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Two Lawyers from Strobl & Sharp added to the list of “Top Lawyers”

Lynn Brimer and Norman Hyman have been named as “Top Lawyers” by dBusiness magazine in 2012, joining a long list of Strobl & Sharp attorneys who have been recognized for their achievements over the years. (more…)

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Tom Strobl Named as American Bar Foundation Fellow

Thomas-Strobl

Thomas (Tom) Strobl, managing partner of Strobl & Sharp, P.C., has been selected by the American Bar Foundation (ABF) to join the Fellows.  Membership in The Fellows is limited to less than one percent of the lawyers admitted to practice in each jurisdiction of the United States and to a small percentage of international lawyers.

Fellows from Michigan recommended him based on his extraordinary leadership in the legal profession and service to society.

“I am deeply honored to be selected to join The Fellows of the ABF,” said Strobl.  “As a Fellow, I look forward to supporting the ABF’s groundbreaking research in law and social science.”

The ABF was founded in 1952 by the American Bar Association.  It is now recognized as the premier institute in the United States for empirical social science research on law.  ABF research addresses critical questions about the functioning of juries, the careers of lawyers, diversity in the legal profession and many other aspects of the legal system.  For more information about the ABF, go to:  http://www.americanbarfoundation.org/index.html.

Strobl,
who co-founded Strobl & Sharp, P.C. in 1989, is responsible for ensuring the firm’s continued commitment to the highest levels of client service, attorney excellence and pro bono work.  He serves as outside general counsel to many privately held companies and advises them on all aspects of business law, including commercial, corporate, real estate and tax matters.

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The ‘R’ in inherited IRA Does Not Stand for Retirement

By Pamela Ritter

The implications of the US Supreme Court’s Clark v. Rameker decision

On June 12, 2014, US Supreme Court Justice Sonia Sotomayor, on behalf of a unanimous Court confirmed inherited IRAs are not “retirement funds.” This means an inherited IRA is not tax exempt (11 U.S.C. 522 (b)(3)(C)). This decision notably alters the landscape of inherited IRA’s under the Bankruptcy Code.

A look at the past: inherited IRAs before Clark

Pamela Ritter
Pamela Ritter


Before the Clark decision, spouses, children, close friends and relatives were often named as beneficiaries of inherited IRAs with the expectation that these funds would be protected from the claims of creditors. Individuals as well as creditors presumed assets held in an inherited IRA were exempt from creditors under the Bankruptcy Code because they were considered “retirement funds”. Eight courts supported this position, reasoning that funds contained in inherited IRAs remained “retirement funds.” The Bankruptcy Court for the Western District of Wisconsin broke from the majority view and held that a debtor’s inherited IRA was not exempt under the Bankruptcy Code. This set the stage for the path Clark would take to the United States Supreme Court.

A look at the present: the Clark opinion

The Court’s 2014 decision was the culmination of a case that began in 2000 with Ruth Heffron, who named her daughter Heide Heffron-Clark, the sole beneficiary of her traditional IRA. When Ruth Heffron’s husband died, she rolled his IRA over into her account. When Heffron died in 2001, her IRA passed on to her daughter as an­ inherited IRA. Heidi Heffron-Clark began taking monthly distributions in 2002. Shortly after, she and her husband opened a pizza parlor in Stoughton, Wisconsin. Unfortunately, the pizzeria failed in the face of the recession. Seeking financial relief, the couple filed a Chapter 7 bankruptcy petition in the Western District of Wisconsin. In their bankruptcy petition, the Clarks listed the inherited IRA with a value of approximately $300,000, as exempt. Arguing that the inherited IRA is not a “retirement fund” according to the exemption statute, the Chapter 7 trustee and the other creditors objected to the exemption. The bankruptcy court agreed with the trustee, beginning the case’s contentious journey through the district court, which reversed the ruling, the Seventh Circuit, which upheld the ruling, and ultimately the Supreme Court which agreed with the bankruptcy court’s initial decision.

The Supreme Court concluded that the funds in the inherited IRA hold three legal characteristics  that keep them from being considered ‘objectively put aside for the purpose of retirement.’

The three key points are:

  1. The holder of an inherited IRA may not invest additional sums into the account.
  2. The holder of an inherited IRA is required to begin withdrawing money a short time after inheriting the funds, no matter how many years he or she may be from retirement.
  3. The holder of an inherited IRA can withdraw the entire balance of the account at any time without penalty.

The Court emphasized that allowing an exemption for inherited IRAs could encourage debtors to delay withdrawals until after their bankruptcy is closed and then use the funds for non­retirement purposes. Thus, the Court concluded that an inherited IRA is not exempt.

A look at the future: bankruptcy, inherited IRAs, and estate planning in a post-Clark environment

How will Clark impact the bankruptcy process and estate planning moving forward? In the bankruptcy context, inherited IRAs are no longer exempt under the federal exemptions.
In the estate planning context, in general a non-spousal IRA heir must withdraw the full account within five years of the initial owner’s death or take out minimum amounts each year starting before December 31 of the year after the IRA owner dies the “Stretch IRA”. This leads to tax deferral strategies for beneficiaries that want a longer than 5-year payout period.

One way to protect a non-spousal IRA inheritor is to leave the funds in a trust. There are multiple strategies to use around trusts.
Same-sex couples will also have special planning concerns. Unless they are married, the only way to leave a retirement account to a partner and avoid immediate income taxation is through an inherited IRA.

Closing points

As in the past, the traditional IRA holder can state the spouse as the primary beneficiary and any adult children as secondary beneficiaries The Clark ruling applies to non-spousal IRA cases. Advisors and their clients should discuss whether there are specific issues or circumstances such as creditor issues or special needs. Some circumstances may warrant a different beneficiary designation.

Pam Ritter has over 20 years of experience with providing legal counsel and advice to community, regional and national financial institutions. She specializes in banking law, creditors’ rights and commercial real estate.

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Tax Breaks for Michigan Flood Victims

4 Ways to Gain from Your Loss

By James Rocchio

Tax breaks for MI flood victimsMichigan taxpayers who were adversely affected by the severe storms and flooding that began on August 11, 2014, may qualify for tax breaks from the Internal Revenue Service (IRS). Macomb, Oakland and Wayne counties were declared a federal disaster area because of the storms. The federal designation means flood victims who reside, or have a business in these counties, can look forward to help from the IRS in a few ways.

1.  Deductions for losses not covered by insurance

Property losses not covered by insurance or other reimbursements may be deducted if they are at least $100 and more than 10 percent of your income. You multiply your income by 10 percent and subtract $100 to calculate your deduction. For example, if your income is $50,000 and your loss is $10,000, you will have a deduction of $4,900.

You need to document the damages and photos are helpful if you have them. For losses in the tens of thousands of dollars, you should bring in an appraiser to verify the extent of your claim.

2.  Timing of loss deductions

Taxpayers in the disaster area have the option of claiming disaster-related losses on their federal tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get you your money faster. However, waiting to make the claim on this year’s return could get you a greater tax savings, depending on other income factors.

If you decide to claim the deduction on last year’s return, put the disaster designation “Michigan/Severe Storms and Flooding” at the top of the form so the IRS can expedite the refund.

3.  Federal extension of filing and payment deadlines

Certain deadlines that fall on or after August 11, 2014, and on or before January 15, 2015, have been extended through January 15 by the IRS. This applies to corporations and businesses that previously obtained an extension until September 15, 2014, to file their 2013 returns as well as individuals and businesses that received a similar extension until October 15. It also includes the due date for the estimated tax payment for the third quarter of 2014, which would normally be due on September 15. The IRS automatically identifies taxpayers located in the disaster area and applies filing and payment relief.

There is more information on the IRS relief for Michigan flood victims on the IRS web site.

4.  Michigan Department of Treasury extension

The Michigan Department of Treasury will observe the IRS tax filing extension granted to taxpayers who were adversely affected by the severe storms and flooding.

For Michigan individual income tax purposes, the third quarterly installment of estimated tax payments may be made any time on or before January 15, 2015.  Individual annual income tax returns previously extended to October 15, 2014, may be filed on or before January 15, 2015.  The Michigan Department of Treasury will waive any penalty and/or interest charges for late filing.

For Michigan business and corporate income tax purposes, any filings and payments due on or after August 11, 2014, and on or before January 15, 2015, will be considered timely if made by January 15.

So don’t let your flood damage drown you in losses; look to these tax breaks for relief instead.

Attorney James (Jim) Rocchio’s tenure as a “Big 8” Certified Public Accountant gives him the added capability to prepare all corporate, partnership, individual, gift, estate, trust, and not-for-profit federal and state filings. He serves as outside general counsel for many privately held companies and advises them on a variety of business law needs, including commercial, corporate and tax matters.

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Strobl & Sharp Provides Pro Bono Service to Entrepreneur Winner

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Winner Julie Andreae, Secure Beginnings Breathable Crib Mattresses

The Walsh College, Troy Campus, hosted the third annual Entrepreneur-YOU Women’s Business Plan and Pitch Competition on October 10, 2014. Winner Julie Andreae of Secure Beginnings Breathable Crib Mattresses will receive free legal services from Strobl & Sharp. The counseling will focus on growing her business – taking on investors, distribution and other agreements, employment contracts, succession and estate planning and more.

“My jaw dropped when I heard the women making pitches,” said attorney Leslie Stein, Strobl & Sharp’s representative at the event. “They were impressive. I left feeling energized and excited about the success these women will have and their potential for employing many other women (and men) as their businesses grow.”

Andreae also received a cash award of $9,400 for her second place win in the growth category. The Secure Beginnings revolutionary crib mattresses allow a baby to breathe freely through the open celled sleep surface, resulting in safer, more comfortable sleep. They contain no harmful chemicals found in conventional and organic crib mattresses. The crib mattress sleep surface can be easily removed and laundered in a washer and dryer.

Pediatric sleep disorder specialists endorse and use the breathable crib mattresses in their clinics. To learn more about the company and its products, visit: http://securebeginnings.com/index.php.

Nine Michigan female entrepreneurs presented their business plans and pitches to a panel of judges at the competition, vying for a portion of more than $75,000 in cash and in-kind support. Along with Walsh College, the other collaborators behind Entrepreneur-YOU were the Michigan Women’s Foundation and Inforum Michigan. Funding for the competition came from Fifth Third Bank, Ford Motor Company Fund and DTE Foundation.

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Strobl & Sharp Attorneys Recognized as Michigan’s Super Lawyers

Strobl & Sharp is pleased to announce Andrew Ayar, Krista Jackson, Marc Melamed and Meredith Taunt, have all been selected as Michigan’s 2013 “Rising Stars” by Super Lawyers magazine. Other Strobl & Sharp attorneys were given the highest rating of Super Lawyers by the magazine. They are Lynn Brimer, George Fish, Alan Harnisch, Norman Hyman, and Thomas J. Strobl.

“We are proud to have four Rising Stars in our firm– less than three percent of eligible candidates are selected. This level of professional accomplishment and peer recognition so early in their careers was well-earned through much hard work,” says Strobl & Sharp Managing Partner, Thomas J. Strobl.

Rising Stars are considered the top up-and-coming attorneys in the state — those who are 40 years old or younger, or who have been practicing for 10 years or less.

Strobl has also been honored by Super Lawyers magazine for the past seven years for his legal skills in the areas of Business/Corporate, Banking, and Mergers & Acquisitions.

“I’m pleased that others in the industry recognize the deep expertise and strong bench at Strobl & Sharp. We have been recognized for excellence in the majority of our practice areas,” shares Strobl.

The Strobl & Sharp honorees’ practice areas recognized by Super Lawyers are Business/Corporate, Banking, Environmental, Mergers & Acquisitions, Tax, Bankruptcy & Creditor/Debtor Rights, Business Litigation, General Litigation, Insurance Coverage, Criminal Defense: White Collar, Land Use/Zoning, Real Estate, Estate Planning & Probate, and Non-Profit.

No more than 5 percent of the lawyers in the state can achieve the designation of Super Lawyer. Super Lawyers selects attorneys using peer nominations and evaluations along with third party research. Each candidate is evaluated on 12 indicators of peer recognition and professional achievement.

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Say Goodbye to ’14 with Some Good Tax Strategies

9 Tips to Reduce Your Tax Payments

 

By James Rocchio

Tax Strategy-StroblSoon the new year will start another income tax cycle for individuals and the 28 million small businesses in the U.S. Here are some tax strategies that both individuals and small businesses can use to minimize this year’s tax liability. This advice focuses on often-overlooked deductions and ways to either accelerate or delay deductions.

1.    Bad Debts

Bad debts are categorized as either nonbusiness or business bad debts. If the debt is a nonbusiness bad debt, a deduction may be taken only in the year in which the debt becomes totally worthless. When deducted, it is treated as a short-term capital loss regardless of how old the debt is. Short-term capital losses up to $3,000 per year may be deducted against your ordinary income. If the debt is a business bad debt, you may deduct it directly from your gross income.

2.    Charitable Contributions

Consider making charitable contributions of cash or property before the end of the year to help minimize your tax liability. Remember that charitable contributions include out-of-pocket expenses such as the cost of a meal, lodging overnight incurred while attending a charity meeting and mileage (14 cents per mile) accrued while driving your car for charitable purposes.

Charitable contribution may be made in a few ways:

  • If you contribute by check, you are entitled to a deduction in the year the check is drawn, even if the organization does not cash it until the next taxable year.
  • If you use a credit card, you can deduct the contribution in the year that it is charged, even if you pay off the credit card bill at a later date.
  • If you use a promissory note or pledge to contribute, you may claim deductions only in the year in which you actually pay the note or pledge.

3.     Mortgage Interest Payments

You may be eligible to obtain an additional month’s mortgage interest deduction by prepaying next year’s January payment in December of this year. Generally, no more than one month’s mortgage interest deduction can be accelerated in this manner. Of course, by accelerating next January’s payment into the current year, you will only have 11 months of deductible payments next year, unless you again prepay the following January’s payment in December.

4.     Job-Hunting Expenses

Certain expenses are deductible for both successful and unsuccessful job hunts. In order to itemize and deduct the expenses, the job search must relate to your present profession and you must not have experienced a substantial lapse of time between jobs. Eligible expenses that you may be able to deduct are transportation costs such as mileage or parking, travel away from home, resume graphic design and printing, and postage to mail your resume.

5.     Financial Portfolio Losses

Long-term capital losses incurred through the sale of financial portfolio holdings may be used dollar-for-dollar to offset ordinary income subject to a maximum of $3,000. However, the benefits of selling at a loss should be compared to the benefit of selling the asset in a future year at a possible gain.

6.     Medical Expenses

Medical expenses paid in 2014 are deductible only to the extent that they exceed 10 percent of your adjusted gross income. The threshold is lowered to 7.5 percent if the taxpayer or the taxpayer’s spouse turns 65 before the end of the tax year. If you can defer or accelerate routine medical expenses so that these expenses can be bunched into a particular year, you may be able to exceed the threshold limits.

Along with accelerating or deferring medical expenses for the year, you might also be able to exceed the 10% limit by deducting often overlooked transportation expenses that relate to medical care. You may already know to include the cost of traveling to and from a doctor, dentist or hospital. But do you know you can include the costs of traveling to a pharmacy as well? Along with the standard mileage rate deduction for your car, this includes parking fees and tolls.

Further, allowable medical expenses include the amount you pay for lodging (up to $50 per night) while away from home for care provided by a physician in a licensed hospital. Your plane or train fare there and back is deductible as well.

7.     Individual Retirement Accounts

If you have disposable income, you should consider establishing an IRA. You may be able to deduct the money set aside in an IRA from your gross income even if you do not itemize your deductions. For 2014, your contribution to an IRA is fully deductible up to the lesser of $5,500 or 100 percent of your compensation for the year provided you are not covered by a qualified retirement plan. For people 50 or older, an additional $1,000 is allowed as a deductible contribution for a total of $6,500.

You may still wish to contribute to an IRA for the taxable year even if you are not eligible to deduct your contribution. The advantage of making nondeductible IRA contributions is that any income earned on the invested funds will not be taxed until it is withdrawn from the account.

8.     Taxes

The last installment of your estimated state and local income taxes (due in January) can be prepaid in December. This will obtain a greater state tax deduction on your 2014 federal tax return.

9.     Education

Interest on qualified education loans is deductible whether you itemize or not.  The dollar limit is $2,500 for this deduction. If your total qualifying interest is below the limit, it would be advisable to prepay your January payment at year’s end and include it in 2014’s expenses.

An education tax credit is available for amounts paid for qualified tuition and related expenses for yourself, your spouse or a dependent. Or you may deduct qualified tuition costs and related expenses provided you did not elect to take a credit for these same amounts. Because both the credit and deduction are determined in reference to the tuition and related expenses paid during the current year, it may be wise to prepay some of next year’s tuition and expenses.

Now is the time to use last year’s federal income tax return as a guide and estimate your taxable income for the current and upcoming year. This will help you determine the right tax strategies and the advantages and disadvantages of moving any controllable deductions from 2014 to 2015.

Attorney James (Jim) Rocchio’s tenure as a “Big 8” Certified Public Accountant gives him the added capability to prepare all corporate, partnership, individual, gift, estate, trust, and not-for-profit federal and state filings. He serves as outside general counsel for many privately held companies and advises them on a variety of business law needs, including commercial, corporate and tax matters.

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Retiree Police Group Strikes Tentative Bankruptcy Deal

Lynn-Brimer-creditors rights-bankruptcy-Michigan-attorney
Lynn Brimer, lead counsel for the Retired Detroit Police Members Association

Detroit News bankruptcy article quotes Lynn Brimer

Lynn Brimer, practice group lead for creditors’ rights and restructuring group, was quoted in a Detroit News story on the federal appeals court judges’ recent rulings regarding Detroit’s eligibility for bankruptcy. Strobl & Sharp, P.C.’s client, the Retired Detroit Police Members Association, struck a tentative deal late on Monday, July 28. Read the entire Detroit News article.

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Protecting Detroit pensions may violate bankruptcy code

Oct 21 (Reuters) –Lynn Brimer, an attorney representing the Retired Detroit Police Members Association, argued that the legislature added the spending provision to prevent the law from being subject to another voter referendum because Michigan law prohibits referendums on laws that include an appropriation. Read U.S. Bankruptcy Judge Steven Rhodes’ response in the article. 

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Partners Share 2015 Banking Law Observations

Four of Strobl & Sharp’s partners – Tom Strobl, John Sharp, Leslie Stein, Pamela Ritter – offer their personal observations on the banking landscape today

Strobl & Sharp-banking lawRegulations Consume Limited Resources

“Pulse Insights reports that financial institution employees spend up to 90% of their time on non-value-added activities. Regulations and compliance take a huge amount of time, and Strobl & Sharp, PC can help with this issue. The firm can also assist in addressing regulatory disputes with the FDIC and the Consumer Financial Protection Bureau (CFPB),” said Tom Strobl, co-founder and managing partner. “We see the many new rules generated by CFPB under the Dodd-Frank Act as challenges in 2015. A recent CFPB decision on debt collections raises concerns. If banks don’t ensure the files they send out for debt collections are 100% accurate, they may face unwanted litigation and expensive fines.”

Bank Mergers and Acquisitions Increase

“Mergers and acquisitions have increased for banks and other businesses. Experts predict 2014 will have a record number of bank deals, pushed in part by the need to spread the costs of regulatory compliance over a larger asset base,” said John Sharp, one of the firm founders. “We have managed many acquisitions, sales and mergers of banks (both public and private), and we have assisted in the purchase and sales of branches. Our firm has broad business experience, so in addition to banking law issues, we’re able to advise banks on issues like the Worker Adjustment and Retraining Notification (WARN) Act, which may apply if bank or branch sales will result in loss of employment or involve rehiring.”

Commercial Lending is Growing

“There is a growing confidence in the market, though underwriting standards remain tight. Right now apartments, senior housing, medical professional buildings and hotels are showing more activity than they have in years, according to partner and attorney Leslie Stein. “You really need to understand the business of both the bank and the borrower to document deals efficiently and carefully. We know that the only time a loan document really matters is when there is a problem, and we try to focus on documenting loans so that the bank has everything it needs if a default occurs — all the collateral and all of the remedies. I think our documentation expertise is why Strobl & Sharp was listed in the Crain’s Detroit Business 2014 Super Lawyers supplement as a top firm for expertise in Construction, Real Estate & Environmental Law.”

Michigan’s Reinvention of Incentives Spells Opportunity for Banks

“Michigan is enjoying a wonderful resurgence. Much of the progress is due to changes in the incentives available for driving growth. Previously, tax credits provided future savings; now credits provide immediate funding. Recently, we represented a lender on a hotel construction and end loan. It was a complicated deal with numerous tax credits and incentives that came to several million dollars — making the deal bankable,” said Pamela Ritter, partner and attorney. “Working with the third parties involved in administering incentives can be frustrating. We understand how to break through unnecessary delays and bureaucracy. Collaboration with the various agencies requires tactfully applying pressure to move a deal along. Our goal is to make closings happen.”

About our partners:

Partner and Attorney, Pam Ritteradvises community, regional and national financial institutions. She specializes in banking law, creditors’ rights and real estate. She is known for her work with structuring, negotiating and documenting commercial loans, loan modifications, workout resolutions and litigation.

John Sharp, co-founder and attorney, focuses the majority of his practice on representing financial institutions in the areas of banking and securities, as well as real estate and general business. His expertise spans initial public offerings, loan and lease documentation, workouts, bank and branch sales and acquisitions, tax opinions for securities transactions, and formation of de novo banks.

Attorney, Leslie Stein, the firm’s newest partner, focuses on the representation of secured creditors in loan originations, business bankruptcy, reorganization and workouts, and mergers and acquisitions. She has over 34 years of banking, secured transactions and bankruptcy legal experience and has been rated by her peers as one of Michigan’s best bank advisors.

Tom Strobl, co-founder and managing shareholder of the firm, started his career as a commercial lender and chairs the business and banking practice groups. Highly regarded by his peers, he serves as outside general counsel to many privately held companies and advises them on all aspects of business law, including commercial, corporate, real estate and tax matters.

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