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. 213, No. 1, January

A New System for Recognizing Revenue: Learn How the New Model in FASB's Revised Proposal Could Affect Your Business
EXECUTIVE SUMMARY * FASB's revised proposal would create a single revenue recognition standard across industries for both U.S. GAAP and IFRS. * The proposal includes a detailed section of implementation guidance including: sale with a right of...
Board of Education: CPA Firms, Businesses Can Profit from Clients' Advice
EXECUTIVE SUMMARY * Client advisory boards (CABs) give CPA firms and other businesses the opportunity to receive feedback from key clients on topics such as services offered, quality of work performed and relationships between key parties. *...
Bridging Compensation Gaps in a Merger: Achieve Success by Reconciling Firms' Different Pay and Perks
EXECUTIVE SUMMARY * One of the biggest challenges in retaining partners and staff in a merger is reconciling differences in pay and benefits offered by the merging firms. Partners and staff who feel like the merger is hurting them financially are...
Estate Tax Protective Claim Procedures Detailed
The IRS issued guidance on filing a protective claim for refund of estate tax and notifying the IRS that the claim is ready for consideration. The guidance, in Rev. Proc. 2011-48, provides details on who may file a protective claim, methods by which...
Home Office Deduction
With unemployment still near the highest rate in decades, it is not surprising to find many people working out of their homes. Now may be a good time to review the criteria for claiming a deduction for the business use of part of a person's residence....
IRS Audits of Small Business Software Files: Practitioners Should Balance Risk for Their Clients
EXECUTIVE SUMMARY * In its examinations of the returns of small business taxpayers, the IRS is increasingly requesting electronic files of accounting programs such as QuickBooks and Peachtree. While taxpayers and their CPA tax preparers must be...
IRS Provides Planning Opportunity for Accrued Bonuses
A recently issued revenue ruling (Rev. Rul. 2011-29) provides accrual-method employers with a potential planning opportunity to secure a current deduction for accrued bonuses paid within 2 1/2 months of their tax year-end. This opportunity can apply...
Mortgage Interest Deduction Allowed for Home Never Built
The Tax Court held that a couple could deduct interest paid on a loan incurred to purchase property on which they intended to construct a new home but never did. According to the court, a qualified residence was deemed to be under construction when...
New Law, Proposed Regs Heighten EITC Preparer Due Diligence
The Sec. 6695(g) penalty for failure by preparers to exercise due diligence with respect to the earned income tax credit (EITC) increased from $100 to $500 effective for returns required to be filed after Dec. 31, 2011. The measure was enacted in...
One Size Does Not Fit All: A Look at Private Company Financial Reporting in the U.S. and Tiered GAAP Alternatives Being Considered Abroad
EXECUTIVE SUMMARY * The Blue-Ribbon Panel on Standard Setting for Private Companies recommended in January 2011 U.S. GAAP for private companies based on existing U.S. GAAP but with exceptions and modifications and a "private company accounting standards...
Penalty Relief Given, Backup Withholding Delayed for Payment Card Reporting
In Notice 2011-88, the IRS postponed for a year the effective date of the backup withholding requirement for payments in settlement of payment card and third-party network transactions that are subject to reporting under Sec. 6050W (Sec. 6050W payments)....
PTIN Procedures Detailed
Return preparers who needed to renew their preparer tax identification number (PTIN) for the 2012 tax preparation season should have done so before Dec. 31, 2011; if they did not renew by that date, they must register as a new applicant. Those were...
Qui Tam Award Held Taxable
The Eleventh Circuit Court of Appeals affirmed a Tax Court determination that a qui tam whistleblower award to a taxpayer under the federal False Claims Act (FCA) was taxable. Under the FCA, a person may bring a civil action, in which the U.S. government...
Tax Relief and Health Care Acts Shape 2011 Returns: Return Preparers Face New Regulations; Information Reporting Expands
[ILLUSTRATION OMITTED] As CPAs gear up for tax season, they'll find the Form 1040 series for 2011 looking much the same as that of the previous year, but only because of Congress 11th-hour compromise late in 2010 to keep it so. Nonetheless, a number...
The Basics of S Corporation Stock Basis: Avoid Problems in Calculating and Tracking Shareholders' Basis
EXECUTIVE SUMMARY * Tracking owners' basis in S corporation stock is a necessary but sometimes neglected task that can require extensive and difficult reconstruction if not updated and adjusted regularly. * Items that increase basis include capital...
Top-Hat Retirement Plans
Tax-exempt entities may establish as many as three types of tax-favored retirement plans. They may, of course, establish qualified retirement plans. They may also establish Sec. 403(b) plans, generally known as tax-sheltered annuities. The tax law...
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