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. 5, May

AICPA: Correspondence Audits Challenge Taxpayers
The IRS's use of correspondence audits to resolve issues with tax returns has mushroomed over the past decade--but taxpayer satisfaction with the program is fairly low. According to the Treasury Inspector General for Tax Administration (TIGTA), only...
Auditing Transition
With audit busy season ending, it's time to start preparing for the transition to the clarified standards, which are effective for calendar year 2012 audits. A smooth transition requires information, education, and training. Take these steps to prepare...
Compilation Reports for Valuation Engagements? Q&A Resolves SSARSS and SSVS Confusion
Business valuation (BV) reports frequently include information presented in the form of financial statements. The reporting requirements for such financial statements have drawn increased attention as a result of the issuance of Statement on Standards...
CPAS Prioritize Tech Security: Many Unsure How to Best Leverage Emerging Trends
[ILLUSTRATION OMITTED] CPAs are confident that their organizations can secure their IT networks and manage data, but they doubt whether their employers will be able to generate revenue streams and other benefits from emerging technologies such as...
Eighth Circuit Agrees That CPA Was Underpaid
The Eighth Circuit Court of Appeals held that a portion of the dividends paid by an S corporation to its CPA sole shareholder/ employee was compensation. In upholding the decision by the District Court of Southern Iowa, the Eighth Circuit agreed that...
Executives Turn Data into Internal Insight
Prolonged economic sluggishness--which has limited organic growth and stymied mergers and acquisitions the world over--has given many companies something they didn't have when things were busier: time, and reason, to think differently about new ways...
FAF Review of FIN 48 Shows It Meets Its Objectives
The Financial Accounting Foundation (FAF) issued a post-implementation review (PIR) of FIN 48 (FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes). The PIR is a new process designed to help the FAF trustees with efforts to evaluate...
FTC "Splitter" Rules Issued
The IRS issued final regulations on determining who has the legal liability to pay the foreign tax for foreign tax credit (FTC) purposes ('ED. 9576) and temporary regulations on the application of the "anti-splitter" rules of Sec. 909 (T.D. 9577)....
Gaining (from) Your Clients' Trust: How CPAS Can Shift from Service Provider to Essential Business Adviser
EXECUTIVE SUMMARY * The benefits of becoming a trusted business adviser (TBA) include improved client relationships, a higher likelihood of client referrals, a boost to the CPA's or firm's brand, a steadier revenue stream, better profit margins...
Hire a Hero, Enjoy the Benefits: New Incentives for Hiring Disabled and Unemployed Military Veterans
EXECUTIVE SUMMARY * Although the work opportunity tax credit expired at the end of 2011 for other targeted hiring groups, Congress extended and expanded it for qualified military veterans hired after Nov. 21, 2011, and before Dec. 31, 2012. *...
Partnerships Can Issue Schedules K-1 Electronically
The IRS issued Rev. Proc. 2012-17, which contains rules partnerships must follow to supply Schedules K-I, Partner's Share of Income, Deductions, Credits, etc., electronically. The guidance was effective Feb. 13. A person required to furnish Schedules...
Reasonable Salary for S Corporation Owners
Besides its single level of taxation as a passthrough entity, an advantage of an S corporation over a C corporation is that a shareholder's share of the corporation's net income is not considered self-employment earnings and therefore is not subject...
Tax-Advantaged Investing for an Uncertain Economy: These Seven Strategies May Mitigate Risk and Enhance After-Tax Returns
EXECUTIVE SUMMARY * Recent periods of high economic uncertainty, while challenging for investors and their advisers, may present opportunities for special tax-advantaged strategies. * For example, qualified covered calls could generate limited...
Tax Court Respects Stock Sale, Denies Transferee Liability
In Norma L. Slone, the petitioners prevailed when the Tax Court refused to apply the substance-over-form doctrine to recast a sale of a company's stock following an asset sale as a liquidating distribution. The court further found that the taxpayers...
The 10 Most Powerful Postmortem Planning Pointers for Trusts and Estates
EXECUTIVE SUMMARY * Tax planning has just begun when Form 1040 is filed. * Choosing a fiscal year end for the estate can maximize tax deferral. * The estate should make distributions to minimize the overall tax burden. * Use of the accrual...
The Last Word
In retrospect, it was a foolish idea. At 29, I took the leap and started an accounting firm. I had a young family, very little money, and only a handful of clients at the time. The smart thing would have been to seek out a good firm with stability,...
What's Your Fraud IQ?
[ILLUSTRATION OMITTED] The inherent and evolving risks in the banking environment--especially concerning online transactions--command that account holders keep abreast of threats to their accounts, understand their rights and responsibilities as...
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