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. 204, No. 3, September

50 Examples of When to Apply SSVS1
SSVS1 applies to any AICPA member who performs "an engagement to estimate value." According to the statement, any member who performs such an engagement is called a valuation analyst. The statement applies to any engagement to estimate value when...
A Bid for Fair Value: Market-Based Option Pricing May Lower Expenses for Share-Based Payments, but Is It Worth the Cost?
EXECUTIVE SUMMARY * Zions Bancorporation developed Employee Stock Option Appreciation Rights Securities (ESOARS) as a market-based pricing technique for expensing stock options under FASB Statement no. 123(R). * ESOARS auctions may be able to...
AICPA Urges Congress to Reconsider Preparer Standards
When Congress passed the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act of 2007, it contained one major tax policy change not reflected in the title. The law, which was enacted May 25, included a...
CPAs as Corporate Directors: Be Diligent, Not Fearful
EXECUTIVE SUMMARY * Section 407 of SOX requires public company disclosure of "financial expert" participation on an audit committee but stops short of requiring one. Reasons for not including one must be disclosed. CPAs have become prime candidates...
D.C. Circuit Switches Position in Murphy
The Court of Appeals for the D.C. Circuit recently reissued its opinion in Murphy, Marrita v. IRS (see "Tax Matters," JofA, Feb. 07, page 70). The original opinion was released in August 2006, and vacated in December 2006, after the IRS requested a...
Eight Habits of Highly Effective Audit Committees: Tools to Take Your Committee to the Next Level
EXECUTIVE SUMMARY * To ensure that your committee is up to its mission, you must first define the mission by drafting a strong charter that identifies audit committee functions, authority and responsibilities, along with the skills and experience...
Forced Home Sale Can Result in Income to the Borrower
When the real estate market was booming, many homeowners either borrowed heavily to buy in at the top or took out home-equity loans, which added to their debt. Now that the real estate market has cooled, some homeowners are waking up to an unpleasant...
Managing Time-Sensitive Engagements: Have You Ever Accepted a Time-Sensitive Business Valuation Project Then Spent Many Late Nights Finishing the Engagement? These Suggestions May Help Your Effectiveness
* Assess the risks. Time-sensitive engagements tend to elevate risks. Make sure the project is worth the risks that will be assumed to complete it and that the compensation will adequately reward the efforts. * Determine the "critical path" to completing...
Matching Asset Values for Income and Estate Tax
Two recent cases confirm that the income tax basis of inherited property is the same as the amount agreed upon for estate tax purposes. The Second and Ninth circuit courts of appeals held that two brothers, as heirs of their father's estate, must use...
Nexus and FIN 48: States of Flux
The reporting requirements of FASB Interpretation no. 48 have exacerbated an already vexing matter for many CPAs and taxpayers--the uncertainty surrounding the tax issue of nexus. Much of that uncertainty derives from inconsistent adjudication of nexus...
Pension Protection Act Changes Valuations for Tax Purposes
EXECUTIVE SUMMARY * The Pension Protection Act of 2006 changed tax valuation matters that affect how appraisals of non-cash contributions are considered by the IRS. * The IRS now has greater authority to impose penalties on appraisers who value...
Professional Guidance in Business Valuation: Applying SSVS1
EXECUTIVE SUMMARY * CPAs perform valuation services for numerous purposes, including transactions, financings, taxation planning and compliance, intergenerational wealth transfer, ownership transition, financial accounting, bankruptcy, management...
S Corporation Profits or Payday? CPAs Must Be Vigilant in Helping Their S Corporation Clients Pay a "Reasonable" Salary to Shareholder-Employees. but What's Reasonable?
EXECUTIVE SUMMARY * CPAs can help their clients determine what is a reasonable salary to pay shareholder-employees (SEs) of S corporations, thus satisfying an IRS priority to collect proper amounts of employment taxes. Distributions, including =disguised...
Suggested Guidelines for How to Implement SSVS1 in Your BV Practice
Follow these 10 recommendations to integrate Statement on Standards for Valuation Services no. 1, Valuation of a Business, Business Ownership Interest, Security, or Intangible Asset, into your business valuation practice. These guidelines are presented...
The Last Word
I am the chief financial bear at Build-A-Bear Workshop. I am surrounded by stuffed animals at Build-A-Bear Workshop World Bearquarters in St. Louis, where employees can bring their dogs and children to work. Our offices are decorated as playfully as...
You Say Omit, I Say Understate
The Tax Court recently held that an understatement of gain by a partnership due to overstating its basis on a section 754 election did not result in an omission of gross income. Thus a proposed gain adjustment by the IRS was not timely, since it occurred...
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