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January Week 3 Shows Big Boost
   
In the third week of January, independent retailers reported that their same store sales were up 5.47% compared to the same week in 2015. There’s a good possibility that the big boost came ahead of a large winter storm much of the East Coast experienced at the end of this period. Customers may have been stocking up. Despite the jump in sales, customer counts were down 0.71 percent.

Tomorrow the Bureau of Labor Statistics will release its January unemployment report. Initial estimates are predicting a cooling off after December’s strong report, but we’ll divulge the full details after the BLS’s official data are released.

Same Store Sales        
% Change from last year

Same Store Sales – Previous Months

2016 Independent Grocers Financial
Survey Now Open

 
FMS and NGA invite you to participate in the 2016 Independent Grocers Financial Survey. The survey has been a joint effort between FMS and the National Grocers Association for the past eleven years and has become a critical benchmarking tool for independent grocers. The information you provide gives you and your fellow independent grocers valuable insights on the health of our industry and important benchmarking data for your company.
 
As always, your data will be completely anonymous and no identifying information will be included in the survey or shared with anyone.
 
The deadline to complete the questionnaire is February 17, 2016.
 
To participate, click here: www.fmssolutions.com/2016survey


BGBC Partners Tax Update: Section 179 Update
   
Thanks to Congress passing The Protecting Americans from Tax Hikes Act of 2015 (PATH ACT) on December 18, 2015, Section 179 has been made permanent at the $500,000 expensing limit and the $2 million phase-out limit (these limits apply to tax year 2015).  Beginning in 2016 this provision modifies Section 179 by indexing both the $500,000 expensing limit and the $2 million phase-out limit for inflation.  Since the passage of the PATH Act, air conditioning and heating units are now eligible for Section 179 expensing.  This is great news and a fantastic incentive for grocery store owners wanting to purchase new equipment and also enjoy the current year expensing and tax benefits of the newly acquired equipment.

Here is an example of the tax benefits to a grocery store owner who purchases $650,000 of equipment with a 5-year tax life in 2015.  Please note this example illustrates the interaction of Section 179 expensing, bonus depreciation, and regular depreciation:

$650,000        Equipment purchase
$500,000        Section 179 expense current year
$75,000          50% bonus depreciation taken current year
$15,000          Normal 1st year depreciation deduction
$590,000        Total 1st year depreciation
 
This example illustrates that a total of $590,000 of the $650,000 spent on equipment can be written off in the 1st year.   This is enables grocery store owners to enjoy tremendous tax savings.   Assuming a 35% tax bracket the 1st year federal tax savings would be $206,500. The other good news concerning Section 179 is both new and used property is eligible.  Only new equipment is eligible for bonus depreciation.  When applying both Section 179 and bonus depreciation, Section 179 is generally taken first then bonus depreciation.

While most equipment that a grocery store purchases or finances will qualify for Section 179 expensing, there are exceptions.  Some of the common exceptions are:
  • Real Property
  • Property used outside of the United States
  • Property acquired by gift or inheritance or equipment purchased from related parties
  • Property used to furnish lodging
The passage of the PATH Act has made some really good tax savings provisions permanent which now allows for better tax planning opportunities going forward.  However, make sure to consult with your tax adviser to maximize these benefits and minimize unintended missteps.
 
BGBC Partners, LLP is a full service certified public accounting and business consulting practice.

For more information, contact Brad Bell, CPA or Steve Reed, CPA/ABV/CFF at BGBC Partners, LLP (317-633-4700).


For More Information,
Contact Mark Ehleben
877-435-9400 x1402
marke@fmssolutions.com
8028 Ritchie Highway | Suite 212 | Pasadena, MD 21122


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