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. 4, April

Acquiring Basis in S Corp Shareholder Loans
Practitioners routinely face the challenge of helping S corporation shareholders increase their basis for purposes of deducting pass-through losses under IRC [section] 1366(d)(1). Often, planning to increase basis will result in shareholders making...
Applying Forensic Skepticism to Lost Profits Valuations: Use the Correct Tools to Avoid Overcompensating Claimants
EXECUTIVE SUMMARY * Forensic accountants are frequently engaged to review business interruption (lost profits) damages for insurance claims. Although it isn't always the case, owners of privately held companies may have the opportunity to inflate...
FLP Affirmed by Tax Court
The Tax Court held that although a family limited partnership (FLP) conducted no active trade or business, it nonetheless fulfilled a legitimate and significant nontax purpose. Thus, a discounted value of an interest in the FLP, rather than that of...
Gift Tax on QTIP Transfer Included in Gross Estate
The Tax Court agreed with the IRS that gift tax of approximately $10 million resulting from the gift of qualified terminable interest property (QTIP) by a decedent within three years before her death was includible in her gross estate under IRC [section]...
IFRS for SMEs-U.S. GAAP: Comparison Tool Available Online
[ILLUSTRATION OMITTED] While the SEC moves toward a 2011 vote on whether to require U.S. public companies to report using IFRS, a more compact version of the international standards is already an option, subject to state board approval, for U.S....
IRS Proposes Disclosure of Uncertain Tax Positions
The IRS said on Jan. 26 (Announcement 2010-9) that it may require businesses to disclose with their tax returns any uncertain tax positions for which they must establish a reserve, as well as those for which they have not established a reserve because...
Life Insurance Checkup
Life insurance policies often form a large percentage of a client's net worth. As goals, needs and products evolve, advisers should review their clients' insurance portfolio to make sure it is optimized. Follow these steps to get started: * Confirm...
Materiality in Planning and Performing an Audit
Statement on Auditing Standards (SAS) Materiality in Planning and Performing an Audit supersedes SAS No. 107, Audit Risk and Materiality in Conducting an Audit (AICPA, Professional Standards, vol. 1, AU sec. 312). CONTENTS Introduction Scope of This...
Preface to Codification of Statements on Auditing Standards, Principles Underlying an Audit Conducted in Accordance with Generally Accepted Auditing Standards
This preface contains the principles underlying an audit conducted in accordance with generally accepted auditing standards (the principles). These principles are not requirements and do not carry any authority. The Auditing Standards Board has...
Project Management for Accountants: Effectively Plan Engagements to Achieve Success
EXECUTIVE SUMMARY * Project management is a results-focused concept based on planning and achieving firm objectives. * Project management can replace time sheets. Firms that use project management do not need to track time on an hourly basis....
Statement on Auditing Standards Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Generally Accepted Auditing Standards
Statement on Auditing Standards (SAS) Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance With Generally Accepted Auditing Standards supersedes: SAS No. 1, sections 110, Responsibilities and Functions of the Independent...
Tax Court Must Heed Special Trial Judge's Report
In the long-running case of three taxpayers at the center of an alleged kickback and tax-avoidance scheme, the Seventh Circuit held that the Tax Court did not give proper deference to the findings of its special trial judge (STJ) 12 years ago. In so...
Tax from the Top: Q&A with IRS Commissioner Doug Shulman
[ILLUSTRATION OMITTED] In March 2008, Doug Shulman became the 47th commissioner of the IRS, after serving as vice chairman of the Financial Industry Regulatory Authority (FINRA). Within months, the financial crisis hit and the IRS was given the...
Tax Treatment of Adoption Expenses: A Sizable Tax Credit Is Available, but with Possible Changes on the Horizon
EXECUTIVE SUMMARY * Families facing high costs of adopting a child may ask their CPA about the adoption expense tax credit. * Besides advising clients about the nonrefundable credit's limits and strategies for carryforward of excess credits,...
Technology Considerations for Converting to IFRS
[ILLUSTRATION OMITTED] Lewis A. Dulitz, vice president of accounting policies and research at Covidien--a $10.7 billion health care products company with 42,000 employees in more than 60 countries--was part of a team that implemented the necessary...
Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (Redrafted)
Statement on Auditing Standards (SAS) Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (Redrafted) supersedes SAS No. 109, Understanding the Entity and Its Environment and Assessing the Risks of Material...
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