Tax Alerts
Tax Briefing(s)

The SEC unanimously approved the PCAOB’s new auditor’s reporting standard Monday, supporting the communication of “critical audit matters” as a way for auditors to provide more information to investors and the public.


The FASB proposed providing guidance to customers on the accounting for fees paid in a cloud computing arrangement by incorporating guidance already included in the software revenue recognition standard applied by cloud service providers to determine whether an arrangement is the sale or license of software.

                


The FASB issued a new standard — Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern — that will explicitly require management to assess an entity's ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances.

 


On Monday, June 10th, the American Institute of CPAs (AICPA) today introduced the Financial Reporting Framework for Small-and Medium-Sized Entities to help the small business community with its financial reporting needs. The FRF for SMEsTM accounting framework is a new accounting option for preparing streamlined, relevant financial statements for privately held owner-managed businesses that are not required to use US Generally Accepted Accounting Principles (GAAP).


The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the Act), also provides tax savings for businesses. The Act, which President Obama signed on December 17, 2010, includes bonus depreciation, R&E Credit and CFC provisions may also have a estimated income tax and financial reporting impact.

A number of tax incentives are frequently overlooked and should be considered as a way to potentially substantially reduce the the cost of operating in a state. The incentives include income tax credits, sales tax exemptions, and property tax abatements are standard incentives offered by states and local jurisdictions to encourage private investment and ease corporate tax burdens for companies across any industry.

The Departments of Labor, Health and Human Services (HHS), and the Treasury (the agencies) have their "FAQs About the Affordable Care Act Implementation.

The HIRE Act, which was signed into law on 18 March 2010, suspended the statute of limitations for an entity’s entire tax return if the entity is found to have failed to report all required international transactions.

Spurred by a changing landscape of accounting for tax risks, concerns about the effectiveness and efficiency of corporate examinations, and recent court decisions, including Textron, the IRS has created a new uncertain tax position disclosure policy.

The FASB has approved the issuance of new guidance for arrangements with multiple deliverables — EITF Issue 08-1, Revenue Recognition with Multiple Deliverables, and EITF Issue 09-3, Certain Revenue Arrangements that Include Software Elements. By providing another alternative for determining the selling price of deliverables, Issue 08-1 will allow companies to allocate arrangement consideration in multiple deliverable arrangements in a manner that better reflects the transaction's economics and will often result in earlier revenue recognition.

EITF 07-5 addresses the determination of whether an equity-linked financial instrument (or embedded feature) is indexed to an entity's own stock, which is an important consideration in determining the instrument's accounting classification.

On October 10th, the Financial Accounting Standards Board (FASB) issued guidance clarifying how FASB Statement No. 157, Fair Value Measurements (FAS 157), should be applied when valuing securities in markets that are not active. The guidance, released as a FASB Staff Position (FSP), provides an illustrative example that applies the objectives and framework of FAS 157 to determine the fair value of a financial asset in a market that is not active.

The effects of a change in tax law on deferred taxes should be recognized in the period the law is enacted and included in income from continuing operations. The effects of new tax legislation on taxes currently payable also must be recognized in the period of enactment with allocation to earlier or later periods prohibited.

The SEC voted to propose amendments which specifies the required disclosures in proxy statements, annual reports and registration statements about the compensation of executive officers and directors

Based on new rules and guidance related to the American Jobs Creation Act of 2004, formal valuations are being recommended for grants of stock options for private companies to avoid current taxation for its employees.

An overwhelming majority of companies have started to use enterprise risk management as a strategic business tool to more effectively manage a variety of risks that can impact the firm's capital and earnings -but most firms say they still have a long way to go, according to a report released by The Conference Board.

When equity securities were issued to employees within one year of the IPO filing, the SEC staff typically challenged any valuation of the underlying securities at a price below the anticipated IPO range. The incidence of restatements related to the valuation of cheap stock lead to a AICPA technical practice aid that was issued several years ago. In light of SFAS 123R, the SEC felt the need to reconfirm its support for the AICPA guide to preparers, auditors and valuation specialists.

On June 30, 2005, the Financial Accounting Standards Board (FASB) issued its Exposure Drafts, Business Combinations; a replacement of FASB Statement No. 141 and Consolidated Financial Statements, Including Accounting and Reporting of Noncontrolling Interests in Subsidiaries: a replacement of ARB 51. The Exposure Drafts would significantly change the accounting for business combinations as well as the accounting and reporting of noncontrolling (or minority) interests in consolidated financial statements.

In light of an apparent contradiction with the SEC's requirements for CEO and CFO certifications, management should carefully consider whether to rely on the SEC staff's recent FAQ as a basis for omitting disclosures about material changes in internal control over financial reporting in SEC reports for periods prior to the date of their first Section 404 report. In some cases, management's documentation and testing of internal control over financial reporting performed to date may have identified material weaknesses. Further, even if management plans to remediate those weaknesses prior to year end, management should consider the associated implications to the effectiveness of the issuer's disclosure controls and procedures as of the end of each interim period.

The AICPA recently issued a new Practice Aid to provide guidance and best practices on the valuation of, and disclosures related to, equity securities issued by privately-held companies as compensation. The Practice Aid was developed to help address the issues that typically arise in accounting for "cheap stock" issued by a private company prior to its initial public offering (IPO). However, the guidance in the Practice Aid is applicable to all nonpublic companies, not just those contemplating an IPO.

Treasury and the IRS released two new proposed form, Schedule M-3, Net Income (Loss) Reconciliation for Corporations With Total Assets of $10 Million or More, for use by certain corporate taxpayers filing Form 1120, U.S. Corporation Income Tax Return,and Form 8858, Information Return of U.S. Persons With Respect to Foreign Disregarded Entities.

U.S. and foreign law lack an integrated approach to treating crossborder outsourcing. As a result, the U.S. and foreign treatment may vary widely depending on the facts and circumstances of each situation.

Due to the increasing level of business in China, Hong Kong is viewed as a potential tax haven for financial intermediary services. Here is how it compares to other popular tax havens such as Singapore, Malaysia and Taiwan

The Service is focusing on taxpayers who pay royalties for the use of patents, copyrights, and other intellectual property and it is likely that audits in the current cycle will look at this issue as well

Public companies are embarking on a new level of investment reporting after passage of the huge corporate responsibility and accounting reform law in July. The most perplexing issue is that companies need to adhere to a law that has not been well defined in some of the most significant areas like what internal controls need to be in place to meet the requirements of the law.

Many small public companies are deferring SOX implementation due to time and cost issues and hoping for continued deadline extensions. Here are some rules of thumb concepts to keep in mind regarding the implemenation process.

There are several different alternatives when structuring a business-as a matter of note-tax and legal issues dominate the decision making process

Shareholders and management want to sell a business at the highest value the business can sustain and must be able to defend that valuation to any potential buyer who questions the price.

Perhaps the most powerful tax-planning tool available to shareholders of a closely held company is the ability to sell stock to a trust created pursuant to an employee stock ownership plan (ESOP) and defer or permanently avoid taxation on any gain resulting from the sale.

The IRS has released the annual inflation adjustments for 2023 for the income tax rate tables, plus more than 60 other tax provisions. The IRS makes these cost-of-living adjustments (COLAs) each year to reflect inflation.


The 2023 cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirement-related provisions have been released by the IRS. In general, many of the pension plan limitations will change for 2022 because the increase in the cost-of-living index due to inflation met the statutory thresholds that trigger their adjustment. 


For 2023, the Social Security wage cap will be $160,200, and social security and Supplemental Security Income (SSI) benefits will increase by 8.7 percent. These changes reflect cost-of-living adjustments to account for inflation.


The IRS has released the 2022-2023 special per diem rates. Taxpayers use the per diem rates to substantiate certain expenses incurred while traveling away from home. 


The Financial Crimes Enforcement Network (FinCEN) has issued a final rule implementing the beneficial ownership information reporting provisions under the Corporate Transparency Act (CTA), which was enacted as part of the National Defense Authorization Act for Fiscal Year 2021 ( P.L. 116-283). The CTA amended the Bank Secrecy Act by adding a new provision on beneficial ownership reporting ( 31 USC §5336).


The IRS issued final regulations to strengthen implementation of the Affordable Care Act by fixing the “family glitch.” The rules amend eligibility for the premium tax credit (PTC) to allow family members of workers who are offered unaffordable family coverage to qualify for premium tax credits. The regulations also add a minimum value rule for family members of employees, based on the benefits provided to the family members. This guidance would affect taxpayers who enroll, or enroll a family member, in individual health insurance coverage through a Health Insurance Exchange (Exchange) and who may be allowed a Premium Tax Credit for the coverage.


A new revenue procedure provides taxpayer assistance procedures to allow S corporations and their shareholders to resolve frequently encountered issues without requesting a private letter ruling (PLR).


The IRS identified drought-stricken areas where tax relief is available to taxpayers that sold or exchanged livestock because of drought. The relief extends the deadlines for taxpayers to replace the livestock and avoid reporting gain on the sales. These extensions apply until the drought-stricken area has a drought-free year.


Senate Finance Committee Chairman Ron Wyden has indicated to the Internal Revenue Service what his expectations for the recently allocated funds from the Inflation Reduction Act are to be used for.


The American Institute of CPAs has posted comments on guidance recently issued by the Internal Revenue Service regarding the deductibility of payments by partnerships and S corporations for certain state and local taxes.


As an individual or business, it is your responsibility to be aware of and to meet your tax filing/reporting deadlines. This calendar summarizes important tax reporting and filing data for individuals, businesses and other taxpayers for the month of August 2017.


Lawmakers from both parties spent much of June debating and discussing tax reform, but without giving many details of what a comprehensive tax reform package could look like before year-end. At the same time, several bipartisan tax bills have been introduced in Congress, which could see their way to passage.


The much-anticipated regulations (REG-136118-15) implementing the new centralized partnership audit regime under the Bipartisan Budget Act of 2015 (BBA) have finally been released. The BBA regime replaces the current TEFRA (Tax Equity and Fiscal Responsibility Act of 1982) procedures beginning for 2018 tax year audits, with an earlier "opt-in" for electing partnerships. Originally issued on January 19, 2017 but delayed by a January 20, 2017 White House regulatory freeze, these re-proposed regulations carry with them much of the same criticism leveled against them back in January, as well as several modifications. Most importantly, their reach will impact virtually all partnerships.


If you converted your traditional IRA to a Roth IRA earlier this year, incurred a significant amount of tax liability on the conversion, and then watched as the value of your Roth account plummeted amid the market turmoil, you may want to consider undoing the conversion. You can void or significantly lower your tax bill by recharacterizing the conversion, then reconverting your IRA back to a Roth at a later date. Careful timing in using the strategy, however, is essential.

You have carefully considered the multitude of complex tax and financial factors, run the numbers, meet the eligibility requirements, and are ready to convert your traditional IRA to a Roth IRA. The question now remains, however, how do you convert your IRA?

Limited liability companies (LLCs) remain one of the most popular choice of business forms in the U.S. today. This form of business entity is a hybrid that features the best characteristics of other forms of business entities, making it a good choice for both new and existing businesses and their owners.