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. 209, No. 6, June

Adoption Credit and Exclusion Expanded
The Patient Protection and Affordable Care Act (PL 111-148) temporarily increased the adoption expense credit and fringe benefit exclusion limit for adoption-assistance programs and made the credit refundable. The changes are effective for tax years...
Don't Neglect to Elect
A wide range of federal tax elections gives individual taxpayers options for how they report certain income or expense items. Some of the more common elections for individuals concern retirement plans, medical expenses and interest expense. Each election...
Firm Up Your Data Security
Given the many threats organizations face in protecting critical information and processes, an information security policy is arguably one of the most important documents an organization can create. Consider these best practices for creating a new...
Fortify Your Facebook Privacy Settings: Don't Let the Window into Your Personal Life Sully Your Professional Reputation
[ILLUSTRATION OMITTED] Thousands of CPAs and many state CPA societies are using Facebook to help establish and maintain relationships. A search for CPA' on Facebook yields more than 31,000 results. As more CPAs continue to embrace this venue, privacy...
IRS Provides Guidance, Steps Up Exams of Sec. 199 Issues
Code [section] 199 provides a deduction equal to a specified percentage (9% for 2010 and subsequent years) of the lesser of qualifying production activity income (QPAI) or taxable income. In brief, QPAI equals eligible receipts, or domestic production...
Keeping Fraud in the Cross Hairs: Report Highlights Common, Costly Schemes and Makes Prevention the Target
Five percent of annual revenue--that's the estimate of how much money the typical organization loses to fraud, according to participants in the 2010 Report to the Nations on Occupational Fraud and Abuse. The report, prepared by the Association of...
New GAAP for Multiple Deliverables: Revenue Recognition Changes Require Businesses to Disclose More about Transactions
EXECUTIVE SUMMARY * Accounting Standards Update 2009-13, released in October 2009, made significant changes to revenue recognition for multiple-element sales. * Whether an element has an objective and reliable fair value, as previous GAAP required...
Ninth Circuit Reverses Itself in Xilinx
The Ninth Circuit Court of Appeals affirmed the Tax Court's holding that allowed a semiconductor company to deduct costs of employee stock options (ESOs) without having to share them with its Irish subsidiary in a joint venture (Xilinx v. U.S., docket...
Opening the Door to Financial Regulatory History: SEC Historical Society's Online Museum, Launched in 2002, Finds Greater Relevance in an Era of Financial Upheaval
[ILLUSTRATION OMITTED] At a time when financial regulatory reform is capturing headlines, an online museum administered by the SEC Historical Society is granting users from Wall Street to Main Street equal access to resources, relics and research...
QSub Bank's Tax-Exempt Bond Expense Deductible
The Seventh Circuit Court of Appeals held that a bank organized as a qualified S corporation subsidiary (QSub) could deduct in full its interest paid to acquire tax-exempt bonds, reversing the Tax Court. As a general rule, expenses related to producing...
Request for Replacement Estate Tax Check Denied
The U.S. Court of Federal Claims held it did not have jurisdiction to issue a replacement check to a U.S. executor after a foreign executor named to the same estate cashed a refund check from the IRS. The issue arose after a U.S. citizen died in...
Sixth Circuit Finds False Imprisonment Settlement Payments Taxable
The Sixth Circuit affirmed a Tax Court decision that settlement proceeds received for false imprisonment were not excludable under IRC [section] 104(a)(2) as amounts received due to physical injury. Brenda Stadnyk was falsely imprisoned as the result...
Spouse Had "Reason to Know" of Disallowed Deductions
The Sixth Circuit joined the Second, Fifth, Seventh, Eighth, Ninth and Eleventh circuits in adopting the "knowledge of the transaction" test of Price v. Commissioner (887 F.2d 959 (9th Cir., 1989)) in innocent spouse cases, upholding a Tax Court finding...
SUB Payments Are Not FICA Wages
The District Court for the Western District of Michigan affirmed a bankruptcy court's holding that severance payments by a bankrupt company to its laid-off employees were not subject to FICA tax. The court held that because IRC [section] 3402(0) subjects...
Tax Return Preparation Mistakes: How to Avoid or Mitigate Professional Liability
EXECUTIVE SUMMARY * Professional liability for CPA tax preparers and other tax practitioners can arise from mistakes or omissions in preparing clients' tax returns. Courts have recognized limits on this liability, and, in many instances, tax practitioners...
Test Your Knowledge of Professional Ethics
[ILLUSTRATION OMITTED] Periodically the JofA publishes questions on ethics topics that have been raised by AICPA members via the Institute's Ethics Hotline. This set of questions and staff answers deals with the application of the Code of Professional...
The Federal Reserve Issued Final Rules That Restrict the Fees and Expiration Dates That Apply to Gift Cards
The Federal Reserve issued final rules that restrict the fees and expiration dates that apply to gift cards. The rules are intended to protect consumers from certain unexpected costs and require that gift card terms and conditions be clearly stated....
The Last Word
Fear is a funny thing. It can paralyze--or it can motivate. One type of fear, however, actually inspires me: It is the fear of passing up an opportunity because I am comfortable with the status quo. I don't ever want that to happen. Right now, I...
The Recovery Act: An Auditee's Perspective: Fund Recipients Must Heed Single Audit Act Requirements
EXECUTIVE SUMMARY * Recovery Act funds allocated for contracts, grants and loans are subject to the requirements of the federal Single Audit Act of 1984 (as amended in 1996), passed by Congress to establish requirements for audits of governments...
Widow Not Barred from Innocent Spouse Claim
The Tax Court determined that a widow was not prohibited from raising the issue of relief from joint and several liability for three tax years that had been previously litigated. The court concluded that the exception to res judicata applied, but it...
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