Why Aren't We All Doing This? - On The Numbers
Construction Equipment Distribution magazine is published by the Associated Equipment Distributors, a nonprofit trade association founded in 1919, whose membership is primarily comprised of the leading equipment dealerships and rental companies in the U.S. and Canada. AED membership also includes equipment manufacturers and industry-service firms. CED magazine has been published continuously since 1920. Associated Equipment Distributors
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SECTION: On The Numbers

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Why Aren't We All Doing This?

By Garry Bartecki

Article Date: 12-01-2010
Copyright(C) 2010 Associated Equipment Distributors. All Rights Reserved.

CFOs agree: There are three actions every dealer should be taking right now – four, if you include participation in AED's biannual CFO conference.

We completed another successful round of CFO conferences in October, and we're already planning for next year. For those of you who don't know, AED prepares an annual CFO Conference giving participants a choice of the spring or fall session. We normally follow the original program but made a change this year to the fall session after the latest tax bill hit the streets.

The fall session was informative and a lot of fun – a good mix of participants (including a contractor) all provided lively discussion sessions.

The key messages to take home were:
  • This is a very complex tax planning year. Better know what you are doing to avoid those March and April surprises.
  • Eli Lustgarten projects a slow recovery even though equipment manufacturers are doing better.
  • Eli, along with other speakers, sees rental as being the preferred alternative of equipment use by contractors.
  • Health care costs will continue to climb at unmanageable rates.
  • 20 Groups will play a big role in getting dealers back on track.
  • Accounting changes will get even more complex.
  • Bankers all said to consider locking in fixed rates at 5 percent if you can do it.
I told you we provide a meaty agenda, and this only covers about two thirds of the program. No matter what size company you come from, there is meaningful data to use for tax and general business planning. Those of you who have not made the effort to attend this conference are really missing the boat (in my opinion).

At the conclusion of every conference we poll the crowd to pull out the important take aways. We also polled the participants to see which ones were using some of the ideas and tactics discussed at the conference. To our surprise, only about half were using most of the tactics discussed. After further discussion, the group selected three topics "We Should All Be Doing at This Time," and they are:
  1. Use the tax deferral strategy of 1031 like kind exchange (LKE) to mitigate tax gains from selling equipment
  2. Check out the AED health insurance plan as soon as possible
  3. Set up and join a 20 Group to get through the recovery period
How do you execute on these three essential areas? I'm so glad you asked.

Regardless of whether you ran out of tax losses or are creating taxable gains from selling off rental equipment, 1031 LKE can help you manage your cash flow related to income taxes. With the potential tax liabilities dealers have, they must use every technique available to control this liability. AED can refer you to member firms that can perform the qualified intermediary service, as well as tax consultation for you.

AED-Member Health Insurance
Whether a dealer is fully insured or self insured, the AED health care plan offered through Veritas Risk Services to members will help reduce health insurance costs if you qualify for the plan. There may still be time for you to submit your data before your renewal date. I suggest you examine this significant alternative, because health care costs are expected to increase dramatically over the next few years. (Hint: See their ad at left.)

Dealer 20 Group
Managing through the next five years will be tough. The industry has changed with a very short learning curve to stay competitive. After listening to how the ADP 20 Groups work and the above-average results attained by these groups, we all agreed it is worth the time and effort to he lp improve your chance s for succe s s.

Wish you were all there because I believe you would have reached the same conclusions. Going forward, AED is acting on your behalf by (1.) continually providing tax knowledge, (2.) offering members (both dealers and manufacturers) the Veritas captive health care program, and (3.) connecting you with top of the line 20 Groups.

Welcome aboard.

Garry Bartecki (gbartecki@aednet.org) is AED's vice president of Finance.
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