1. © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Taxation of Business Entities 1 Chapter 8 Property Transactions: Capital Gains and Losses, § 1231, and Recapture Provisions

2. 2 The Big Picture (slide 1 of 4) Alice owns land that she received from her father 10 years ago as a gift. –The land was purchased by her father in 1980 for $2,000 and was worth $10,000 at the time of the gift. The property is currently worth about $50,000. If Alice sells the land, you previously determined that she would have a taxable gain of $48,000.

3. 3 The Big Picture (slide 2 of 4) Alice also owns 500 shares of Purple Co. stock. –300 shares were inherited when Alice’s grandfather died. –Alice’s grandfather paid $12,000 for the Purple shares, and they were worth $30,000 at the time of his death. If Alice sells those shares for $120 each, you previously determined that she would have a $6,000 taxable gain. The other 200 shares were purchased by Alice two months ago for $28,000. –If Alice sells those shares for $120 each, you determined that she would have a recognized loss of $4,000.

4. 4 The Big Picture (slide 3 of 4) Nine months ago Alice invested$50,000 in a 50% interest in a patent that Kathy, an unemployed inventor, had obtained for a special battery she had developed to power ‘‘green’’ cars. –To date, Kathy has been unable to market the battery to an auto manufacturer or supplier. Alice also owns a house that she inherited from her grandmother two years ago. –The fair market value of the house at the date of her grandmother’s death was $475,000. Alice will recognize a $125,000 gain on the sale of the property.

5. 5 The Big Picture (slide 4 of 4) Finally Alice’s new husband sold depreciable equipment used in his sole proprietorship. –The business purchased a $50,000 machine and deducted $35,000 of depreciation before selling it for $60,000. Now Alice would like to know more about the gains and losses and the tax liability that she and her husband can expect from these transactions. –Read the chapter and formulate your response.

6. 6 Taxation of Capital Gains and Losses Capital gains and losses must be separated from other types of gains and losses for two reasons: –Long-term capital gains may be taxed at a lower rate than ordinary gains –A net capital loss is only deductible up to $3,000 per year

7. 7 Proper Classification of Gains and Losses Depends on three characteristics: –The tax status of the property Capital asset, §1231 asset, or ordinary asset –The manner of the property’s disposition By sale, exchange, casualty, theft, or condemnation –The holding period of the property Short term and long term

8. 8 Capital Assets (slide 1 of 5) §1221 defines capital assets as everything except: –Inventory (stock in trade) –Notes and accounts receivables acquired from the sale of inventory or performance of services –Realty and depreciable property used in a trade or business (§1231 assets)

9. 9 Capital Assets (slide 2 of 5) §1221 defines capital assets as everything except (cont’d): –Certain copyrights; literary, musical, or artistic compositions; or letters, memoranda, or similar property Taxpayers may elect to treat a sale or exchange of certain musical compositions or copyrights in musical works as the disposition of a capital asset –Certain publications of U.S. government –Supplies of a type regularly used or consumed in the ordinary course of a business

10. 10 Capital Assets (slide 3 of 5) Thus, capital assets usually include: –Assets held for investment (e.g., stocks, bonds, land) –Personal use assets (e.g., residence, car) –Miscellaneous assets selected by Congress

11. 11 Capital Assets (slide 4 of 5) Dealers in securities –In general, securities are the inventory of securities dealers, thus ordinary assets –However, a dealer can identify securities as an investment and receive capital gain treatment Clear identification must be made on the day of acquisition

12. 12 Capital Assets (slide 5 of 5) Real property subdivided for sale –Taxpayer may receive capital gain treatment on the subdivision of real estate if the following requirements are met: Taxpayer is not a corporation Taxpayer is not a real estate dealer No substantial improvements made to the lots Taxpayer held the lots for at least 5 years Capital gain treatment occurs until the year in which the 6th lot is sold –Then up to 5% of the revenue from lot sales is potential ordinary income –That potential ordinary income is offset by any selling expenses from the lot sales

13. 13 Sale or Exchange Recognition of capital gains and losses generally requires a sale or exchange of assets Sale or exchange is not defined in the Code There are some exceptions to the sale or exchange requirement

14. 14 Sale or Exchange–Worthless Securities and § 1244 Stock (slide 1 of 2) A security that becomes worthless creates a deductible capital loss without being sold or exchanged –The Code sets an artificial sale date for the securities on the last day of the year in which worthlessness occurs Section 1244 allows an ordinary deduction on disposition of stock at a loss –The stock must be that of a small business company –The ordinary deduction is limited to $50,000 ($100,000 for married individuals filing jointly) per year

15. 15 Sale or Exchange –Worthless Securities (slide 2 of 2) Worthless securities example: –Calendar year taxpayer purchased stock on December 5, 2010 –The stock becomes worthless on April 5, 2011 –The loss is deemed to have occurred on December 31, 2011 The result is a long-term capital loss

16. 16 Sale or Exchange Retirement of Corporate Obligations Collection of the redemption value of corporate obligations (e.g., bonds payable) is treated as a sale or exchange and may result in a capital gain or loss –OID amortization increases basis and reduces gain on disposition or retirement

17. 17 Sale or Exchange–Options (slide 1 of 2) For the grantee of the option, if the property subject to the option is (or would be) a capital asset in the hands of the grantee –Sale of an option results in capital gain or loss –Lapse of an option is considered a sale or exchange resulting in a capital loss For the grantor of an option, the lapse creates –Short-term capital gain, if the option was on stocks, securities, commodities or commodity futures –Otherwise, ordinary income

18. 18 Sale or Exchange–Options (slide 2 of 2) Exercise of an option by a grantee –Increases the gain (or reduces the loss) to the grantor from the sale of the property –Gain is ordinary or capital depending on the tax status of the property Grantee adds the cost of the option to the basis of the property acquired

19. 19 Sale or Exchange–Patents When all substantial rights to a patent are transferred by a holder to another, the transfer produces long-term capital gain or loss –The holder of a patent must be an individual, usually the creator, or an individual who purchases the patent from the creator before the patented invention is reduced to practice

20. 20 The Big Picture - Example 11 Patents (slide 1 of 2) Return to the facts of The Big Picture on p. 8-2. Kathy transfers her rights in the battery patent to the Green Battery Co. –In exchange, she receives $1 million plus $.50 for each battery sold.

21. 21 The Big Picture - Example 11 Patents (slide 2 of 2) Assuming Kathy has transferred all substantial rights, Kathy automatically has a long-term capital gain. –Both her share of the lump-sum payment and the $1 per battery royalty qualify (less her basis in the patent). –Kathy also had an automatic long-term capital gain when she sold 50% of her rights in the patent to Alice. Whether Alice gets long-term capital gain treatment on the transfer to Green Battery will depend on whether she is a holder (see the discussion below in Example 12).

22. 22 The Big Picture - Example 12 Holder Of A Patent (slide 1 of 2) Return to the facts of The Big Picture on p. 8-2 and continuing with the facts of Example 11 Kathy is clearly a holder of the patent –She is the inventor and was not an employee when she invented the battery.

23. 23 The Big Picture - Example 12 Holder Of A Patent (slide 2 of 2) When Alice purchased a 50% interest in the patent, she became a holder if the patent had not yet been reduced to practice. –Since the patent was not being manufactured at the time of the purchase, it had not been reduced to practice. Consequently, Alice is also a holder. –She has an automatic long-term capital gain or loss when the patent is transferred to Green Battery Co. Alice’s basis for her share of the patent is $50,000, and her share of the proceeds is $1 million plus $.50 for each battery sold. Thus, Alice has a long-term capital gain even though she has not held her interest in the patent for more than one year.

24. 24 Sale or Exchange–Franchises, Trademarks, and Trade Names (slide 1 of 3) The licensing of franchises, trade names, trademarks, and other intangibles is generally not considered a sale or exchange of a capital asset –Therefore, ordinary income results to transferor Exception: Capital gain (loss) may result if the transferor does not retain any significant power, right, or continuing interest

25. 25 Sale or Exchange–Franchises, Trademarks, and Trade Names (slide 2 of 3) Significant powers, rights, or continuing interests include: –Control over assignment, quality of products and services –Sale or advertising of other products or services –The right to require that substantially all supplies and equipment be purchased from the transferor –The right to terminate the franchise at will, and –The right to substantial contingent payments

26. 26 Sale or Exchange–Franchises, Trademarks, and Trade Names (slide 3 of 3) Noncontingent payments are ordinary income to the transferor –The franchisee capitalizes the payments and amortizes them over 15 years Contingent payments are ordinary income for the franchisor and an ordinary deduction for the franchisee

27. 27 Sale or Exchange Lease Cancellation Payments Lessee treatment –Treated as received in exchange for underlying leased property Capital gain results if asset leased was a capital asset (e.g., personal use ) Ordinary income results if asset leased was an ordinary asset (e.g., used in lessee’s business and lease has existed for one year or less when canceled) Lease could be a § 1231 asset if the property is used in lessee’s trade or business and the lease has existed for > a year when it is canceled Lessor treatment –Payments received are ordinary income (rents)

28. 28 Holding Period (slide 1 of 3) Short-term –Asset held for 1 year or less Long-term –Asset held for more than 1 year Holding period starts on the day after the property is acquired and includes the day of disposition

29. 29 Holding Period (slide 2 of 3) Nontaxable Exchanges –Holding period of property received includes holding period of former asset if a capital or §1231 asset Transactions involving a carryover basis –Former owner’s holding period tacks on to present owner’s holding period if a nontaxable transaction and basis carries over Inherited property is always treated as long term no matter how long it is held by the heir

30. 30 Holding Period (slide 3 of 3) Short sales –Taxpayer sells borrowed securities and then repays the lender with substantially identical securities –Gain or loss is not recognized until the short sale is closed –Generally, the holding period for a short sale is determined by how long the property used for repayment is held If substantially identical property (e.g., other shares of the same stock) is held by the taxpayer, the short-term or long-term character of the short sale gain or loss may be affected

31. 31 The Big Picture - Example 18 Holding Period Return to the facts of The Big Picture on p. 8-2 Assume that Alice purchased the Purple stock on January 15, 2010. –If she sells it on January 16, 2011, Alice’s holding period is more than one year. –If instead Alice sells the stock on January 15, 2011, the holding period is exactly one year, and the gain or loss is short term.

32. 32 Tax Treatment of Capital Gains and Losses (slide 1 of 6) Noncorporate taxpayers –Capital gains and losses must be netted by holding period Short-term capital gains and losses are netted Long-term capital gains and losses are netted If possible, long-term gains or losses are then netted with short-term gains or losses –If the result is a loss: –The capital loss deduction is limited to a maximum deduction of $3,000 –Unused amounts retain their character and carryforward indefinitely

33. 33 Tax Treatment of Capital Gains and Losses (slide 2 of 6) Noncorporate taxpayers (cont’d) –If net from capital transactions is a gain, tax treatment depends on holding period Short-term (assets held 12 months or less) –Taxed at ordinary income tax rates Long-term (assets held more than 12 months) –An alternative tax calculation is available using preferential tax rates

34. 34 Tax Treatment of Capital Gains and Losses (slide 3 of 6) Noncorporate taxpayers (cont’d) –Net long-term capital gain is eligible for one or more of four alternative tax rates: 0%, 15%, 25%, and 28% The 25% rate applies to unrecaptured §1250 gain and is related to gain from disposition of §1231 assets The 28% rate applies to collectibles The 0%/15% rates apply to any remaining net long-term capital gain

35. 35 Tax Treatment of Capital Gains and Losses (slide 4 of 6) Income Layers for Alternative Tax on Capital Gain Computation *May include qualified dividend income

36. 36 Tax Treatment of Capital Gains and Losses (slide 5 of 6) Collectibles, even though they are held long term, are subject to a 28% alternative tax rate Collectibles include any: –Work of art –Rug or antique –Metal or gem –Stamp –Alcoholic beverage –Historical objects (documents, clothes, etc.) –Most coins

37. 37 Tax Treatment of Capital Gains and Losses (slide 6 of 6) The alternative tax on net capital gain applies only if taxable income includes some net long-term capital gain –Net capital gain may be made up of various rate layers For each layer, compare the regular tax rate with the alternative tax rate on that portion of the net capital gain The layers are taxed in the following order: 25% gain, 28% gain, the 0% portion of the 0%/15% gain, and then the 15% portion of the 0%/15% gain This allows the taxpayer to receive the lower of the regular tax or the alternative tax on each layer of net capital gain

38. 38 Tax Treatment of Capital Gains and Losses - Corporate Taxpayers Differences in corporate capital treatment –There is a NCG alternative tax rate of 35 % Since the max corporate tax rate is 35 %, the alternative tax is not beneficial –Net capital losses can only offset capital gains (i.e., no $3,000 deduction in excess of capital gains) –Net capital losses are carried back 3 years and carried forward 5 years as short-term losses

39. 39 §1231 Assets (slide 1 of 4) §1231 assets defined –Depreciable and real property used in a business or for production of income and held >1 year –Includes timber, coal, iron, livestock, unharvested crops –Certain purchased intangibles

40. 40 §1231 Assets (slide 2 of 4) §1231 property does not include the following: –Property not held for the long-term holding period –Nonpersonal use property where casualty losses exceed casualty gains for the taxable year –Inventory and property held primarily for sale to customers –Copyrights, literary, musical, or artistic compositions and certain U.S. government publications –Accounts receivable and notes receivable arising in the ordinary course of a trade or business

41. 41 §1231 Assets (slide 3 of 4) If transactions involving §1231 assets result in: –Net §1231 loss = ordinary loss –Net §1231 gain = long-term capital gain

42. 42 §1231 Assets (slide 4 of 4) Provides the best of potential results for the taxpayer –Ordinary loss that is fully deductible for AGI –Gains subject to the lower capital gains tax rates

43. 43 Special Rules For Certain §1231 Assets (slide 1 of 2) Casualty gains and losses from §1231 assets and from long-term nonpersonal use capital assets are determined and netted together If a net loss, items are treated separately –§1231 casualty gains and nonpersonal use capital asset casualty gains are treated as ordinary gains –§1231 casualty losses are deductible for AGI –Nonpersonal use capital asset casualty losses are deductible from AGI subject to the 2% of AGI limitation If a net gain, treat as §1231 gain

44. 44 Special Rules For Certain §1231 Assets (slide 2 of 2) The special netting process for casualties & thefts does not include condemnation gains and losses –A § 1231 asset disposed of by condemnation receives § 1231 treatment Personal use property condemnation gains and losses are not subject to the § 1231 rules –Gains are capital gains Personal use property is a capital asset –Losses are nondeductible They arise from the disposition of personal use property

45. 45 General Procedure for § 1231 Computation (slide 1 of 3) Step 1: Casualty Netting –Net all recognized long-term gains & losses from casualties of § 1231 assets and nonpersonal use capital assets If casualty gains exceed casualty losses, add the excess to the other § 1231 gains for the taxable year If casualty losses exceed casualty gains, exclude all casualty losses and gains from further § 1231 computation –All casualty gains are ordinary income –Section 1231 asset casualty losses are deductible for AGI –Other casualty losses are deductible from AGI

46. 46 General Procedure for § 1231 Computation (slide 2 of 3) Step 2: § 1231 Netting –After adding any net casualty gain from previous step to the other § 1231 gains and losses, net all § 1231 gains and losses If gains exceed the losses, net gain is offset by the ‘‘lookback’’ nonrecaptured § 1231 losses from the 5 prior tax years –To the extent of this offset, the net § 1231 gain is classified as ordinary gain –Any remaining gain is long-term capital gain If the losses exceed the gains, all gains are ordinary income –Section 1231 asset losses are deductible for AGI –Other casualty losses are deductible from AGI

47. 47 General Procedure for § 1231 Computation (slide 3 of 3) Step 3: § 1231 Lookback Provision –The net § 1231 gain from the previous step is offset by the nonrecaptured net § 1231 losses for the five preceding taxable years To the extent of the nonrecaptured net § 1231 loss, the current-year net § 1231 gain is ordinary income –The nonrecaptured net § 1231 losses are those that have not already been used to offset net § 1231 gains Only the net § 1231 gain exceeding this net § 1231 loss carryforward is given long-term capital gain treatment

48. 48 Lookback Provision Example Taxpayer had the following net §1231 gains and losses: 2009$ 4,000 loss 2010$10,000 loss 2011$16,000 gain –In 2011, taxpayer’s net §1231 gain of $16,000 will be treated as $14,000 of ordinary income and $2,000 of long-term capital gain

49. Section 1231 Netting Procedure 49

50. 50 Depreciation Recapture (slide 1 of 3) Assets subject to depreciation or cost recovery may be subject to depreciation recapture when disposed of at a gain –Losses on depreciable assets receive §1231 treatment No recapture occurs in loss situations

51. 51 Depreciation Recapture (slide 2 of 3) Depreciation recapture characterizes gains that would appear to be §1231 as ordinary gain –The Code contains two major recapture provisions §1245 §1250

52. 52 Depreciation Recapture (slide 3 of 3) Depreciation recapture provisions generally override all other Code Sections –There are exceptions to depreciation recapture rules, for example: In dispositions where all gain is not recognized –e.g., like-kind exchanges, involuntary conversions Where gain is not recognized at all –e.g., gifts and inheritances

53. 53 §1245 Recapture (slide 1 of 3) Depreciation recapture for §1245 property –Applies to tangible and intangible personalty, and nonresidential realty using accelerated methods of ACRS (placed in service 1981-86) Recapture potential is entire amount of accumulated depreciation for asset Method of depreciation does not matter

54. 54 §1245 Recapture (slide 2 of 3) When gain on the disposition of a §1245 asset is less than the total amount of accumulated depreciation: –The total gain will be treated as depreciation recapture (i.e., ordinary income)

55. 55 §1245 Recapture (slide 3 of 3) When the gain on the disposition of a §1245 asset is greater than the total amount of accumulated depreciation: –Total accumulated depreciation will be recaptured (as ordinary income), and –The gain in excess of depreciation recapture will be §1231 gain or capital gain

56. §1245 Recapture Example (slide 1 of 2) On January 1, 2011, Jake sold for $26,000 a machine acquired several years ago for $24,000. He had taken $20,000 of depreciation on the machine. Amount Realized$26,000 Adj. Basis-Cost$24,000 Acc. Depr. -20,000 4,000 Realized Gain$22,000 Sec. 1245 – Ordinary Income 20,000 Sec. 1231 Gain$ 2,000 56

57. §1245 Recapture Example (slide 2 of 2) Same as previous example except Jake sold the machine for $18,000. Amount Realized$18,000 Adj. Basis-Cost$24,000 Acc. Depr. -20,000 4,000 Realized Gain$14,000 Sec. 1245 – Ordinary Income 14,000 Sec. 1231 Gain$ -0- The § 1231 gain is $0 because the selling price ($18,000) does not exceed the original purchase price ($24,000). 57

58. 58 Observations on § 1245 (slide 1 of 3) Usually total depreciation taken will exceed the recognized gain –Therefore, disposition of § 1245 property usually results in ordinary income rather than § 1231 gain –Thus, generally, no § 1231 gain will occur unless the § 1245 property is disposed of for more than its original cost

59. 59 Observations on § 1245 (slide 2 of 3) Recapture applies to the total amount of depreciation allowed or allowable regardless of –The depreciation method used –The holding period of the property If held for < the long-term holding period the entire recognized gain is ordinary income because § 1231 does not apply

60. 60 Observations on § 1245 (slide 3 of 3) Section 1245 does not apply to losses which receive § 1231 treatment Gains from the disposition of § 1245 assets may also be treated as passive activity gains

61. 61 §1250 Recapture (slide 1 of 3) Depreciation recapture for §1250 property –Applies to depreciable real property Exception: Nonresidential realty classified as §1245 property (i.e., placed in service after 1980 and before 1987, and accelerated depreciation used) –Intangible real property, such as leaseholds of § 1250 property, is also included

62. 62 §1250 Recapture (slide 2 of 3) Section 1250 recapture rarely applies since only the amount of additional depreciation is subject to recapture –To have additional depreciation, accelerated depreciation must have been taken on the asset Straight-line depreciation is not recaptured (except for property held one year or less) –Depreciable real property placed in service after 1986 can generally only be depreciated using the straight-line method Therefore, no depreciation recapture potential for such property –§ 1250 does not apply if the real property is sold at a loss

63. 63 §1250 Recapture (slide 3 of 3) The § 1250 recapture rules also apply to the following property for which accelerated depreciation was used: – Additional first-year depreciation [§ 168(k)] exceeding straight-line depreciation taken on leasehold improvements, qualified restaurant property, and qualified retail improvement property. –Immediate expense deduction [§ 179(f)] exceeding straight- line depreciation taken on leasehold improvements, qualified restaurant property, and qualified retail improvement property.

64. 64 Real Estate 25% Gain (slide 1 of 2) Also called unrecaptured §1250 gain or 25% gain –25% gain is some or all of the §1231 gain treated as long-term capital gain –Used in the alternative tax computation for net capital gain

65. 65 Real Estate 25% Gain (slide 2 of 2) Maximum amount of 25% gain is depreciation taken on real property sold at a recognized gain reduced by: –Certain §1250 and §1245 depreciation recapture –Losses from other §1231 assets –§1231 lookback losses Limited to recognized gain when total gain is less than depreciation taken

66. 66 Related Effects of Recapture (slide 1 of 5) Gifts –The carryover basis of gifts, from donor to donee, also carries over depreciation recapture potential associated with asset –That is, donee steps into shoes of donor with regard to depreciation recapture potential

67. 67 Related Effects of Recapture (slide 2 of 5) Inheritance –Death is only way to eliminate recapture potential –That is, depreciation recapture potential does not carry over from decedent to heir

68. 68 Related Effects of Recapture (slide 3 of 5) Charitable contributions –Recapture potential reduces the amount of charitable contribution deductions that are based on FMV

69. 69 Related Effects of Recapture (slide 4 of 5) Nontaxable transactions –When the transferee carries over the basis of the transferor, the recapture potential also carries over Included in this category are transfers of property pursuant to the following: –Nontaxable incorporations under § 351 –Certain liquidations of subsidiary companies under § 332 –Nontaxable contributions to a partnership under § 721 –Nontaxable reorganizations –Gain may be recognized in these transactions if boot is received If gain is recognized, it is treated as ordinary income to the extent of the recapture potential or recognized gain, whichever is lower

70. 70 Related Effects of Recapture (slide 5 of 5) Like-kind exchanges and involuntary conversions –Property received in these transactions have a substituted basis Basis of former property and its recapture potential is substituted for basis of new property –Any gain recognized on the transaction will first be treated as depreciation recapture, then as §1231 or capital gain Any remaining recapture potential carries over

71. 71 Refocus On The Big Picture (slide 1 of 5) The land, stock, and home owned by Alice are all capital assets and will produce the following capital gain or loss when sold. –Long-term capital gain of $48,000 from the sale of the land, –Long-term capital gain of $6,000 from the sale of 300 shares of inherited stock, –Short-term capital loss of $4,000 from the sale of the other 200 shares of stock, and –$125,000 of long-term capital gain from the sale of the house.

72. 72 Refocus On The Big Picture (slide 2 of 5) For the patent, since Alice is a ‘‘holder’’ of the patent, it will qualify for the beneficial capital gain rate regardless of the holding period if the patent should produce income in excess of her $50,000 investment. However, if she loses money on the investment, she will be able to deduct only $3,000 of the loss per year (assuming no other capital gains).

73. 73 Refocus On The Big Picture (slide 3 of 5) The depreciable property owned by Alice’s husband is § 1231 property. –The $45,000 gain from the sale of the property ($60,000 amount realized - $15,000 basis) is subject to depreciation recapture under § 1245. – Accordingly, the first $35,000 of the gain (up to the amount of depreciation taken on the property) is taxed as ordinary income. –The remaining $10,000 is given long-term capital gain treatment.

74. 74 Refocus On The Big Picture (slide 4 of 5) As a result of these transactions, Alice and her husband have: –A net long-term capital gain of $189,000 ($48,000 + $6,000 + $125,000 + $10,000), and –A net short-term capital loss of $4,000. The long-term capital gain and short-term capital loss are netted, so the final result is a net capital gain of $185,000, which is taxed at the 15% tax rate. Alice and her husband also report $35,000 of ordinary income on their joint income tax return because of the depreciation recapture provisions.

75. 75 Refocus On The Big Picture (slide 5 of 5) What If? What if the depreciable business property was worth only $10,000 when it was sold? –In this case, there is no depreciation recapture, and the $5,000 loss is deductible as an ordinary loss under § 1231.

76. © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 76 If you have any comments or suggestions concerning this PowerPoint Presentation for South-Western Federal Taxation, please contact: Dr. Donald R. Trippeer, CPA trippedr@oneonta.edu SUNY Oneonta