Contractors Center Point

IRS Issues Standard Mileage Rates For 2012

The Internal Revenue Service (IRS) Dec. 9 announced the 2012 optional standard mileage rate to use for computing the deductible costs of operating an automobile for business will be 55.5 cents per mile. 

The new rate will go into effect beginning Jan. 1, 2012, and will apply to the use of cars, vans, pickup trucks or panel trucks. 

The standard mileage rates for business purposes are based on an annual study of the fixed and variable costs of operating an automobile.  A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System or after claiming a Section 179 deduction for that vehicle.  The business standard mileage rate cannot be used for more than four vehicles used simultaneously.   

For more information on the standard mileage rates, visit the IRS website.

AIA Report Finds Ongoing Credit Crunch Accounts for 20 Percent of Stalled Projects Nationwide

The American Institute of Architects (AIA) today released a comprehensive report which concludes that the major obstacle holding back job creation in the United States is the persistent lack of construction financing, despite record low interest rates.

“This report should lay to rest any doubt about what is a key source for holding back job creation in the United States,’ said Kermit Baker, chief economist of the AIA. “It is the lack of financing especially to the design and construction sector, which accounts for $1 in $9 of U.S. Gross Domestic Product.”

Relying on data compiled by McGraw-Hill Construction and Reed Construction Data, the report found that: 

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  • The share of projects stalled due to financing problems through August 2011 has almost doubled since 2008;
  • One-in-five stalled projects are directly resulting from financing problems;
  • Financing problems account for a higher share of stalled projects in the education and multi-family sector;
  • More than 25 percent of projects reported as stalled due to the credit crunch could qualify for LEED, Green Globes or other green certification status;
  • Financing issues are less of a factor holding back projects in the manufacturing, private healthcare and retail environments.

“Whatever, the reason – be it over-regulation, the threat of a double-dip recession or the reluctance to have too many loans on the books, lenders are just not lending to a major job-producing sector of the American economy,” Baker noted. “Until more credit is extended, the potential of non-residential construction to promote greater levels of economic growth will not be realized.” 

To learn more about this report please visit www.aia.org or contact the construction professionals of McKonly and Asbury, LLP.

2012 Construction Forecasts Provide Mixed Review

Multiple reports from various sources have been published in the last few weeks regarding the 2012 forecast for the construction market. All reports point to a continued slow recovery of the construction sector of the economy with one report showing 0 percent growth in 2012.

Associated Builders and Contractors

Associated Builders and Contractors (ABC) expects 2012 to be a year of gradual advancement in the industry, primarily driven by private construction. ABC is forecasting that nonresidential construction spending will increase approximately 2.4% in 2012. This is following a decrease of 2.4% in 2011. Along with this increase in nonresidential construction spending, employment is also expected to increase, but very little, at a rate of 0.4%. This increase follows a 2011 year which saw employment in this sector increase by 0.6%.

ABC believes that the increase in nonresidential construction will be driven by the energy and health care sectors of the United States economy. Construction related to the nation's power industry is expected to increase 9% in 2012 and is forecast to end 2011 with a 11.4% increase. States that are expected to see the majority of this construction spending are Texas, Oklahoma, North Dakota and Pennsylvania. Health care is also expected to expand with a projected increase in 2012. With continual changes in demographics, health care reform and overall thawing credit markets, construction in this sector is projected to increase 8% in 2012. Other areas of increase are expected in lodging and office construction but minimal.

These increases are expected to be offset by declines in public spending and education. With state and local government budgets continuing to be squeezed and school districts under pressure to hold the line on spending, public improvement projects in these areas are expected to decline in 2011 by 4%. Overall, ABC forecasts public nonresidential construction spending to slip 2% in 2012.