The CPA Journal

The CPA Journal is a monthly refereed accounting journal. It has been published by the New York State Society of CPAs since 1930.Subjects for The CPA Journal inlcude accountants and accounting. Carolyn Morrisroe is the managing editor and Anthony H. Sarmiento is a contributing editor.

Articles from Vol. 65, No. 3, March

Accountants Seek to Evade Accountability
The October 17, 1994, issue of Barron's contained an article on liability reform that began as follows:Something startlingly unwholesome is afoot in Washington. This is a process by which persons and groups--specifically accountants--who have defrauded...
After Reengineering - 'Dejobbing'?
That is the result of almost a cutbacks, layoffs, and restructuring? Reengineering, self-managed teams, flattened organizations, and computerization result not only in the disappearance of just a certain number of jobs; what is disappearing is the very...
AICPA Poll Foresees Sweeping Changes in Financial Management
Nearly 81% of U.S. senior financial executives expect to see more sweeping changes in the core financial functions at their companies within the next two years, while approximately 58% already have seen such changes, according to a survey by the AICPA.The...
AICPA Poll Foresees Sweeping Changes in Financial Management Functions
Nearly 81% of U.S. senior financial executives expect to see more sweeping changes in the core financial functions at their companies within the next two years, while approximately 58% already have seen such changes, according to a survey by the AICPA.The...
'Anti-Conduit' Regulations Issued
IRC Sec. 7701(1) authorizes Treasury to promulgate regulations recharacterizing multiple-party financing arrangements as transactions directly among any two or more of the participating entities. As previously discussed in this column ("Heightened Caution...
Book Review: Beyond the Bottom Line
Beyond The Bottom LineBy Joel Makower and Business for Social Responsibility, Stern & Schuster, 335 pages, $23.00Review by Alexander A.H. Bohtling, CPA, retired from Deloitte & Touche, LLP.This book covers the expanding areas of corporate responsibilities,...
Bribes and Kickbacks - Where Is Your Company?
In a speech before the Institute of Internal Auditors, Norman Jaspan, consultant and author of several books on white-collar crime, declared that "bribes and kickbacks in this country have reached an alarming figure." Following are excerpts from some...
Clergy - Tax Benefits and Opportunities
CLERGY--TAX BENEFITS AND OPPORTUNITIESBy Howard Taber, CPA, Bloom Hochberg & co., P.C., CPAsIRC Sec. 107 permits members of the clergy a parsonage allowance, which is excluded from their gross income. For purposes of the social security tax, they...
Comprehensive Report Available Free to AICPA Members
The comprehensive version of the report from the AICPA Special Committee on Financial Reporting (Jenkins Committee) is now available from the AICPA. Some 200 pages in length, the report gives extensive information about the work of the committee and...
Doing Business in China
In 1966 Pearl Buck said, "The most dangerous element in today's world is the state of mutual ignorance which exists between the peoples of the United States and of mainland China." That ignorance persists even today. The majority of Americans focus on...
Drucker Reinvents Government
Deter F. Drucker, a renowned expert on management, stepped away from business management to a topic that has recently been on the top of many people's minds--how to reform government. In the February issue of The Atlantic Monthly, Drucker authored the...
Final Built-In Gains Tax Regulations Released
Over two years after the original proposal was released and eight years after the built-in gains tax was enacted, the Treasury Department issued final built-in gains tax regulations.IRC Sec. 1374 imposes a built-in gains tax on any C corporation that...
Final Partnership Anti-Abuse Regs. Issued
In May 1994, Treasury issued proposed regulations designed to curb abuse of the tax rules applicable to partnerships. (See "Controversial New Partnership Anti-Abuse Regulations Proposed" in the July 1994 issue of The CPA Journal.) The proposal drew overwhelming...
Group Support Systems Can Improve Your Meetings
A significant technological change for many companies over the next several years will be the advent of communication networks. Local- and wide-area networks will affect communication both within and outside any given locale. The ability to communicate...
Hidden Biases among Jurors in Accounting Malpractice Cases
While researching the behavior of juries, we examined the attitudes, experiences and predispositions that jurors are likely to bring to court when deciding accounting malpractice suits. As a result, we have developed the following advice for attorneys...
How to Transfer Wealth, Avoid Estate Taxes, and Maintain Con
Family Limited Partnerships (FLPs) are effective estate planning vehicles through which taxpayers can transfer wealth, avoid estate tax, and still maintain control of their assets. Husbands and wives who have more than $1.2 million in assets and are...
How to Transfer Wealth, Avoid Estate Taxes, and Maintain Control
Family Limited Partnerships (FLPs) are effective estate planning vehicles through which taxpayers can transfer wealth, avoid estate tax, and still maintain control of their assets. Husbands and wives who have more than $1.2 million in assets and are...
Income from Discharge of Indebtedness under Title 11
IRC Sec. 108 excludes discharged indebtedness from the gross income of an individual's bankrupt estate. Insolvent taxpayers are also allowed an exclusion, but only to the extent of insolvency. The amount excluded from gross income is applied to reduce...
IRC Sec. 9100 Relief and Tax Elections
Generally, elections prescribed by the IRC and regulations must be made by a specified time. In only a few instances can the election time be extended. Should a return be filed without an election, there are only a few choices available to the practitioner....
Know Your Client's Social Security Tax Zone
KNOW YOUR CLIENT'S SOCIAL SECURITY TAX ZONEBy Ken Fowler, CPA, CMA, CIA, CFE, Mankato State UniversityThe RRA '93 made tax planning for individuals receiving social security benefits more important and, unfortunately, more complicated. Gone are the days...
Liability and Basis Issues concerning LLC(s)/LLP(s)
Among the many issues that must be considered when selecting a form in which to conduct business are the exposure to personal liability for the debts of a business, the ability to deduct losses generated by the business, and the taxability of distributions...
Limited Liabilities Companies and Liquidation of Subsidiarie
LIMITED LIABILITIES COMPANIES AND LIQUIDATION OF SUBSIDIARIESBy Zev Landau, CPA, Lopez, Edwards, Frank & Co.A review of Letter Ruling 94040421 explores an interesting tax plan where the chief players are the common parent company of an affiliated...
Limited Liabilities Companies and Liquidation of Subsidiaries
LIMITED LIABILITIES COMPANIES AND LIQUIDATION OF SUBSIDIARIESBy Zev Landau, CPA, Lopez, Edwards, Frank & Co.A review of Letter Ruling 94040421 explores an interesting tax plan where the chief players are the common parent company of an affiliated...
Litigation Support Liability - the Mattco Decision
The Mattco Forge v. Ernst & Young case has opened a potentially significant new area of professional liability. Before this case, large judgments against the accounting profession were primarily in auditor malpractice cases. In June 14, however,...
LLCs: The Entity of the Future?
For many new and existing closely held companies, limited liability companies (LLCs) are rapidly becoming the entity of choice. An LLC is an unincorporated association created under the state law that combines the limited liability protection of a corporation...
New Law - Durable and Springing Powers of Attorney
There have been significant changes in the procedural requirements concerning durable powers of attorney. Sec. 5-1501 of the New York State General Obligations Law, which provides for the statutory short-form power of attorney, has been amended to reflect...
New Rules on Disclosure of Certain Significant Risks and Unc
In December 1994, the AICPA's Accounting Standards Executive Committee (AcSEC) issued Statement of Position 94-6 (SOP), Disclosure of Certain Significant Risks and Uncertainties, in response to increased demand for improved disclosures by reporting entities....
New Rules on Disclosure of Certain Significant Risks and Uncertainties
In December 1994, the AICPA's Accounting Standards Executive Committee (AcSEC) issued Statement of Position 94-6 (SOP), Disclosure of Certain Significant Risks and Uncertainties, in response to increased demand for improved disclosures by reporting entities....
Price Waterhouse Creates Simple but Effective Retirement Pla
It is easy to be impressed by the inexpensive, Price Waterhouse Retirement Planning System. As with so many of today's interactive programs, it can be used by different people at different levels. The novice will be able to get a quick snapshot that...
Price Waterhouse Creates Simple but Effective Retirement Planning Software
It is easy to be impressed by the inexpensive, Price Waterhouse Retirement Planning System. As with so many of today's interactive programs, it can be used by different people at different levels. The novice will be able to get a quick snapshot that...
Ray Groves: A Leader with a Point of View
After 17 years as Chairman and a Chief Executive, on October 1, 1994, Ray J. Groves relinquished the leadership reins of the second largest CPA firm in the U.S. He leaves a legacy not only of a strong, well-oiled management machine at Ernst & Young...
Reliance on the Owner/manager: Prudent Professional Behavior
Under what circumstances and to what degree should the independent auditor rely on the owner-manager (O/M) of a smaller entity where the O/M is dominant? The professional literature is ambiguous while research results indicate a dichotomy in audit approaches...
Reporting Options When Beginning Inventory Is Unobserved
CPAs offer clients three levels of service for historical financial statements: audits, reviews, and compilations. Sometimes CPAs are requested by clients to increase the level of service in the current year to an audit from the review or compilation...
Sell before Maturity - and Increase Your Bond Returns
Buy and hold. If your clients are like most investors, this is probably their approach to bonds. The problem is, buy-and-hold investing means giving up extra return that's available at no extra risk. In my experience, systematically selling before maturity...
Shared Foreign Sales Corporations
A shared foreign sales corporation (FSC), as defined in IRC Sec. 927(g)(3), is generally any FSC that maintains a separate account for transactions with and distributions to each shareholder (or related persons). The shared FSC is the primary tax-savings...
Steps to Take in Preparing and Dealing with an IRS Examinati
The chances of your tax return being examined by the IRS have fallen to an all time low. Taking too much comfort in this and not being prepared for such an experience is much like a nonswimmer, without a life preserver, wading into a stream "averaging"...
Steps to Take in Preparing and Dealing with an IRS Examination
The chances of your tax return being examined by the IRS have fallen to an all time low. Taking too much comfort in this and not being prepared for such an experience is much like a nonswimmer, without a life preserver, wading into a stream "averaging"...
Tax Court Denies Marital Deduction on Post-Death Appreciatio
In a regular opinion, the Tax Court recently ruled, in Estate of Agnello v. Commissioner, that the estate tax marital deduction is not allowed on the appreciation in estate assets that occurs after the death of the decedent spouse.IRC Sec. 2056(a) allows...
Tax Court Denies Marital Deduction on Post-Death Appreciation of Assets
In a regular opinion, the Tax Court recently ruled, in Estate of Agnello v. Commissioner, that the estate tax marital deduction is not allowed on the appreciation in estate assets that occurs after the death of the decedent spouse.IRC Sec. 2056(a) allows...
Tax Filing and Electronic Data Interchange
Tax return preparers and taxpayers currently have three alternative methods for filing income tax returns: mailing traditional paper returns, mailing condensed PC paper returns such as the 1040PC, and tax returns transmitted under the IRS's Electronic...
Valuing Stock Options: A Cost-Effective Spreadsheet Template
The December 1994 decision by the FASB to drop the requirement for an expense charge for options does not eliminate the problem of option valuation. The focus will now be on the notes to the financial statements rather than the income statement. Prior...