Kutchins Robbins & Diamond: CPA and CFP, Chicago, IL- Newsletter

Francis Bacon, the English philosopher, once said, "God Almighty first planted a garden. And indeed it is the purest of human pleasures."

The Tecza family has been bringing pleasure to people through gardening for more than seven decades. The history of the Tecza companies actually began in Europe where founder Adam Tecza began his horticultural training. In 1930, at the age of 18, Adam left Europe and returned to his birthplace of Chicago. His big career break came in 1933 when he was appointed head landscape foreman for the World's Fair.

In 1937, his reputation as a hard worker who was committed to the horticulture industry resulted in a position with a well‑known landscape architectural firm. It wasn't long before he was promoted and put in charge of planting trees for the city of Chicago. In 1939, Adam started his own company, Greenleaf Tree Surgeon. The growth of the home building industry and the increased demand for flowers and decorative items led to the renaming of the business in 1949 to Adam's Landscape Garden Center. Adam's Nursery and Landscape Company was born in 1953 and in 1969, twenty acres of land were purchased on the outskirts of Elgin. At that time, Tecza and Sons Nurseries, Inc. was formed. Expansion came again during the fall of 1979 with the acquisition of 155 acres of land in the town of Genoa in DeKalb County.

"The reason for this purchase was to enter the wholesale market more aggressively, and to provide plant material for the company's planned garden center," explains JR Tecza, grandson of the founder and now General Manager of all three companies: Tecza and Sons Nurseries, Inc.; Tecza's Rainbow Gardens, Inc. (retail division); and Tecza's Rainbow Gardens, Inc. (landscape designibuild division). JR took over management of the business in January from his dad, Tom Tecza, a licensed landscape architect who started the company's three divisions. Tom continues to oversee the growing of the plant material, but he has entrusted his oldest son with the day‑to‑day operations.

Today, Tom and Janet Tecza's three grown children work together in this family owned and operated nursery and garden center. In addition to JR, Stephen Tecza is the Retail Garden Center Division Manager; Heather Tecza is CFO and office administrator. Jeff Staley is the Landscape Design/Build Division Manager.

JR began working in the business at the age of 12. He recalls hoeing weeds and pruning plants on long, hot summer days at the 50‑acre nursery in Elgin. "I learned a lot from working summers for my dad.

After graduating from the University of Illinois in 1989 with a degree in ornamental horticulture, JR came back to Work in the business as a propagator. A few years later, he took on the role of nursery manager. "There's a lot of hands‑on stuff to learn in a nursery that you can't get from books," he admits.

For years. a billboard on the comer of Randall Road and Route 64 advertised the Tecza name. The ad simply stated: "Let us color your world." Like his brother, Stephen began coloring his corner of the world as a preteen when he cultivated the fields in the nursery. In 1992, Stephen obtained a bachelor's degree in agricultural business from Illinois State University.

Today, Tecza and Sons Nurseries, Inc. grows and supplies tried‑and‑true varieties of shade trees like maple, ash and linden; ornamentals; flowering shrubs; and conifers to Tecza's Rainbow Gardens, Inc. as well as to landscapers, rewholesalers, and government agencies.

In order to take care of all its customers' outdoor living space requirements, the Landscape, Design/Build Division under the direction of Jeff Staley contracts for plant material projects as well as landscape projects that include patios, walkways. retaining walls and garden ponds.

An expanded garden center boutique opened in April. Janet Tecza is in charge of buying and selling unique decorative garden gifts for both inside and outside the home. Here, customers will find items like gazing globes, hand‑painted birdhouses, baskets, vases, silk flower arrangements and copper lawn sprinklers.

"My mom and dad are very creative and are always coming up with wonderful marketing ideas," says Heather, who has a master's degree in business administration and an undergraduate degree in agricultural business from Western Illinois University.

"Seeing the garden center come to fruition has been most gratifying," she says. It's great to look back at what we've accomplished and then to look forward to planning and implementing new ideas."

As the office administrator, Heather works closely with David Diamond and the staff at KRD. "I meet with David at the end of each quarter and he reviews our internally generated financial statements. He advises me on everything from the depreciation of new equipment to looking over my payroll and sales taxes. David is a good sounding board. He is extremely patient with me and provides as many examples as necessary to explain a concept I may‑have trouble understanding. W~hen I call him\ with a question, he tries to handle it personally rather than hand me off to an assistant. We like the personal service he provides."

"David has been extremely helpful in determining the cost basis of our inventory, which is important since we propagate and grow most of our own plant material. And, he takes an interest in other aspects of our companies. Recently, he referred us to a leasing company for the financing of a new automated phone system."

As for the future, the Tecza companies should continue to flourish and grow just as the gardens they cultivate.

Utility Deregulation Provides Customers a Choice and Possible Cost Savings

In an effort to help clients save money on their utility bills, KRD has entered into an agreement with Ira Holtzman & Associates, owners of Lower Electricity, a utility consulting firm that represents companies looking for the lowest utility rates Working in conjunction with Mr. Holtzman, the partners at KRD can help you determine whether you should switch to an alternate utility provider and whether that provider offers a different rate structure that can save you money. Usually, all that is required is for you to submit a copy of your paid bills. There is no cost to the client for this service.

As of January 1, 2001, nonresidential customers are eligible to participate in ComEd's Deregulation Program, which means that as a business owner you now have a choice about who supplies your power. Illinois deregulation effort has its roots in the 300‑page Electric Service Customer Choice and Rate Relief Law of 1997. The legislation restructured the state's electricity industry, ending ComEd's monopoly in northern Illinois, including McHenry County. Regardless of which electricity supplier a customer chooses, ComEd will continue to be responsible for the transmission and distribution of all electricity.

Even if you decide to remain with your current utility provider, we may still be able to help you save money by having the specialists at Lower Electricity review your bills for overcharges, tariff rate alternatives and utility monitoring to ensure accuracy and compliance by each supplier.

Some examples of utility savings achieved for clients include: Paying for a meter that was not the customer's; paying higher usage rates (rate per KWH) by being in the wrong ‑rate classification; and paying‑excessive charges based on estimated bills. We can also get overcharges refunded.

For more information about utility deregulation services, please contact us. We'd be happy to discuss it with you.

Avoid Costly Energy Pitfalls

Here are a few tips on how to avoid costly energy pitfalls:

‑Stop the battle over the thermostat‑‑Set thermostats at 78' in the summer and 68' in the winter. Use ceiling fans, window shades, and air conditioning economizers to stay comfortable.

‑Watch out for ravenous equipment‑‑Size heating, ventilation and air conditioning equipment correctly, and keep them tuned up. Replace old units with high‑efficiency models.

‑Take 24‑hour control over HVAC operations‑‑‑Use setback building temperatures during unoccupied hours, and install timers or automated controls to ensure savings.

‑Quit reheating the same area‑Install paddle or ducted ceiling fans to recirculate warm air in large, high‑ceiling spaces such as warehouses, production floors and auditoriums.

‑Keep energy dollars from flying out the window (or going through the roof)‑‑Use weatherstripping or caulking to stop gaps around doors and windows; confirm adequate ceiling and roof insulation in your facility to save money year‑round.)

Determining Stock Basis for Tax Purposes

When selling stock shares. you must establish your cost basis in the shares to calculate the tax liability. A simple definition of cost basis is the amount of money invested. Upon

liquidation, cost basis represents a return of capital and is not taxed again. The cost basis of shares of stock includes the shares' total cost, including commissions, plus any reinvested dividends. For tax purposes, you compare cost basis to the amount of money received from selling the shares of stock. If the amount received is greater than the cost basis, you report a taxable gain. If the amount received is less than the cost basis, you report a loss.

The cost basis of inherited property is either stepped up or stepped down to Its fair market value (FMV) at the date of the decedent's death. For example, a young man inherits $10,000 of AT&T stock from his father. At his father's death, the shares' market value was $11,500. The son's basis in the stock shares is the FMV, or $11,500.

To calculate tax liability, you must first add all capital gains for the year. Then, separately add all capital losses. Finally, offset the totals to determine the net capital gain or loss for the year, Net capital losses are deductible against earned income up to a maximum of $3,000 per year. Any capital losses not deducted in a year may be carried forward indefinitely to be used in future years

Wash sale Rule Violation

Capital losses may not be used to offset gains or income if the investor sells a security at a loss and purchases the same or a substantially identical security within 10 calendar days before or after the trade date. The sale at a loss and the repurchase within this period is a wash sale.

To avoid a wash sale rule violation, remember that you cannot purchase new shares during the 61 ‑day period surrounding, and including, the day you sold your stock at a loss. When you reinvest, select a security that is not considered "the same or substantially identical."

Time or Service Not Deductible Expenses

You are not entitled to deduct the value of your own time or services contributed to a charity, However, unreimbursed travel or transportation expense necessarily incurred in performing services for a charitable organization are deductible, so long as no element of personal pleasure, recreation or vacation is involved. Also deductible are reasonable expenditures for meals and lodging.

IRS Drives Up Mileage Rates 2 Cents The IRS has issued the optional standard mileage rates for employees, self‑employed individuals or other taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical or moving purposes The new rates apply to costs paid or incurred on or after January 1, 200 1. The rates for businesses and medical and moving use increases by 2 cents per mile to 34.5 cents per mile for business use and 12 cents per mile for medical and moving purposes. The mileage rate for charitable purposes stayed the same as the 2000 rate at 14 cents per mile.

Note that if you use the standard mileage rate method for business. the cost for depreciation. repairs and maintenance. gasoline and insurance are not deductible. Parking fees and tolls are deductible items, whether you use the standard deduction method or the actual expense method.

Small Businesses Benefit from New Tax Deposit Rule The IRS has changed its tax deposit rules making them more favorable for small businesses. As of January 1, 200 1, businesses who have less than $2,500 in quarterly employment taxes are now allowed to make federal employment tax deposits every three months. These deposits can be made when they file Form 941, "Employers Quarterly Federal Tax Returns." This replaces the prior standard that allowed quarterly payments only if a business had less than S 1.000 in quarterly employment taxes. Businesses with accumulated withheld employment taxes of $2,500 or more per quarter must still remit them to an authorized financial institution or by electronic tax deposit, if required. Withheld employment taxes include income taxes collected from wages, railroad retirement taxes and FICA tax.

Proposed changes b~ the Internal Revenue Service liberalizes current retirement distribution rules. The IRS' "required minimum distribution" rules have long been considered too complex and rigid. On January 12, 2001, the IRS released new proposed rules that simplify required minimum distributions (RMD) from IRAs and qualified plans such as a 401(k) or a profit sharing plan or a 403(b) taxsheltered annuity. The proposed changes are not yet final and won't technically take effect until January 1, 2002. However, the IRS is allowing taxpayers to use either the current or proposed regulations for their 2001 distributions, so these new rules are important.

The U.S. Treasury Department's changes will result in smaller required distributions for most IRA owners as well as for participants in 401(k) and 403 (b) plans. In addition, the proposed regulations also provide a clean slate to individuals

who had become locked into unfavorable distribution schedules. The new rules simplify a system that often could not be changed for future years even though an individual's financial situation had changed. In simple terms, the new rules put all IRA holders on the same liberal minimum distribution method. Anyone who turns 70 1/2 and must start withdrawing IRA funds will now only have to take out minimal amounts and beneficiaries may be able to stretch inherited IRAs out over their own life expectancy. Please call us if you are planning to take a distribution this year.

This summer, Sharon Bree will celebrate her one‑year anniversary with KRD. As firm administrator, Sharon works directly with the three partners and is involved in all aspects of office management. In addition, she is in charge of accounts receivable and is responsible for hiring/firing and performance reviews for those employees who report directly to her. She spearheads the firms marketing efforts, implements computer software updates, and leads new employees through an orientation process. Sharon will also facilitate the new utility deregulation services offered by KRD.

With more than 30 years of office management and administration under her belt, Sharon is well‑qualified for her job. The two traits she values the most are flexibility and a sense of humor. Both of which she possesses. "You have to have a sense of humor to survive 'in business," she emphasizes. And then to prove her point, she adds: "You can say I have 30 years of work experience, but if anyone asks when I started working, tell them at age 9!"

Her goal in the firm is to create a uniform work environment where everyone performs at his or her highest level. The best part of her job, she says, is the people she works with every day. "There is something I like about each person who works in this firm; otherwise I wouldn't make the 52‑mile‑a‑day drive."

For more than 10 years, Sharon has been a member of the Illinois Association for Accounting Administrators. She was President of the organization in 2000. Coincidentally, she answered the phone in the office of a member firm one afternoon. The caller on the other end of the line was Allen Kutchins. "He was inquiring about a list of accounting administrators who might be looking for a new job. I replied, 'I just happen to be looking.' I sent Allen my resume and he made me an offer I couldn't refuse."

In her leisure, Sharon enjoys sports and reading mystery novels. She also plays competitive volleyball and enjoys golf She has two daughters of whom she is very proud. Shannon plays college basketball at Oakland City University in Oakland City, Indiana, and Rhonda is married and works pan‑time in a dental office. Mom recently found out that Shannon was named homecoming queen on February 3. "Being a single working mother, the one thing I've always tried to do is teach my children to be self‑sufficient and develop a sense of purpose in life‑and no matter what goes wrong, always keep your sense of humor."