Time To Take Advantage of Deductions!

Using Section 179 and/or Bonus Depreciation with an Equipment Lease or Equipment Finance Agreement might be the most profitable decision you make in 2012.

Why? Because the amount you deduct will exceed your cash outlay for 2012 when you combine (i) a properly structured Equipment Lease or Equipment Finance Agreement with (ii) a full Section 179 deduction. It is a bottom-line enhancing tool (plus, you get the new equipment and software you're adding to your business).

Also, the '$179 bonus per $10,000 financed' is available thru 12/31/2012. This means that you (a) get your equipment, vehicles, and/or software now, (b) get to take full advantage of the Section 179 deduction in 2012, and (c) get Section 179 bonus cash as well.

Leasing and Section 179

Did you know that your company can lease equipment and still take full advantage of the Section 179 deduction? In fact, leasing equipment and/or software with the Section 179 deduction in mind is a preferred financial strategy for many businesses, as it can significantly help with not only cash flow, but with profits as well.


The obvious advantage to leasing or financing equipment and/or software and then taking the Section 179 Deduction is the fact that you can deduct the full amount of the equipment and/or software, without paying the full amount this year. The amount you save in taxes can actually exceed the payments, making this a very bottom-line friendly deduction (you are reading this correctly; in many cases, the deduction will actually be profit).

Accounting Standards? What Next?

EQUIPMENT LEASING AND FINANCE ASSOCIATION EXPRESSES SERIOUS CONCERNS OVER LEASE ACCOUNTING PROJECT

Washington, D.C. — The Equipment Leasing and Finance Association (ELFA) has announced it may withdraw its support for the proposal to develop a new lease accounting standard, calling the current proposal “fraught with difficulties.” In a letter to the Financial Accounting Standards Board and the International Accounting Standards Board, ELFA President and CEO William G. Sutton, CAE, noted that the association has been actively engaged in and consistently supported the lease accounting project since 1996, but is unable to support the tentative conclusions reached by the Boards in recent deliberations. The letter outlines ELFA’s chief concerns with the proposal and suggests a framework for accounting for leases that the association would support.

The letter reads, in part:

ELFA has consistently supported the [lease accounting] project’s principal objective of providing users of financial statements with an accounting model for leases, which includes the recognition on a lessee’s balance sheet of the assets and liabilities arising from lease contracts. Unfortunately, since we do not believe the Boards have appropriately resolved the question of lessee cost allocation, we are seriously considering withdrawing our support for the issuance of a final standard based upon the tentative conclusions reached in the recent redeliberations. The tentative decision that all equipment leases are purchases is fraught with difficulties. We believe a continuation of the existing accounting standards is preferable to the model that has been proposed.

Our active engagement in the question of lease accounting extends back to 1996, and we have consistently supported the project and the goal of recording leases on a lessee’s balance sheet. This long-standing support for the leases project has been principally based on the following considerations:

• The lease standard should produce a result that is representationally faithful to the economics of lease transactions;
• It should provide information to users of financial statements, both external users and management, and meaningful insights into a company’s leasing activities during and at the end of a period;
• The model should be operational at the individual transaction level and not unduly complex; and
• The benefits of the new reporting model should not exceed the costs of implementation and ongoing compliance. 

Unfortunately, the approach to leasing now envisioned in the project does not meet these requirements, and we believe issuance of a revised exposure draft would be ill-advised. We do not believe that reporting under the proposed model will satisfy the diverse needs of investors and will involve significant costs to implement and inappropriately raise the cost of capital.

The letter details the association’s concerns with the current lease accounting proposal, including the key issue of lessee cost allocation, and advocates for specific revisions in order to achieve the project’s goals. In addition, the letter offers alternative approaches for differentiating between leases that are purchases of an asset and leases that only represent a temporary transfer of the right of use.

The full text of the letter is available on the ELFA website at:http://www.elfaonline.org/Issues/Accounting/pdfs/ELFALetterAug2012.pdf 

Our Customers say it best

“Working with Mazuma Capital allowed us to ride the tailwind of our newly signed service contracts with the right equipment in place.  The flexibility Mazuma offered us was refreshing and it was a great fit for our needs,” said the CEO of the Services Company. “The team at Mazuma did not feel like your typical lender/banker, their business is relationship based on every level.  The dynamic throughout Mazuma’s staff was one of professionalism with an added level of personalized service. Working with a top notch lender that provided exactly what we needed was a great experience.”

Kevin, CEO Ground Reclamation Services

“As our company searches for more opportunities for lease financing, I received a call from Mazuma Capital Corp. As I laid out to Mazuma and other companies what we were looking for in the way of lease financing, Mazuma came through with the best over all cost of funds as well as meeting our needs and time schedules. I have enjoyed working with Mazuma Capital Corp, because of their willingness to be flexible and the way they keep me updated on all that happens through the process. Everyone there is so easy to work with and I will continue to work with them on an ongoing basis. My experience was well within what I hoped for from a lease financing company.”

–Tom, VP of Finance & CFO

FASB Floats Early Ideas on Private Company Accounting

If private companies should have different accounting standards, the Financial Accounting Standards Board is looking for ideas on how those differences should be established. FASB published some early ideas for how financial reporting requirements should be differentiated for private companies, and it is looking for feedback on that preliminary thinking before moving to the next step.
The “invitation to comment” published by FASB maps out six critical issues that differentiate private companies from public companies, leading to the conclusion that accounting requirements for private companies should differ as a result. FASB says the type and number of users for financial statements are different for private companies than public companies, and they have more direct access to management to ask questions. Private companies have different investment strategies, and different ownership and capital structures. They have thinner resources than public companies to manage the accounting function, and as a result it takes them longer to get up to speed on new accounting pronouncements.
As a result of those differences, FASB says, the accounting rules for private companies might logically differ in some key areas, including recognition and measurement, disclosures, and presentation. It might also be reasonable to give private companies longer lead times to adopt new standards as they are issued, FASB says. That's a broad view of the framework FASB is considering, but the board looking for feedback on that line of thinking before proceeding with a final framework.
In the meantime, the Financial Accounting Foundation is forming the Private Company Council to help identify where differences in accounting standards might be appropriate for private companies to reduce the cost and complexity of preparing financial statements that comply with U.S. Generally Accepted Accounting Principles. FASB and PCC will consider feedback to the invitation to comment and finalize the framework before they begin writing any new standards for private companies. FASB is looking for feedback by Oct. 31.
In a separate project to gather feedback on business combination rules, FAF also is looking for users of financial statements, preparers, auditors, academics, and regulators to participate in a survey that willassess the effectiveness of Financial Accounting Statement No. 141R: Business Combinations. FAF is conducting its latest post-implementation review of FAS 141R, now contained in the Accounting Standards Codification, to determine whether the standard achieved what was intended. FAF is asking those interested in participating to register online.


http://www.complianceweek.com/fasb-floats-early-ideas-on-private-company-accounting/article/253288/

NEWS RELEASE East Coast Coal Fired Power Provider Partners with Mazuma Capital in Funding a Fly-Ash Conditioning System

DRAPER, UTAH July 2012–Mazuma Capital, a leading national direct lender, today announced it has funded $1.3M for a large East coast power provider.

The power provider sought a knowledgeable funding source with the ability to provide a solution to a complicated transaction. In order to comply with state environmental standards the company needed to condition their waste into coal fly-ash before depositing waste in state landfills.

The company was set up as a multi-layered organization with disparate corporate entities having varying degrees of ownership.  Due to this structure and the difficulties it posed, the incumbent bank for the power provider passed on providing financing for this equipment, in spite of the fact that the company has excellent credit. The additional challenge was financing almost 50% of “soft costs”, to include labor and installation along with a blanket UCC filing that would not subordinate.

After navigating the review of several of the company’s opaque organizational charts, the risk factors, and equipment, Mazuma agreed to fund this transaction

“This power producer had a very unique set of complications that we were able to work through. Our team was innovative and methodical in our approach to the deal, which ultimately provided the terms in the manner the company needed. It is transactions of this nature that really spotlight the unique funding abilities Mazuma has within the industry”, said Jared Belnap, CEO and President at Mazuma Capital.

About Mazuma: Mazuma Capital is committed to our client’s success. Our unique capabilities and innovative product offerings provide solutions accelerating financial growth. Servicing both rising companies and established businesses, Mazuma continues to secure its position as the middle-market industry leader. We build long-term relationships by delivering on our commitments. Mazuma co-authored the Utah Best Practices Alliance. Mazuma Capital subscribes to the ELFA Code of Fair Business Practices and NAELB code of ethics.

Media Contact:

Julie Fuchs

801-816-0800 Ext. X291jfuchs@mazumacapital.com

Technology Spending is on the Rise Despite a Down Economy

Fueled by an accelerating move to cloud computing, and by a boom in associated telecommunications services, worldwide information technology spending is increasing somewhat faster than expected, according to industry analysts at Gartner.  

Over all, people will spend $3.6 trillion on information technology in 2012, the research firm said. This represents a 3 percent increase from 2011, when $3.5 trillion was spent, Gartner said, and is up from the 2.5 percent increase projected three months ago.

The increase, while modest, is notable because it is happening in the face of a financial crisis in Europe, slow growth in the United States, and a slowdown in China’s economic growth.

Spending on public cloud services is expected to increase 20 percent, to $109 billion, from $91 billion in 2011. By 2016, Gartner said, this expenditure could nearly double, to $207 billion.

That would still be a relatively small portion of the total spending, though it tends to represent considerable computing power and potentially more efficient I.T. systems.

http://bits.blogs.nytimes.com/2012/07/09/information-technology-spending-to-hit-3-6-trillion-in-2012-report-says/?smid=li-share

Emerging Leader- Jared Belnap

http://www.worldleasingnews.com/articles/jared-belnap-president-mazuma-capital/

Jared Belnap, President, Mazuma Capital

By Abigail Sutton, Editor

During his tenure in the leasing industry Jared Belnap has personally closed over $150 million in lease transactions and has garnered extensive experience in credit, syndication, sales, legal, documentation, and executive management. Belnap helped create Mazuma. First, as a co-founder and private investor, then, serving as vice president of sales/corporate secretary through December 2007 and in his current position, as president since January 2008. His performance and experience have been invaluable in the formation and implementation of Mazuma’s infrastructure, website development, marketing, documentation, sales and sales management, formation of key strategic relationships and other important functions within Mazuma’s framework. Belnap is an introspective leader who achieves success through calculated risk, for this and more we chose him as February’s Emerging Leader.

Teri Gerson, President & CEO of Executive Solutions for Leasing and Finance, Inc. had this to say about Belnap’s skill and leadership, “Jared Belnap has impressed me with his commitment to analyzing before pulling the trigger.  This saves tremendous back pedaling, both with market entrees, employee hires, and sales force structure. He is thoughtful, honest, and fair in all of his dealings, and always takes a broad view without sacrificing practicality and reality relative to his company.”