Journal of Accountancy

A monthly publication of the American Institute of Certified Public Accountants focusing on the latest news and developments related to the field of accounting, and written for CPAs and other accounting professionals.

Articles from Vol. 205, No. 4, April

Advising Private Foundations: Despite Their Administrative and Regulatory Complexity, These Philanthropic Vehicles Are Taking Off
[ILLUSTRATION OMITTED] EXECUTIVE SUMMARY * Small family private foundations are growing at a rate of six per day. This indicates a growing probability that CPA firms will be advising benefactors of family foundations. It is vital that CPA firms...
Better Evidence Gathering: Adopting Best Practices Can Improve Audit Confirmation Response Rates
[ILLUSTRATION OMITTED] EXECUTIVE SUMMARY * Confirmations can be an effective tool when working with accounts payable, accounts receivable, account balances, inventory, investment securities, market values, lines of credit and other actual or...
Charity Begins with Ownership
The Tax Court ruled that a criminal defense attorney who donated case materials in a prominent case to the University of Texas did not have sufficient ownership rights to the materials to claim a charitable deduction under IRC [section] 170. Even if...
Expand Your Horizons: Niche Marketing Success Stories
EXECUTIVE SUMMARY * By identifying target markets and resources, niche marketing can distinguish a CPA firm from its competitors while generating higher profit margins. * A well-developed marketing plan is the key to successful niche marketing...
Fee Management Tips
[ILLUSTRATION OMITTED] Properly pricing your services should be a high priority. Follow these best practices for setting and managing fees [check] Know the costs of providing services. Determine direct costs, allocated overhead and targeted firm...
FLPs That Flop: In Several Recent Cases, the IRS Successfully Challenged Attempts to Exclude from Taxable Estates Assets Transferred to Family Limited Partnerships (FLPs, or "Flips") in Which a Decedent Had Retained the Right to Enjoy the Property or Income from It
[ILLUSTRATION OMITTED] Besides reducing estate taxes, purposes of FLPs include liability protection and asset management. Usually, a parent transfers assets to a FLP in return for ownership of interests. The parent then gifts interests in the FLP...
IRS Can't Shake Yardstick at Tax Treaty
The Court of Appeals for the Federal Circuit ruled a U.K. bank was entitled to a $65 million refund because the IRS applied a regulation that increased the institution's income by $155 million in violation of the U.S.-U.K. tax treaty of 1975. In...
Like a Good Neighbor
The Ninth Circuit has affirmed a district court and held that termination payments received by a retiring insurance agent were not capital gain but were taxable as ordinary income. The court thus joins the Seventh Circuit in so ruling on similar facts....
On Equal Terms: Rep. Rick Boucher Tells Why Patents on Tax Planning Methods Run Counter to Public Policy
[ILLUSTRATION OMITTED] Rep. Rick Boucher, D-Va. (9th District), has been at the forefront of efforts to stop patents on tax planning methods. With a fellow Virginian from across the aisle, Pep. Bob Goodlatte, R-Va., and Pep. Steve Chabot, R-Ohio,...
Recruiting (and Retaining): The Next Generation Accountant: One University's Experience
[ILLUSTRATION OMITTED] EXECUTIVE SUMMARY * The demand for qualified accounting graduates continues to exceed supply; demand is expected to continue growing. * Universities are increasingly concerned with retention of college students as they...
Return Preparers Subject to New Regulations
Section 7216 of the Internal Revenue Code imposes criminal penalties on tax return preparers who knowingly or recklessly make unauthorized disclosures or uses of information furnished to them in connection with the preparation of an income tax return....
Rising Expectations: Audit Committee Oversight of Enterprise Risk Management
[ILLUSTRATION OMITTED] EXECUTIVE SUMMARY * More companies are placing oversight responsibility for risk management with the board of directors. While embracing this responsibility, boards are also finding that better risk intelligence is a significant...
Split-Interest Prohibition Upheld
The Third Circuit Court of Appeals joined other jurisdictions in affirming IRC [section] 2055(e)'s prohibition of charitable deductions from an estate for transfers of interests in trust property that are not definitely divided between charitable and...
Step Right Up
The Tax Court upheld as having economic substance a partnership's nearly $12 million distribution of notes to redeem partners' interests in real estate on which the partnership claimed a step-up in basis. The IRS had denied the partners' resulting...
Taxpayer Advocate Presents Annual Wish List
National Taxpayer Advocate Nina Olson presented her annual report to Congress in January recommending dozens of issues for the Ins and Congress to resolve this year. The report analyzes issues in 26 categories, including collection and tax services,...
The Last Word
I don many hats as a faculty member. At various points in my life, I've wanted to be a priest, coach, disc jockey, accountant, professor, taxi driver, bartender, musician, actor, paperback writer, talk show host and stand-up comic. My classes resemble...
This Sold House
The Tax Court recently held that a couple could exclude gain from the sale of one of their two residences, since during the five-year period preceding the home's sale, it was used as the couple's principal residence for the requisite two-year period....
Trust-Owned Life Insurance: The CPA's Role: Exposures Related to Serving as a Trustee
EXECUTIVE SUMMARY * CPAs with specific training and understanding of life insurance in estate planning sometimes are trustees of trust-owned life insurance (TOLI). With the complexity of many policies, responsibilities of annual policy review and...