A new year is upon us and here are a few observations for the new year:

• Our Economy - I am constantly asked where we are on the economic recovery curve. My answer is simple. The recovery is over! Make whatever changes you need, in order to be successful in this environment. This is the new normal. It will be a slow but a steady rise. The main concern I hear is regarding the uncertainty with the European crisis. Once that is solved, as it hopefully will be, I think the economy will get a boost as many companies are waiting on investment decisions. Nobody invests with uncertainty of this magnitude. Once the landscape is known, people find ways to invest and make money. Let us know if you would like to sit down and review your specific plans for 2012.
  
  
• Tax Reform – I expect no major tax bill this year dedicated to tax reform. Election year; Need we say more? However, both the state and federal governments need to raise revenues so watch out for changes that will be added on to other bills, especially bills where tax extension of key tax items are addressed. Our legislators are expert on last minute “additions” kept hidden until a bill passes. We will be monitoring unfolding events and keeping you informed through our tax alerts.
  
  
• Estate and gift tax planning. I expect we will not have any clarifications of any new law changes until the very end of this year at the very best. Again, election year paralysis. The current rules expire this year which are generous in what they allow. Do everything you can to be proactive in this area this year you decide to gift or not. Our estate tax team is ready to help you understand this complex area.
  
  
• Mergers and acquisitions – I sense and feel the market is heating up and will continue to do so, especially with the estate and gift tax complications that people are addressing this year. Again, uncertainty is the key. If we get clarity, a lot of deals could be going down. My advice is to be ready in advance by getting your house in order with all the things you can do now, so you are ready to go. Also, if you are on the buy side, the same thought process applies. Once the market heats up, you want to be ready to jump in full force.  
  
  
• Banking - I do see and expect the credit markets to continue to open. That being said, they will only open up to those with strong management, good cash flows and a strong business case showing the need and credible results. Demonstrated management, accurate financials from last year, combined with solid projections of the current year, will go along way to help you secure desired financing.
  
  
• Regulatory Issues – I continue to see increased regulatory scrutiny. Expect to see changes  in SOX compliance and exemption floors as well as efforts to make IPO’s more inviting, to push up the economy.
  
  
• Election year – Expect a wild ride as politicians continue to have the lowest ratings in history and will continue to have, as they avoid the issues with elections coming up. People want changes and this could be a year where “house cleaning” continues.

David Krajanowski, CPA
Managing Partner