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. 174, No. 2, August

Accounting for Real Estate Syndication Income and Foreclosed Assets
Statement on Auditing Standards no. 69, The Meaning of "Present Fairly in Conformity With Generally Accepted Accounting Principles" in the Independent Auditor's Report, identifies statements of position (SOPs) as sources of established GAAP This month's...
Accounting Software Now Available for the Nonaccountant
The emergence of the powerful personal computer is changing the way small business owners do their accounting. As paper-based bookkeeping starts to pass into history, the flickering glow of a computer screen is becoming as common in the back room...
AICPA Benevolent Fund: A Way for Members to Help the Profession's Neediest
The AICPA Benevolent Fund, Inc., is one of the Institute's oldest and most worthy, but least publicized, member services. Leonard I. Green, the AICPA director of financial management and staff aide to the Benevolent Fund, says it was established in...
AICPA Testifies on Draft Investment Advisers Bill
The American Institute of CPAs emphasized the need for reform of the Investment Advisers Act of 1940 to focus on activities giving rise to investment adviser fraud and abuse--namely, holding clients' funds or securities for investment purposes or recommending...
A Strategy for Improving the Quality of a CPA's Life
EDITOR Judith R. Trepeck, CPA Rehmann, Robson & Co. 30800 Northwestern Highway, Suite 220 Farmington Hills, Michigan 48334 CONTRIBUTING EDITORS Jerrell A. Atkinson, CPA Atkinson & Co., Ltd. Albuquerque, New Mexico ...
Auditing Postretirement Benefits: How to Deal with FASB 106
Much has been written about the financial statement impact of Financial Accounting Standards Board Statement no. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions (see "The New FASB 106: How to Account for Postretirement Benefits,"...
Back-Pay Award for (Pre-1991 Title VII) Discrimination Is Taxable
Under Internal Revenue Code section 104(a)(2), damages received on account of personal injuries are excludable from income. There was conflict in the federal courts of appeal as to whether a back-pay award to settle a claim of employment discrimination...
Black Days for Accounting Firms
Philip R. Lochner, Jr., a former Securities and Exchange commissioner, addresses the question of accountants' liability, as most recently defined by the decision to award Standard Chartered Bank $338 million. The following article is reprinted with...
Defining "Activity" for Passive Losses
In May 1989, the Internal Revenue Service issued a complex set of temporary regulations defining "activity" for passive loss purposes. The temporary regulations used a building-block approach, starting with an "undertaking" and then combining these...
Du Pont and Seagram Make Merger History
8 J.E. Seagram Corp. is involved in a dispute with the IRS that has reached the Tax Court. The resolution will have widespread ramifications regarding the tax consequences of mergers and other stock-for-stock transactions. At issue is E.I. Du Pont...
Foreign Tax Reform Bill
A bill to improve the application of U.S. tax laws to American businesses operating abroad was introduced in May by House Ways and Means Committee Chairman Dan Rostenkowski (D-IIi.) and Willis Gradison (R-Ohio), a committee member. The Foreign Income...
IASC Issues Five New Comparability Project Exposure Drafts
The International Accounting Standards Committee (IASC) published five exposure drafts as part of its comparability and improvements project. The project's purpose is to develop revised international accounting standards (IAS) that permit fewer free...
Independent Contractors: Bill May Solve the Problem
Possible relief is on the horizon for many small and medium-sized businesses that employ workers they classify as independent contractors. These employers have been walking a legal tightrope for years because the guidelines for distinguishing an independent...
IRS Gets New, More Flexible Guidelines on Offers in Compromise
Internal Revenue Code section 7122 gives the Internal Revenue Service the authority to settle a criminal or civil case with a taxpayer through offers-in-compromise procedures. The authority extends only to tax liabilities that have been assessed but...
Locating a 401(k) Provider: What to Do When a Client Asks for Help
When a client asks for advice on establishing a 401(k) pension plan, many CPAs are not on comfortable ground. While they may have a general knowledge of pension plans, they probably lack the in-depth know-how to offer specific advice. In fact, they...
Pennsylvania CPAs Find Baby Boomers Worried over Finances
The Pennsylvania Institute of CPAs (PICPA) surveyed 500 members with clients who are either in the baby-boom age bracket or employed by companies owned or managed by baby boomers. It found that generation, which accounts for 31% of the U.S. population,...
QTIP Deduction Allowed despite Accumulation Clause in Trust
George and Lavedna Ellingson set up an irrevocable trust governing the disposition and management of their property during their lives and after their deaths. They also were the initial trustees of the trust. On George's death, the trust instrument...
Redemptions versus Cross-Purchase Agreements
The death of one of the owners of a closely held corporation can cause special problems for the owner's estate, especially those dealing with the value of the corporation's stock. One way to avoid many of these problems is through the use of a buy-sell...
Sex Discrimination and CPA Firms
President Bush late last year signed the Civil Rights Act of 1991, which amends Title VII of the Civil Rights Act of 1964. Precisely what this act achieves will not be clear until it is interpreted in the courts. However, we do know the law increases...
Small Business Relies on CPAs, Says PCPS Survey
An American Institute of CPAs private companies practice section survey of 2,000 small businesses (with revenues between $500,000 and $25 million) was released in May. Among the findings: 44.1% of the respondents turned to CPAs first for outside business...
Small Business Thrives on Hiring Older Workers
Small business and older workers have a mutual attraction, according to a 1991 Small Business Administration study. In 1988, companies with fewer than 25 employees hired more than two-thirds of newly hired workers aged 65 and over. In that year workers...
Takeover Expenses: National Starch and the IRS Add New Wrinkles
In the 1980s, the business world witnessed a proliferation of mergers and acquisitions. Of transactions valued at $1 million or more, over 31,000 M&As involving U.S. companies occurred during the last decade, with a total value exceeding $1.34...
The Consumer's Perspective on the Insurance Crisis
Fears of another savings and loan crisis and a shortage of objective advice have left consumers confused, nervous and distrustful of the insurance industry. In 1991, state regulators seized six major insurance companies: Executive Life, Executive Life...
Transfer of Home Ineffective for Estate Tax Purposes
Lydia Maxwell sold her home to her son in 1984 for $270,000. The son and his wife gave back a $250,000 mortgage, on which the son made yearly payments of 9% interest but no payments of principal. Maxwell forgave the remaining $20,000 of the purchase...
Understanding Social Security Retirement Benefits
Older clients often rely on CPAs for information and advice on the computation, reduction and taxation of Social Security retirement benefits. Because Social Security benefits are an important aspect of retirement planning, CPAs need to know how these...
What the Quill Decision Means for Business Owners
CPAs should make certain their clients or companies doing business out-of-state are fully aware of the ramifications of the U.S. Supreme Court's recent Quill decision. Direct marketers, such as L.L. Bean and Lands' End, breathed a sigh of relief when...
What to Do If the IRS Audits Your Pension Plan
Many small and medium-sized pension plans are now more vulnerable than ever to an Internal Revenue Service attack if they are not administered by competent professionals. CPAs should advise their companies and clients that many more plans will be required...
Where Small Business Can Find Export Help
CPAs with small business clients or companies interested in exporting should advise them to contact the nearest Small Business Administration office. The 107 SBA field offices across the country provide counseling and financial assistance to meet...
Winning an Engagement: A Step-by-Step Approach
The message is clear. Accounting firms that hope to be successful in today's competitive markets must train employees to sell the accounting services they offer and sell them aggressively. Many in the accounting profession perceive selling as somehow...
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