive approach to combating fraud by utilizing analytics can help identify red flags and schemes before they occur, especially as it relates to grant management.

Listen to the full episode to hear all of Tanous and Casner’s insights.

Subscribe and listen to future episodes of Weaver: Beyond the Numbers, The Business of Government on Apple Podcasts or Spotify.

Weaver’s professionals are known for helping government clients address problems, achieve compliance, and prevent fraud or loss. Visit weaver.com for more thought leadership.

On this episode of Weaver: Beyond The Numbers Real Estate Edition Podcast, hosts Rob Nowak, Partner, Tax Services at Weaver and Howard Altshuler, Partner-in-Charge, Real Estate Services at Weaver, talked about their predictions for industry trends for the rest of 2021 and into 2022.

“If I had my sunglasses, I’d be putting them on because the future is bright,” Altshuler said. “Overall, the market is looking really well.”

Retail is recovering to a great extent, and people are getting out and about. We see hospitality is doing well, especially concerning non-business travel. Industrial/multi-family/single-family rental, and self-storage, that stuff never slowed down, according to Altshuler.

The lessons that were learned during the first portion of the pandemic might also come back to bear during the current Delta variant wave of COVID-19, according to Nowak. But, things might be different if there continue to be different and continuing variants.

“The industry had figured out, in many ways, how to adapt to the pandemic, which is why real estate sort of led the way in terms of economic recovery,” Nowak said.

One area they haven’t spent a ton of time on but dug into on this episode is single-family rentals, as they can bridge the gap of affordability between apartment buildings and folks who might not be able to afford a single-family home.

On this episode of Weaver: Beyond The Numbers Real Estate Edition Podcast, hosts Rob Nowak, Partner, Tax Services at Weaver and Howard Altshuler, Partner-in-Charge, Real Estate Services at Weaver, talked about the Pros and Cons of Real Estate Funds Vs. Real Estate Partnerships with Scott Winkler, Senior Manager, Audit Investment Funds, Weaver.

“I think the biggest advantage of an investment fund over a partnership is they’re going to be nimble,” Winkler said. “With an investment fund, you’re usually able to obtain a subscription line of credit from the bank.”

This allows investors to have quick access to capital so that you can move quickly in a time-sensitive deal. This is an advantage over a private partnership unless someone has something on the shelf, which not many folks do, according to Altshuler. If they don’t, they will have to go out, get documents ready, make sure everyone is on board in the partnership, and it is more time consuming.

This has led to a proliferation of real estate funds, according to Nowak. “Deal flow is a little constricted right now, and good deals are hard to come by. I think if you have a fund structure in place, it just enables you to move on that deal significantly faster.”

Other differences include promote and fee structures, which may provide more benefits to investment partnerships over funds.

Listen to hear more about the differences between real estate investment partnerships and real estate funds.

In a landscape that’s seen an uptick in cybersecurity concerns thanks to a boost in remote work, hurried adoption of technology solutions and more, there’s one cyberattack du jour – ransomware.

To explore this specific kind of threat and its impact on government Weaver: Beyond the Numbers, The Business of Government host Adam Jones was joined by Weaver National Practice Leader, Advisory Services, Brian Thomas, CISA, CISSP, QSA.

Cyberattacks and threats to governmental organizations can be especially harmful to the workings of our society. The increasing incidence of ransomware attacks, which typically see bad actors infiltrate a network, encrypt key files and systems, and demand a ransom in exchange for their return to operation, can be extremely destructive.

“Ransomware is malware, or malicious software, that has been written by some threat actor, who, basically, is going to install software on your machine that will then encrypt the contents of the machine,” Thomas said. “You can’t access your own data…They’re essentially demanding a ransom to give you the encryption key to decrypt your own data.”

Large-scale ransomware events, such as the attack on the Colonial Pipeline, don’t typically play out via the way most of us think of when we think about cyberattacks. Instead, bad actors are infiltrating organizations with what Thomas called “good, old-fashioned hacking techniques” and working to establish as wide a presence as possible.

So, how can organizations and governments with ever-growing networks and ecosystems stay ahead of the “bad guys” without a silver-bullet solution, which Thomas said doesn’t exist? Listen to the full episode to hear Thomas’s insights.

This is a bit of a special episode of Weaver: Beyond The Numbers. It's our first anniversary, and the hosts want to say thanks. There are no guests on this episode. Instead, it's just the love of the real estate industry binding us together. Both hosts Rob Nowak and Howard Altschuler, are either going or just went on vacation. They want to remind listeners that those long car rides are great for episodes of the podcast.

"The fact that people are listening to our podcast, the fact that people are commenting on it and sharing, shows that people like what they're hearing and they want to share it with others, as well," Altschuler said.

It's been about a year since the first episode. The hosts have learned, grew, and with the help of our listeners, gained a lot of new insight into the world of real estate taxes: the success they've had, though, has been because of our listeners, supporters, and guests.

"We've had such a tremendous base of support from folks who are listening, commenting, suggesting topics, as well as those at the firm who have been incredible supporters," Nowak said.

Both Nowak and Altschuler mentioned that when they set out to do the show, they wanted to provide relevant content to the real estate community and was relevant across the industry. But, they want to hear about what you want to hear. So reach out to us.

Relocating a business is a complex move but something that can be very beneficial to a company. One state where they are flocking is Texas, named the “Best State for Business” by Chief Executive Magazine. What are the implications, tax-wise, for such a move?

On this episode of Weaver: Beyond The Numbers Real Estate Edition, host Rob Nowak, Real Estate Industry Tax Partner, talked with Howard Altshuler, Partner-In-Charge of Real Estate Services, about their love of real estate, alternative real estate and how the future of the office is…the office.

Earlier in the week, Altshuler was on a webinar that Weaver co-hosted titled, “A Look At Real Estate Investing Today” and moderated by Weaver's Sindhu Rajesh, Partner, Alternative Investment Industry Co-Leader.

"One of the things that came up in the discussion was alternative investment classes," Altshuler said. "Normally, when we think about investing in real estate, most people stick with the four primary classes: industrial, office, retail, multi-family. But, there's so much more out there."

New areas are becoming attractive, and investors are looking at different things and may be chasing better returns. The alternative real estate investments discussed included life sciences hubs, cold storage, self-storage, single-family rental and data centers.

Others that were briefly discussed were doctor's offices, ambulatory and surgery, and even rehab centers.

While there is a lot of other real estate to consider from an investor standpoint, another aspect to shed light on is the future of the office. The pandemic has shifted thinking about office space with more work-from-home options, but the office isn’t going away.

Altshuler added, "We all came to the same conclusion that the office isn't going anywhere. Work-from-home is real, but, at the same time, it's not as big as everybody thought."

Weaver’s Brad Jay, Partner-in-Charge of Manufacturing, Distribution and Retail Services, brought together three industry leaders to provide knowledge, insights and best practices from their experiences in business valuation and succession and estate planning.

Reference rate reform is happening. LIBOR is out the door, to be replaced by SOFR. To discuss this significant transition, Weaver Beyond the Numbers Real Estate Edition hosts Howard Altshuler, Partner-in-Charge, Real Estate Services and Rob Nowak, Partner, Tax Services spoke with their colleague Bruce Zaret, Partner, Risk Advisory Services.

So, why is LIBOR out? Zaret explained that, “in the 2008 financial crisis, there was a lot of reliance on LIBOR, but it’s a rate that can be altered or manipulated. SOFR should bring more stability since it’s based predominately on repo transactions.”

While LIBOR was forward-looking, Zaret noted that the new rate SOFR is more transactional and looks at an average over time. It’s also based on actual data, and banks can set a cap so that it’s not too volatile. “We expect it to be more reliable and predictable. It’s not based on future projections that are more prone to speculation and basically a group’s opinion,” he added.

The holder of this data will be the Alternative Reference Rates Committee, which includes primarily private organizations in the financial sector. They will dictate the rollout of the rate. LIBOR is expected to sunset at the end of 2021, but Zaret mentioned that it may be pushed out to 2023 because people aren’t prepared for it.

On the implications, Zaret said that, “looking at it from a contractual perspective, it may require more collateral. You could have gains or losses, but it will impact the overall financial structure. For banks, it will change the products they offer. There may be a difference in rate during the transition period.”

Commercial property tax assessments arrive every year, but how accurate are they, and should companies appeal? After all, this is a number that owners want to see low, low, low.

Providing his in-depth knowledge, Jason Armstrong, Senior Manager, State and Local Tax Services, joined his colleagues and hosts of Weaver Beyond the Numbers Real Estate Edition Howard Altshuler, Partner-in-Charge, Real Estate Services and Rob Nowak, Partner, Tax Services.

Armstrong first urged that organizations “make sure you’re viewing them every year, and they are in line with the market. We didn’t know how assessors would handle 2020, but in most cases, valuations stayed flat or increased.”

Armstrong noted that assessors should be using data around the market, rent rates, cap rates, vacancies and collections for businesses questioning their assessments. “Find out their parameters and numbers and compare them to your actuals.”

There is an opportunity to lower the valuation if it seems high, especially if the property suffered losses. “If you had high vacancies because of shutdowns, it should lower the value, because your net operating income is less,” Armstrong explained.

Companies can appeal assessments. That varies by state, but, in Texas, the timeline is 30 days after receipt of the assessment.

Armstrong also noted the advantage of a consultant in making an appeal. “Working with a real estate professional and tax expert, they know the process and pain points. They also have access to market data. Some of that is accessible, but a specialist will have things like a cap rate study on hand.”

Commercial property tax assessments arrive every year, but how accurate are they, and should companies appeal? After all, this is a number that owners want to see low, low, low.

Providing his in-depth knowledge, Jason Armstrong, Senior Manager, State and Local Tax Services, joined his colleagues and hosts of Weaver Beyond the Numbers Real Estate Edition Howard Altshuler, Partner-in-Charge, Real Estate Services and Rob Nowak, Partner, Tax Services.

Armstrong first urged that organizations “make sure you’re viewing them every year, and they are in line with the market. We didn’t know how assessors would handle 2020, but in most cases, valuations stayed flat or increased.”

Armstrong noted that assessors should be using data around the market, rent rates, cap rates, vacancies and collections for businesses questioning their assessments. “Find out their parameters and numbers and compare them to your actuals.”

There is an opportunity to lower the valuation if it seems high, especially if the property suffered losses. “If you had high vacancies because of shutdowns, it should lower the value, because your net operating income is less,” Armstrong explained.

Companies can appeal assessments. That varies by state, but, in Texas, the timeline is 30 days after receipt of the assessment.

Armstrong also noted the advantage of a consultant in making an appeal. “Working with a real estate professional and tax expert, they know the process and pain points. They also have access to market data. Some of that is accessible, but a specialist will have things like a cap rate study on hand.”

Greg Englert, Partner, Risk Advisory Services, continues Weaver’s Beyond the Numbers’ examination of ESG strategy to drive performance and value for companies in the second of a two-part series.

Englert provides a recap of topics covered in part one before diving into several current trends in sustainability reporting to begin the discussion.

The world experienced many changes during the pandemic. As a result, many things might translate to the commercial real estate (CRE) sector. Weaver Beyond the Numbers Real Estate Edition hosts Howard Altshuler, Partner-in-Charge, Real Estate Services and Rob Nowak, Partner, Tax Services shared their thoughts on these possibilities.

“I was thinking about some things I’ve seen, like contactless entry points and payments, and how those might translate to CRE. How can we make buildings smarter and more responsive?,” Nowak replied.

“Some of the innovations coming out of this period are here to stay just because they are more efficient, and secure. Do we even need to push a button for the elevator anymore?” Altshuler pondered.

“These things are already out there; we just haven’t seen them in office buildings. We may even combine biometrics so that, instead of a key card, facial recognition just opens the door,” Altshuler said.

In the office environment, there are still some unknowns about what they will look like. Still, in most cases, it’s probably going to be a hybrid approach. “It’s generally been portrayed as extremes of either the death of the office or everyone rushing back. It’s probably going to be somewhere in the middle, and we are social beings that don’t want to be cut off,” Nowak described.

With a change in who’s in the office also comes possible shifts in office architecture and space planning. Nowak added, “We’re back to open floor plans, but the separation between is likely to increase, because people don’t want to disturb each other. So, that’s just a good business practice.”

Health Care real estate is much different from other commercial real estate for several reasons. Discussing those and current trends in the space, Weaver Beyond the Numbers Real Estate Edition hosts Howard Altshuler, Partner-in-Charge, Real Estate Services and Rob Nowak, Partner, Tax Services spoke with their colleague, Corey Palasota, Managing Director for Health Care Valuation.

First, Palasota explained his role. “I spend about 60% of my time in the valuation of operating businesses, and the other 40% consulting on various things including helping them understand the real estate market.”

In differentiating Health Care real estate, Palasota noted that the buildings are typically single purpose and specialty. However, he has seen some changes in the industry around spaces having more flexibility. “There is more consideration around the services to include in the footprint.”

While many businesses are downgrading or eliminating commercial space, Health Care isn’t, as it’s an in-person service. This makes it a “safer asset class,” according to Palasota.

The hosts asked Palasota about what’s impacting valuation. “The stronger the operating business, the more valuable it can be. Other factors are the competitive advantages of the operator, what the payer mix is of commercial versus Medicare, and the reimbursement. It’s anything that demonstrates there’s enough revenue to pay the lease.”

In looking at new trends, Palasota noted that there was a lot of horizontal integration and consolidations in previous years. As of late, he’s seeing more vertical integration, which offers a competitive edge.

“Business valuation is a pie, and it’s carved up into various divisions, with real estate one of the biggest. The lease rate pushes value in one direction and risk in the other. Overall, developers want the lease rate to be viable and operations to be successful,” Palasota said.

Joining a not-for-profit board may bring tremendous opportunities for an individual looking to serve a community or specific area of interest. Still, it helps to understand the particulars of what such a commitment means and some of the challenges board members face.

Rhetoric around tax legislation changes is a topic of focus in Washington right now. While there is much left to be decided, Weaver leaders shared an update on what to expect.

Weaver Beyond the Numbers Real Estate Edition hosts Howard Altshuler, Partner-in-Charge, Real Estate Services and Rob Nowak, Partner, Tax Services for Weaver, recently covered it in an episode.

“There is an undertone from the White House on sweeping changes along with tax rates. It could include the elimination of incentives, much of which are targeted at commercial real estate, specifically 1031 Exchange,” Nowak said.

The 1031 Exchange allows for the deferment of paying capital gain taxes when selling an investment property and reinvest the proceeds into other properties. “The rules did change in 2017 to only account for real property. The complete elimination of it could have an impact on businesses and individuals. It could align with certain thresholds of income,” Nowak explained.

Another area in consideration is the capital gains rate. This could likely occur for those making an income in excess of $1 million. “It could be a bracketed type of system, and those at different thresholds pay different rates,” Nowak added.

“It could be challenging for those that sold assets years ago and deferred, as they may have to pay a higher tax rate,” Altshuler noted.

Ultimately, there is no timeline for when or if they’ll occur, so Nowak is helping clients deal with uncertainty. “The value we deliver on the consultancy side is to spend time making sure clients understand how these changes could impact them.”

From shareholder and investor obligations to regulatory compliance requirements, environmental, social, and governance issues are front and center in many industries. While the conversation continues to grow louder in the United States, many companies are already embedding sustainability reporting and other ESG-related risks and opportunities into their business strategies.

April 16 has traditionally been a day of celebration for tax professionals, but not in 2020 or 2021. As a result of the pandemic, the government delayed Tax Day. This delay and uncertainty about possible tax code adjustments are the topic for Weaver Beyond the Numbers, Real Estate Edition hosts Howard Altshuler, Partner-in-Charge, Real Estate Services for Weaver, and Rob Nowak, Partner, Tax Services for Weaver.

Tax law changes from year to year, mainly when significant political changes occur. With a new administration in the Oval Office in 2021, this year is no different.

Host Joseph Cahoon talked with Rob Nowak, a tax partner with Weaver, the largest CPA firm in the southwest, for this Folsom Forum Webinar by the Folsom Institute for Real Estate at Southern Methodist University. The duo talked about changes to tax law and what that means in real estate and in a broad sense.

Capital gains might be the big topic of taxes at the moment, with the Biden administration proposing to raise the rate to 43.4% for those with incomes over $1 million.

During election season, both candidates proposed tax changes. The Biden/Harris ticket proposed equalizing rate structures between different levels of income earners, Nowak said, with one of the rates being discussed the aforementioned capital gains rate. No legislation is passed, but there is a potential road map laid out for tax increases.

"Cap gains rates might increase from, let's say, 20 to 28%, or from 20% to the highest ordinary rate, but only for those taxpayers who meet certain income thresholds," Nowak said. "That income threshold might be a million of income, it might be $400,000 of income, but we're not talking about a wholesale adjustment of the cap gain rate structure."

If the capital gains rate went from 20 to 28%, it would be a reversion back to the Reagan-era capital gains tax rates.

On this episode of Weaver Beyond the Numbers, Real Estate edition, Howard Altshuler, Partner-in-Charge, Real Estate Services for Weaver, and Rob Nowak, Partner, Tax Services for Weaver, were joined by Charlie Anastasia, Tax Partner for Weaver, for some insights into REITs (real estate investment trusts).

The Biden administration recently submitted a proposed bill, The American Jobs Plan, to rebuild the country’s infrastructure and create millions of new jobs.

Weaver’s Mayur Naik, Senior Manager, State & Local Tax Services, and Shane Stewart, Partner-in-Charge, State and Local Tax Services, brought their wealth of knowledge and expertise to Beyond the Numbers.

On this episode of Weaver Beyond the Numbers, Real Estate Edition, Howard Altshuler, Partner-in-Charge, Real Estate Services for Weaver and Rob Nowak, Partner, Tax Services for Weaver were joined by Andy Freundlich, Partner, Assurance Services for Weaver for a lively discussion on risk assessment and management in real estate.

“This last year has been amazing for lots of reasons. We think about how unprepared we are for everything,” Freundlich said.

Certain risks are known when it comes to things like deferred maintenance or entitlement risk, but building managers, asset managers, developers and tenants also face unknown risks.

How do real estate stakeholders prepare for the unknown? What are the what-ifs that haven’t been accounted for, and how do we prepare for what comes next?

Altshuler suggests that complacency can play a part in not being properly prepared.

“Instead of thinking, ‘That could never happen,’ think ‘Well, that could happen, so how do we deal with it? Is it feasible?,’” he said. “Is there enough benefit in the cost of preparing for risk? How do we assess the likelihood of risk?”

Planning for risks is an essential component of real estate, and having an internal committee brainstorming the “what-ifs” and how to respond to them is key to staying on top of risk management and protecting property from the unknown. That unknown could be anything from a cyberattack to a blackout or even a riot.

According to Freundlich, people are “always thinking about risk management.

“We’re thinking about insurance. We’re thinking about how we can be healthier.”

Looking at different scenarios to see what weaknesses there may be in risk management systems is an important aspect of the real estate business, and getting advice from experts is always a good place to begin.

On this episode of Weaver Beyond the Numbers, real estate edition, Howard Altshuler, Partner-in-Charge, Real Estate Services for Weaver, and Rob Nowak, Partner, Tax Services for Weaver were joined by David Vasquez, Partner, Business Tax Services for Weaver for a conversation about the questions and issues around the Paycheck Protection Program (PPP) first instituted in March 2020.

Weaver’s Rob Nowak, Partner, Tax Services, and Howard Altschuler, Partner-in-Charge, Real Estate Services, know many logistical challenges come into play when ordering something online. But what barriers exist on the backend for returning those online purchases?

Nowak and Altschuler discussed the world of reverse logistics to see if they could figure out what goes on when people need to return an online item and what logistics challenges companies face with a world turning more and more to ecommerce for all of their purchases.

Nowak wondered, if a specific ecommerce platform’s truck was already in a neighborhood dropping off items, why can’t they pick up a return, as well? But, in trying to answer this question, Nowak realized it might come down to logistics that are more complicated than a customer sees.

Altschuler saw specific online shopping trends posing additional challenges for logistics, such as online grocery shopping, where refrigerated goods may be difficult to handle from a return standpoint. In contrast, dry goods may be solvable challenges.

With the rise of online purchasing in traditional brick and mortar establishments like grocery, Nowak recognized the potential need for industrial growth in logistics centers.

“For every 10 logistics facilities, there might need to be one or two reverse logistics facilities just to handle the flow of goods back in, then redistribute those to their warehouses so those items can be resold,” Nowak said.

But, even if additional facilities were required to handle an influx of returns, Altschuler believed they’d utilize smaller spaces. “You’re not going to need a million-square-foot warehouse to hold returns unless it’s a regional depot or something like that.”

Howard Altshuler, Partner-in-Charge, Real Estate Services for Weaver, brought together a panel of Weaver real estate and tax experts, Rob Nowak, Partner, Tax Services, David Nolan, Senior Tax Manager, and Charlie Anastasia, Partner, Tax Services to discuss differed exchanges.

Sellers utilizing a deferred exchange have 45 days to identify a replacement property. There are three methods for property identification.

The three-property rule allows the taxpayer to identify up to three replacement properties of any aggregate fair market value. This method is generally used when there is a reasonable assurance that a suitable single property can be identified and acquired.

The 200% rule allows a taxpayer to identify unlimited replacement properties up to 200% of fair market value of the relinquished property. Taxpayers utilizing this method are typically seeking portfolio diversification.

The 95% rule allows taxpayers to identify an infinite number of properties without regard to fair market value. However, the taxpayer MUST acquire at least 95% of the value of properties specified.

The devastating Texas storm of 2021 has hosts Howard Altshuler, Partner-in-Charge, Real Estate Services for Weaver, and Rob Nowak, Partner, Tax Services for Weaver thinking about preparing for the next unknown. After all, the area has dealt with two in the last 12 months.

“We need to stop thinking things won’t happen,” Nowak urged.

While a pandemic and natural disaster aren’t exactly preventable, organizations can be more proactive than reactive. Altshuler shared his findings about data centers and how they fared well in the storm. “They have redundant systems and think about stuff nobody else does, which is what we need to do.”

Integrating redundancy, the hosts noted, has many implications, from design to codes to architecture. Much of the time, most think the costs outweigh the benefits, but that’s looking less and less true after every disruptive event.

Nowak brought the conversation back to tax liability. “There is a deduction available for unreimbursed casualties and losses, and it’s easier to submit these in a federally declared disaster. Documenting these losses is important, so check with your tax advisor if you sustained a loss.”

Gone are the days when remote sellers can afford to procrastinate their obligations to register and begin filing sales tax returns under the economic nexus laws requirements.

On this episode of Weaver Beyond the Numbers, Real Estate edition, Howard Altshuler, Partner-in-Charge, Real Estate Services for Weaver, and Rob Nowak, Partner, Tax Services for Weaver, brought their dynamic duo powers to some hot real estate topics; what to do with excess office space made available due to the effects of the pandemic, and the growing needs of single-family workforce housing. One solution beginning to pop up in some areas is the conversion of office space to living space. But just because conversions are taking place, that doesn’t necessarily mean it’s a full solution to the problem.

There are many challenges in achieving inclusion and diversity on boards. Many non-profit boards struggle with putting together a balanced board of diverse voices, including younger board members. Ronnie Haggerty, Vice President of Community Relations for The United Way at Greater Houston, and Dr. Froswa’ Booker-Drew, Vice President of Community Affairs for the Strategic Alliances at the State Fair of Texas, joined Weaver’s Alyssa Martin to discuss these issues and provide insights and tips for boards looking to create inclusive and diverse boards that can lead non-profits to success.

“The reality is in today’s world boards simply are not diverse,” Haggerty said in a sobering statement. “We have an aging, white, board representation in communities like Houston, which is one of the most diverse cities in the United States. Only 35% of board members report that their board composition represents the demographics of the populations they serve. And only a quarter of those boards place a high priority on diversifying those organizations.” There’s a lot of work to do to make these boards relevant in today’s world.

Dr. Booker-Drew took the issue an additional step further. “When you look at diversity, not only from a board perspective but senior leadership and sometimes even staffing in our non-profit organizations, there is a problem. Many of our non-profits, particularly those led by people of color diversity, are important in those organizations because there are networks they typically don’t have access to. It’s also important to pay attention to the role of age and even ideology. Sometimes we tend to get people who think like we do. The challenge in that is we have blind spots.” It is critical to bring in people with different viewpoints, different geographies, and different ages, in addition to color diversity, to create a well-balanced board.

Brad Jay, Weaver’s Partner-in-Charge of Manufacturing and Distribution Services tapped Frank Cinati, CFO of ABATIX, Vince Rullo, CFO of Howard Supply Company, and Matt Nafziger, CFO of Royal Manufacturing to give their perspective on how manufacturing and distribution companies have weathered the COVID-19 storm. What does the post-pandemic outlook like, and what can companies do to remain responsive to client needs in the face of continued change?

The COVID-19 pandemic has forced all sorts of businesses to get adaptable, and perhaps no one knows that better than the people running the financial side of things.

Management is never easy, but what’s the best way to manage when in-person meetings or even informal tools for collaboration like happy hours are no longer on the table? That’s the challenge the majority of businesses have faced in 2020.

The Pandemic’s Effect on eCommerce, Building Design, and Hotels with Howard Altshuler

Real Estate Edition: Buildings and Spaces’ Role in the ‘End’ of COVID-19

The 2020 Election May Be Very Taxing

This week on Weaver: Beyond the Numbers, Rob and Howard dive into resilience for retail properties.

On this episode of Weaver Beyond the Numbers: Real Estate Episode, Rob Nowak and Howard Altshuler of Weaver chat about disruption opportunities the coronavirus pandemic brings to real estate.

Setting People Up for Success with Alyssa Martin and Adam Jones

How the Pandemic Could Change Leadership, Culture and Work with Dale Jensen and Lee Colan.

On this episode of Weaver: Beyond the Numbers, Weaver’s Bruce Zaret, Robert Neill and Trip Hillman tackle perhaps the largest looming question as the world marches toward a new normal – what risks are emerging in the wake of the COVID-19 pandemic?

These emerging risks will impact every corner of your organization, from facilities and the supply chain to insurance, financials, your workforce, operations, organizational culture and more.

With that in mind, it’s critical to examine how c-suite leaders and other stakeholders can address these risks, turn them into opportunities for growth, and outline a path forward that engenders success in the post-pandemic era, not trepidation and stagnation.
In particular, the trio of Weaver experts touched on:

Where innovation can play a key role in navigating the post-pandemic new normal
How to manage elevated risks for IT professionals, including those surrounding technology implementation, remote work capabilities, growing security risks as organizations incorporate remote collaboration and more into permanent strategies, and more
Actionable next steps for updating overall organization strategies and assessing risk to maintain critical agility and productivity

Other key considerations during the immediate post-pandemic era and beyond include data protection, management of third-party services and vendor relationships, regulatory changes that could result from this period of uncertainty, and more of the top 11 risks likely to impact your organization in the coming months.

Visit weaver.com for more thought leadership on today's topics and to subscribe to Weaver's Monthly Insights Newsletter. Until next time, stay safe and thank you for tuning in.

The purpose of SOC reporting is to give insights into business-to-business relationships. Neha Patel, Partner-in-Charge, IT Advisory Services, Weaver, and Alexis Kennedy, Senior Manager, IT Advisory Services, Weaver, joined Beyond the Numbers to talk about the importance of SOC reporting in supply chain management, which is a critical component of many businesses.

“The force behind these reports is to allow a business to gain a more transparent look into the operations of the companies they are entering into a relationship with,” Kennedy said. “The SOC for supply chain is also designed to provide the users with information that they may use to assess and manage the risk that may arise from the relationship with that particular supply chain vendor.”

“The whole premise of this ‘SOC for supply chain’ is to highlight and give more transparency to what dependencies there are throughout that life cycle,” Patel said. “When you think about the world today, there are global dependencies, timelines, dependencies on delivery—companies manage those risks. So, if a company has a dependence on a producer, or supplier or delivery organization, any impact to those tangential elements could impact their ability to operate effectively."

For additional resources to help your business thrive, especially during challenging times, visit Weaver’s Resilience and Recovery Resource Center for up-to-date content on topics including cybersecurity, strategic governance, organizational assessments, tax relief for businesses and individuals, IT and financial considerations, compliance and other legislative updates. Also, be sure to subscribe to our industry publication for the latest news, videos and podcasts in the Business Services Industry.

Weaver: Beyond the Numbers: The Importance of Strategic Governance

At our core, we’re a Texas-based, national accounting firm with comprehensive capabilities. That means we do the things you’d expect us to do: traditional assurance and tax services. However, our philosophy has always been about doing more than expected. That’s why Weaver also provides a wide array of advisory services including risk advisory, transaction advisory, IT advisory, energy compliance services, forensics and litigation, financial institutions consulting and public company services.

As Americans shelter in place to help flatten the curve of infection, manufacturing industry leaders have the challenging task of balancing employee health and safety with international supply chain demands like never before.

On this episode of Weaver's Beyond the Numbers podcast, host Shelby Skrhak sat down with Jody Allred, Partner-in-Charge for Large Market Manufacturing and Distribution and Technology Services, and Kurtis Dixon, Partner in Tax Services to discuss critical issues facing manufacturing industry leaders who are seeking guidance on handling the unprecedented COVID-19 pandemic.

Two industry organizations, Manufacturers Alliance for Productivity and Innovation and the National Association of Manufacturers, recently surveyed the industry, seeking insight on their coronavirus concerns and practical solutions for mitigating the effect.

MAPI revealed that pandemic concerns are rising, with approximately 62% of executives expressing moderate or high concern about COVID-19’s impact on global operations when surveyed March 9. This was a significant rise from the first poll in late-January, which reported 37%.

"For U.S. manufacturing businesses that operate globally, in a very short amount of time, their perspective changed as more information was known," Allred said. "And from March 9 until today, we're looking at an even more significant change."

Whereas the initial and follow-up surveys focused on supply chain issues for essential equipment, such as personal protective equipment, U.S. manufacturers have a new problem emerging, as people are under government orders to stay home and close non-essential businesses.

Of note, the largest manufacturer of protective masks for healthcare workers is Wuhan, China, the initial epicenter of the pandemic.

"Manufacturers are looking forward at demand locally in the U.S and how that's degrading," Allred said. "That has become a much more significant problem today than what the March 9 survey that was focused on supply chain issues (suggested)."

Also on this episode, Dixon discussed the tax implications related to the government's CARES Act, which will provide stimulus relief, and the lesser-known Families First Coronavirus Response Act that was recently passed.

"We've had a lot of conversations from small businesses of under 500 people asking how all this works," Dixon said. "The rules can be confusing, initially."

It requires certain employers to provide employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19.

An epic push-and-pull takes place every day in for-profit hospitals and healthcare facilities. Finance teams need to do their jobs to keep the business profitable, while medical professionals work to give patients the very best care possible. Today on Weaver: Beyond the Numbers, host Shelby Skrhak sits down with CPA Anna Stevens to discuss accounting struggles in the healthcare industry, specifically bridging the gap between departments that can seem at odds.

Before Stevens joined Weaver as director for Weaver's healthcare industry practice, she worked for three years as the controller for an $80 million post-acute health care system, where she saw firsthand the communication gap between finance teams and clinicians.

"We could spend an entire day talking about why these two teams struggle to work together," Stevens said. "It's communication. Yes, we need to communicate better, but how can we do that if we don't even know how to communicate with each other as different personality types?"

Stevens began studying how the common personality traits of finance professionals -- usually analytical thinkers who make decisions based on facts and hard data -- could clash with personality traits common among clinicians, who are more likely to be empathic, intuitive people using feelings and inference to make decisions. In essence, a hard-numbers person probably has a very different communication style from a person who relies on feeling and intuition.

"It's up to us [as accounting professionals] to realize we're coming from different points of view and experiences, and find better ways to communicate," Stevens said.

In this episode, Stevens breaks down the four contrasting personality types of finance teams vs. clinicians and offers strategies for improving communication in the entire organization.

Cannabis-related products and companies squarely live in a world of a perpetual gray area. To help clear up the opaque nature of banking by cannabis-related businesses on this episode of Weaver: Beyond the Numbers, host Shelby Skrhak sits down with Rachel Mondragon, Weaver Senior Manager in Regulatory Compliance specializing in financial institutions, to discuss.

The federal Controlled Substances Act makes marijuana a schedule 1 prohibited drug, plant and all, but recent legislation has given states new ability to delineate parts of marijuana, from medicinal CBD all the way to whole decriminalization. The legality of it is gray, so banks, credit card companies, and other financial institutions have kept their distance.

"Understandably, you have financial institutions thinking of banking this type of client but they're obviously hesitating," Mondragon said. "Part of that is lack of knowledge and understanding when we make a distinction between marijuana, THC, and CBD."

But that's left legitimate CBD businesses to make due as an all-cash organization, despite the industry's rapid growth and proliferation across the United States. With many cannabis-related businesses needing banking and very few banks serving these customers, there's an opportunity.

"For bankers that are looking at potentially banking this type of customer, there is profit to be made," Mondragon said. "Financial institutions can't deny that there are other financial institutions that have taken this leap, saying 'These people have to bank somewhere. We're going to go into this niche and we're taking that risk.' But it's still a risk-based decision."

On this new episode of Weaver: Beyond the Numbers, the Texas economy is our subject matter of focus as we look at the state's economic durability and why the Texas Legislature placed a large bet on that fiscal sustainability. Host Shelby Skrhak sat down with Weaver's State Government Practice Leader Adam Jones for his expert insight and what that means for residents and business owners in the years to come.

Evaluating the Texas Business Cycle Index from 2007 until today, Texas remains an economic juggernaut even amid an oil decline, Jones said, noting an unbelievable 6.6 percent change in Texas' real gross domestic product.

That strength comes despite sustaining one of the state's largest natural disasters in Hurricane Harvey, which pulled on the state budget in a big way.

"The legislature spent an unprecedented $6.1 billion from the Economic Stabilization Fund, known commonly as the Rainy Day Fund," Jones said. "Harvey was arguably the largest rainy day the state has ever had."

But school finance was an even larger expenditure, giving $6.5 billion in increased aid to school districts and $5.1 billion in school district property tax reduction. Jones said these expenditures are a departure from the state's usually conservative spending ideology, and may signal a shift in the political ideologies of the government's elected officials themselves.

"The dynamism of Texas never really stops," Jones said. "It never stops being a topic of conversations, a destination for families and immigrants trying to make a new start. Dynamic is a pretty good summation of the Texas economy and the state as a whole. "

Jones also discussed the state's role in the upcoming 2020 Presidential Race and a recent in-depth Economist article that pitted California against Texas in many ways.

On this episode of Weaver: Beyond the Numbers, we spoke about the increasingly important topic of IT compliance programs. To provide insight and expertise was Brett Nabors, IT advisory services partner with Weaver.

There’s no question that IT compliance programs are essential to companies in any industry. Much of this intense scrutiny is due to emerging threats and cybersecurity.

“IT compliance is now becoming part of the financial statement reports because of the focus on cybersecurity risk. However, IT compliance is more than just IT security. It’s one factor. What makes it so central now to leadership is that executives can no longer be blind to what’s happening in IT. They have a fiduciary duty and must contend with regulatory requirements,” Nabors said.

This means many companies are updating their IT compliance programs, which Nabors recommended.

“There is a lot more reliance now on third parties to perform IT functions of securing and processing client data. Failure to meet control or regulatory criteria can leave an organization exposed. So, everything needs to be monitored, and there must be oversight to limit errors. Companies also find there is a direct correlation between revenue and IT processes in these situations," he said.

The IT compliance role is also changing as the industry landscape does.

“There are multiple responsibilities for those in IT compliance. A lot of it is oversight and meeting basic security needs for the organization and compliance with things like Sarbanes-Oxley and System and Organization Controls," Nabors said.

Get more expert advice and information from Brett about how IT compliance impacts all areas of business by listening to the podcast.

Subscribe and listen to future episodes of Weaver: Beyond the Numbers on Apple Podcasts or Spotify.

Mistakes are costly in any industry, but when it comes to employee benefit plans, you're dealing with someone's retirement income and their livelihood. That's why being designated an employee benefits plan fiduciary is much more than crossing your T's and dotting your I's on paperwork.

In this episode of Weaver: Beyond the Numbers podcast, we discuss the role of fiduciaries with CPA Aracely Rios, an audit partner in assurance services. She'll discuss the role of good documentation in employee benefit plans and share helpful tips for navigating this landscape successfully.

"Their responsibility is acting solely in the interest of the plan participants for the purpose of providing retirement benefits, and acting prudently," Rios said.

Rios said the most common plan mistakes are not following the plan document exactly. For example, Rios often sees plan mistakes that pertain to plan amendments such as changes to the compensation definition added to the plan document, that were not executed by the fiduciary.

"Another one is untimely contributions. You might be short-staffed and thinking, 'Oh I'll get to it when I can.' But that's not acting prudently on your employees' behalf because that means lost earnings for them," Rios said.

The important thing to remember, Rios emphasized, is to have a policy and procedures in place. For more resources, including podcasts and articles, visit Weaver.com/thought-leadership.

On today’s episode of “Weaver: Beyond the Numbers,” Partner Rob Myatt explains how tax reform is affecting the energy industry. It’s an important topic with never-ending changes in the last few years, beginning with the Brady Bill and culminating in the 2017 Tax Cut and Jobs Act. It’s a true tax cut overall, but whether it helps or hurts an individual case depends on each specific tax situation.

Because most energy companies are structured as partnerships, tax reform didn’t do a lot to benefit the industry, but it didn’t have too many negative impacts, either — and there are trickle-down benefits. The impacts mostly emerge from lower tax rates, the 199A deduction, and a new rule allowing 100% expensing of capital expenditures. Click the link above to listen.

Subscribe and listen to future episodes of Weaver: Beyond the Numbers on Apple Podcasts or Spotify.

Technology continues to change the way that Americans are doing business. More consumers than ever are shopping online, helped by outdated laws about sales tax collection for remote sellers. Congress was asked to act and change the laws, but when they moved too slowly, the states took their own action. Enter South Dakota v. Wayfair, a lawsuit that made a lot of headlines in 2018. Now, retailers like Wayfair, Amazon, and others are forced to start meeting “economic nexus” laws, which state that the threshold for whether or not you must charge sales tax in a state no longer depends on whether you have a brick-and-mortar location there, but on your volume of sales or transactions with its residents. An estimated $34 to $35 billion are on the line here, so states are becoming increasingly aggressive about getting their money.

On this episode of “Weaver: Beyond the Numbers,” we interviewed George Rendziperis and Shane Stewart of Weaver’s State and Local Tax Services practice about how the landscape is changing with these new economic nexus laws.

Is your company complying with the new laws in every state where you have customers? What could happen if you don’t get into compliance within the next 24 months? How can you comply across state lines, and how will each state know if you owe sales tax? Listen here, or on Apple Podcasts & Spotify.

Trip Hillman and Kyle Morris join Weaver: Beyond the Numbers this week to talk about how companies can maintain compliance in today’s “cloud offering” society.

To the average user, there is still much uncertainty about the cloud. However, it has revolutionized business capabilities. It has allowed companies to scale without having to invest time and start-up dollars in pricey machinery and server rooms. Companies can also access the cutting-edge technology of huge corporations on a small business budget.

A lot of companies store information in the cloud whether it be email, document storage or data. There are cloud considerations for every company; Hillman and Morris explain on the podcast why it's so important that all businesses understand their security posture and maintain a compliance program.

In this episode of Weaver: Beyond the Numbers, host Shelby Skrhak sits down with Adam Jones, Strategic Governance Consultant for Weaver and owner of Capitol Jones Consulting Firm. Jones and Skrhak take a detailed look at how the state of Texas is fairing economically in 2019. In Jones' eyes, it's one of the best in the United States, and the numbers don't lie.

As he puts it, compared to the rest of the nation, the Texas economy just “rocks," and is extremely diverse. Texas proved itself to be a LIFO, or "last in first out" economy, meaning the last to be in and first to be out of the national recession, and is only continuing its march upward. It’s the only state in the union that can “produce citrus fruit and winter wheat in abundance” as well as lead in other markets, including energy and the manufacturing sector.

And that’s not all that’s thriving. The most recent Dallas Fed projection shows Texas at a 2.4 percent employment growth. Though Texas sees that as a “cooling” of the economy, compared to other states it's a solid number and is a sign of a healthy economy.

For context, the Texas Comptroller’s economic projection for the next biennium was originally pretty bleak at a $0 budget surplus, but is now seeing a revised projection of a $2.8 billion surplus.

In addition to the $2.8 billion, there’s also an economic stabilization fund, or “rainy day fund," sitting at a historic $15 billion. This puts the legislature on pretty good footing, and has a pretty decent fall back, according to Jones.

For more information about Texas’ current economy, including the spot price of oil, and how Texas continues to recover after Hurricane Harvey, give this episode of Weaver: Beyond the Numbers a listen.

The new FASB standard is having a drastic effect on lease accounting. Though what you pay isn't changing, how you pay and categorize your leases is seeing a major shift. Under the FASB standard, lessees must use their balance sheet to recognize operating lease assets and liabilities, not just capital leases, which puts a new strain on CFOs and their teams to adjust.