Articles and Letters

Construction Case Study 2016

GC NICHE: Construction


TYPE OF INDUSTRY: Construction




A construction client needed to secure financing for working capital and to have cash on hand to complete several commercial construction jobs.


Our client felt the cash crunch due to multiple large jobs in progress at the same time, all of which required significant upfront costs. The client also had to cover weekly payroll when payment on accounts receivable was 45-60 days out.

The bank understood the client’s need for cash and a safety net in regards to working capital, but was having a hard time extending credit with traditional borrowing base calculations.  


As with most of our clients applying for loans, we worked very closely with our client’s controller to provide the current reports that the bank needed from the accounting software. We reviewed the reports for weaknesses and opportunities. Banks typically focus on past tax information and financial statements instead of current opportunities, so we provided all historical information necessary, but spent additional time summarizing work in process (WIP), backlog (signed contracts that had not yet started) and quarterly projections for the banker. Finally, we joined the client to discuss the company financials with the banker. We have found it beneficial to be involved in these finance meetings to help communicate and increase understanding between the banker and client when discussing past performance and current opportunities.


  1. Our team reviewed the WIP schedules to understand where the client stood financially so we could recommend how much financing to apply for based on need.
  2. We helped determine the ETC, or estimate to complete, considering  job, and operational expenses.
  3. We reviewed current financials and worked with the client’s controller to bring their books up to date.
  4. We helped prepare necessary banking documents, including quarterly forecasts for the next 18 months that included anticipated revenue and expenses.
  5. We attended meetings with our client and the bankers to ensure that the bankers fully understood our client’s financial health and impending opportunities.
  6. The bank approved the line of credit and refinanced the client’s existing debt.
  7. We worked with the client to create a strategy to use the funds smartly, including a healthy cycle of “pull from the line and then pay back.”


The bank re-financed the client’s current debt at a lower monthly payment and approved a new line of credit.

Please contact a member of our construction team with your questions or to learn more!

Technical Q&A with our Ag Team

Our farming and processing clients don’t run typical businesses — after all, the ag business isn’t typical! That’s why Grimbleby Coleman CPAs developed a specialized, six-person Ag Team to handle the unique needs of these clients. Our team is trained to handle the particular challenges our ag clients face, including taxes, audits, cloud accounting, and financial and succession planning.

Over the years, our Ag Team has helped California ag clients through countless tricky situations. Recently, we asked our Ag Team members: What was your most challenging ag project?

Jeff Bowman, CPA and Principal (

Answer: Recently I’ve had several tax planning discussions with farmers who are preparing for harvest and considering deferring their crop income. These discussions can get really intriguing as we talk about balancing cash flow needs with the timing for taxable income. In some cases, the use of an IC-DISC entity adds another variable as we consider which commodities should be deferred in which year for maximum tax benefits. What starts as a “tax question” usually turns to a conversation about cash flow, budgets, expected changes in the commodity market, and other longer-range goals of our clients.

Donae Caravalho, CPA and Manager (

Answer: Recently we executed a complicated 1031 Exchange that involved a fully developed orchard that was exchanged for a newly planted orchard.

Jeff Coleman, CPA and Principal  (

Answer: One of my challenges was the sale of a significant agribusiness company that was a longtime client. We consulted on the tax differences between a sale of stock and a sale of assets, worked with the attorney and the broker to maximize the after-tax yield to the stockholders, and assisted the shareholders of the closely held company and their family members.

Doug DeBoer, CPA and Experienced Senior Associate (

Answer: A large, complex ag client merged numerous entities into a parent company, formed an ESOP, and needed to review financial statements consolidating two large subsidiary companies into the parent company’s financial statements. Even without the merger or ESOP activity, this would have been a complicated review. Accounting for the mergers (many of which had different fiscal year ends) and the ESOP formation made this an even more challenging and interesting project!

Nate Miller, CPA and Principal (

Answer: One of the more unique projects I worked on recently was the setup of an IC-DISC entity for one of the firm’s larger ag clients, which has multiple entities that could benefit from such an arrangement. We worked with a local law firm to help the client set up a single shared IC-DISC, owned by a trust, whose beneficiaries are the grower entities who will be paying the IC-DISC commissions and receiving the IC-DISC benefits. It’s been a great tax benefit for our client and will continue to save a significant amount for years to come.

Chad Van Houten, CPA and Senior Manager (

Answer: One of my most rewarding projects was working with a younger client who was farming an orchard on leased ground and wanted to be to able use the income from the leased ground to buy their own orchard before the lease expired. We were able to utilize unique farm tax provisions in order to save them considerable amount of tax fee. With the tax savings assisting with the down payment, the client was able to purchase their own orchard and begin production before the lease ran out.

Is your business in a pickle or facing similar challenges? Give us a call! 

Continuing to Invest In a Well-Rounded Team and Ag Education  

We are committed to continued education and encourage active participation in conferences, trade events and the community.  Being an active participant has paid off with the wonderful relationships we’ve developed. Our team attends conferences across the country, including the 2016 AgriBusiness Tax Advisors Summit, which was recently held in North Carolina, as well as the annual AICPA National AgriBusiness Conference. And, as most of you know from bumping elbows with us, we love to attend our local and regional regular trade shows, including the Farm Credit dinner, Hilltop luncheon, Tree and Vines Expo, the World Ag Expo, and the Almond Conference, just to name a few.

Please do not hesitate to reach out to a member of our Ag Team. We’re here to serve you!

How is the Health of your Estate and Trust Planning?

August 11, 2016

Does the gross value of your estate exceed $150,000? If your answer is yes, then let’s talk! We understand that discussing your estate can be, well, uncomfortable. Our Estates and Trusts Team can help you see that creating a plan for what will happen after your death isn’t about passing away — it’s about the legacy you’ll pass on. With the right planning, your legacy will help others live their lives for years to come.

 Why Estate Planning?

Proper estate planning helps lay the groundwork for your family once you pass away, offering peace of mind for you and yours. It may be uncomfortable to begin the discussion, but your worries will ease once you know that your hard-earned money will be used according to your wishes. As CPAs, we’re always looking to minimize taxes and fees so your heirs receive the largest inheritance possible, and avoid probate.

Why Do I Want to Avoid Probate?

Probate is a public legal proceeding that is used to put a person’s financial affairs in order after death. In California, probate proceedings are conducted by the County Superior Court where the deceased person lived — and these proceedings can take months, even years, to move through the system. This process is a matter of public record. All of that time comes with a big price tag, too.

 Will or Trust: Which Is Better?

Anyone can write up a will. But if the gross value of your estate is $150,000 or more, it’s best to create a trust also. A trust will protect your heirs from entering probate, a series of court procedures that can be costly and emotional. A little advance planning will help your heirs retain more of your estate in the long run.

 Trust 101: The Very Basics of Setting Up a Trust

There’s a common misconception that trusts require prohibitive amounts of money to set up. The truth is, you don’t have to be rich to set up a trust. At Grimbleby Coleman, we make the process easy and will work with your attorney or help you find one to work with. We’ll take a look at your tax returns, create a plan to minimize income tax, and create a long-term strategy for asset distribution. Legally your trust, unlike a will, will remain private — a great advantage to the family you leave behind. Also, a trust is the perfect way to leave a legacy to children under the age of 18. Instead of receiving a court-appointed guardian to make financial decisions, you’ll be in charge of who will help your young beneficiary navigate his or her new inheritance.

 A Team With Compassion

We’re one of only two CPA firms in the region with a dedicated estates and trusts team. Not only do we know the ins and outs of this important practice area, we’re driven, passionate, and committed to staying current with the ever-evolving legislature. Our team members include:

What If My Estate Is … Well, Complicated?

We have experience working on difficult estate and trust planning scenarios, including Form 706 for clients with more than $5 million in assets, QTIP planning, portability, Schedule “R” generation-skipping tax planning, GST allocation, and special gift planning.

Further Reading

A member of our Estates and Trusts team looks forward to helping you with your upcoming challenges or trust maintenance.

Critical Succession Planning Tips for the Construction Industry

Do you have a succession plan for your business? Repeatedly our construction and real estate team will hear of construction owners simply closing up shop once they are ready to retire instead of developing a profitable exit plan. Typically the owner hasn’t invested time in proper planning due to the daily demands of running a construction business.

“Unlike many of our agricultural clients, often construction owners do not have the luxury of passing down the business to their family to operate,” Ian Grimbleby, Construction Team Lead mentions. “Nor is it as easy as selling land to your farming neighbor. There is more risk involved because it is an owner-operated service and there are no guarantees that the next generation has the skills required to run the business. “

 Understanding the Challenge

Succession rates are highest when the original business owner is passing it down to the 2nd generation, with a 30% success rate. Once the original owner is out of the picture, succession rates dip even further—with a 12% success rate from 2nd passed to 3rd generations and a mere 3% success rate from 3rd passed to 4th generation owners.

Even with careful selection of a future successor, inheritors are often ill-equipped to handle the transition due to a lack of understanding of what is needed to succeed, and undeveloped skills such as: a lack of management, financial, sales or leadership ability. Additionally, a lack of natural entrepreneurial grit can be to blame for the failed business.

Common succession struggles for business owners often include concerns about their employees through a transition, incentives to keep key employees motivated during uncertain times, long-lasting legacy uncertainties and of course – will I be able to maintain my quality of life?

 Where to Start

  • Have discussions about long-term goals with trusted advisors such as your legal and financial team, key family members, and key employees.
  • Conduct a business valuation (this is recommended for all types of businesses).  Recognizing the difference in fair market value and your emotional value is key, as they will not be the same. Understanding the value of your business assets, financial performance and opportunities is critical. To learn more about Business Valuations please click here
  • Consider all succession alternatives, including, but not limited to:
    1. Internal sale
    2. External sale
    3. Recapitalization
    4. ESOP (full or partial)
    5. Status Quo
  • Discuss buy-in tactics such as sweat equity.
  • Assess the management capability of the next generation and identify the “gaps” in required talent.
  • Evaluate the tax implications of any transaction.
  • Make your recommendations to provide the basis for a formalized succession plan.

 Our Construction team is here to help you navigate these discussions and uncertain times. Rule of thumb is…it’s never too early to start succession planning and being flexible will certainly help in the long run! Please give a member of our construction team a call today.

Ag Software Case Study

GC NICHE: Ag and Cloud Accounting Services Team

GC TEAMMEMBERS INVOLVED: Tami Davis (CAS); Jeff Coleman and Jeff Bowman (Ag Team)

TYPE OF INDUSTRY: Almond and walnut family farming operation




Two brothers and one sister, members of a third-generation farm, were unable to keep up with the business management and bookkeeping processes for their expanding operation. The sister took on bookkeeping tasks to help fill the need, but had no training or accounting background. Farm equipment, cultural and labor costs were often in question and cash flow was a constant struggle, as was accurate bookkeeping.


  • Track expenses across three entities and four orchards.
  • Access accurate information easily.
  • Raise awareness about the skills each member of the business needs to demonstrate.
  • Manage cash flow carefully due to recent plantings.
  • Transition the sister (at her request) away from day-to-day business responsibilities.
  • Identify and track profitability by entity.


Each sibling has a unique skillset and interest in the business; however, each sibling does not invest an equal amount of time in the business, which requires careful valuation. Early on, it became clear that each sibling is adept at technology and open to using it across a variety of devices to manage the business. The siblings are also open-minded and welcoming of regular outside counsel.


After much discussion, the final recommendation was four-fold:

       I.          Adopt and integrate and cloud accounting software technologies.

     II.          Utilize Grimbleby Coleman’s Managed Service department with an outsourced Accounting Manager to assist with ongoing, high-level bookkeeping controller needs.

   III.          Set up a dashboard with auto-generated reports for each sibling’s review.

   IV.          Conduct a monthly meeting to review income and expenses for the entire operation, orchard development costs per acre, financial results compared to budget by acre and crop by year, and impacts on cash flow.


After much discussion, the four recommendations were adopted and have been very helpful from an operational and financial perspective. The siblings now have the ability to:

  • Continuously manage the business anytime, anywhere.
  • Review financial results across all entities in a single report.
  • Remotely approve payments, sign checks, and manage cash flow.
  • Analyze planting, cultural and harvest costs by year, acre, or other criteria.
  • Use tools to compare financial results against budgets and industry standards, as well as analyze the effectiveness of irrigation, spraying, and harvest equipment.
  • Allocate expenses between orchards and entities.
  • Use an outsourced controller to implement protocol and increase accuracy. The ongoing presence of an “extended” accounting and bookkeeping expert has helped facilitate and develop accurate data.

 The siblings are now making business decisions with confidence and the family business is thriving.

To learn more about this case study or other ag related managed services capabilities please contact Jeff Bowman ( or Tami Davis ( 

Featured Article

How to Let Your Money Live on With a Charitable Remainder Trust
If you would like your money to continue to help others after you pass, it's time to start thinking about your estate's philanthropic capacity - and planning for its future.   Many of our clients proactively plan for the future by setting up a charitable remainder trust (CRT).  Charitable trusts allow you to make substantial gifts to a favorite charitable organization without giving up all rights over the property. Charitable trusts are an exception to the general rule that you can't claim a current tax deduction by making a limited or postponed gift. Through a charitable trust, you can make an irrevocable future gift to a charity and still claim a current income tax deduction. "Making the decision to establish a CRT should not be taken lightly, due to the initial legal fees and required annual accounting fees, but there are plenty of benefits for the right person," Principal and CPA Colleen Meenk says. "I've seen clients with modest means as well as extremely wealthy clients benefit from establishing a CRT. Almost always, there is stock or another type of investment property involved in the trust."   Who is a good candidate for a CRT? Consider establishing a CRT if you're charitably minded and have an asset that has appreciated significantly that would result in burdensome taxes if sold. For example, let's say you hold stock in a company and the value of the stock goes through the roof. If you sell that stock, there would be considerable  savings if contributed to a CRT first. A CRT would sell the stock and you would be taxed only on the income stream received.   If you're considering a CRT, think about your own life expectancy and your assets. Will they continue to grow? You'll be able to use the cash a CRT provides while you're living, but whatever amount remains in the trust after your death will go to charity.   "We caution our clients that a charitable trust does not work for everybody," Meenk says. "To be successful, this has to be the right person with an identifiable asset of significant value."    Why a CRT instead of a standard philanthropic donation? A CRT allows you to retain the right to an income stream. You won't pay capital gain taxes as you would if you took the earnings from the major asset's sale; rather, you'll be taxed a smaller percentage over the years, avoiding the immediate tax hit. The structure of a CRT also benefits the organization you want to support: It can lead to a larger donation, which will allow you to do more long-term, meaningful good.   How do you set up a CRT? Review the asset with your accountant as part of your estate and charitable giving plan. Your accountant will model and calculate your CRT based on your asset's long-term and current market value; this financial modeling will help you better understand the financial implications of a CRT. Your attorney will draft the trust agreement. Your asset must be funded, and then sold, by the end of the calendar year. Interested in donating to your university or a small non-profit? Most colleges or universities have a dedicated endowment staff that are well versed in CRT calculations and can help with advance planning. Of course, don't forget to run those projections by your accountant and financial advisor! Smaller, local charities are typically less equipped to plan and implement a CRT. It's best to get a professional opinion early on in this situation.   How is the CRT filed with the IRS? The CRT is filed on its own return each year, referred to as a Split Interest Trust, with its own K1 reporting the income stream distributed, which is then included in your individual return.   To learn more about the CRT guidelines, check out the IRS website. It would be our pleasure to help you set up your CRT. We're happy to explain the pros, cons, and long-term commitment. Please give Colleen or your CPA a call or email.  

Featured Staff

Manoj joined Grimbleby Coleman as an Associate after four years in banking and 2 years in the transportation industry. In this role, he assists with tax planning engagements and business returns and greatly enjoys seeing his client relationships morph from professional to friendship. Manoj holds a Bachelor of Science in Business Administration with a concentration in accounting from California State University, Stanislaus. 

A long time Livingston, California resident, Manoj stays very active in his community. He's been involved with Livingston Rotary, was a Livingston Planning Commissioner, and a Livingston Medical Group board member. He also volunteers at the Livingston Guru Sikh Mission. "And I would like to get involved with other organizations in the future." 

In his free time, you might find Manoj traveling, enjoying time with his daughter, or relaxing with friends and family. 

His favorite number is 21. "My dad, brother and I were all born on the 21st." How's that for a coincidence? 

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