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. 207, No. 1, January

Annuities and the Other Side of the Retirement Savings Coin: Help Your Clients Achieve Their Financial Goals for Their Golden Years
[ILLUSTRATION OMITTED] EXECUTIVE SUMMARY * CPAs advising clients on planning for retirement must reckon with greater longevity of today's retirees and the risk of market swings that could drastically deplete the value of invested assets. *...
CFC Credit Rules Eased
In response to the liquidity crisis, which has made it difficult for taxpayers to fund their operations, the IRS quickly responded on Oct. 3 with Notice 200891, temporarily expanding the short-term financing exception to IRC [section] 956. This measure...
Congress Extends, Amends Research Credit
The recently enacted Emergency Economic Stabilization Act of 2008 includes the long-awaited extension of the IRC [section] 41 research credit. The credit had expired at the end of 2007, but the act extends it to apply to amounts incurred after Dec....
Exercising Leadership
[ILLUSTRATION OMITTED] I want to speak about where our profession is headed during the next 12 months and beyond, and how getting there will require a willingness to think and act differently. I will describe some methods I think we can all use...
Financial Reporting for Real Estate: Will FASB 157 Achieve a Higher and Better Use?
[ILLUSTRATION OMITTED] EXECUTIVE SUMMARY * Under FASB Statement no. 157, the highest and best use of all assets, including real property, should be considered when measuring that asset's fair value. * Fair value should be measured from a market...
Medical Residents Not Subject to FICA
Although circuits have split on the issue previously, two recent decisions concluded that medical residents are not subject to FICA, based on the student exception of IRC [section] 3121(b)(10). The provision states that the term "employment" "shall...
Nine Lives for Ohio's CAT?
The Ohio Supreme Court has been asked to rule on Ohio's commercial activity tax (CAT) as applied to certain food sales, after the tax was found by a state appeals court to violate the state constitution in that regard. A gross receipts business...
No Good Deed Goes Unpunished
A volunteer president of the board of directors of a nonprofit day care center was held personally liable for the day care's payroll taxes and therefore was not entitled to a refund of the taxes he paid on behalf of the organization. The Seventh Circuit...
Plan Design in the Balance: Weighing the Pros and Cons of Cash Balance Plans
[ILLUSTRATION OMITTED] EXECUTIVE SUMMARY * A cash balance plan is considered a defined benefit plan and must follow the rules relating to those plans. However, a "ash balance plan looks like a defined contribution plan to the participant. ...
Preventing Identity Theft throughout the Data Life Cycle
EXECUTIVE SUMMARY * CPAs and their clients or corporate employers are susceptible to privacy breaches, leaving their customers and employees at risk of identity theft. * Data may lose its value to an organization, but it may not lose value to...
Quick Points on Prenups: Premarital Agreements (Also Known as Prenuptial Agreements, or "Prenups" for Short) Involve Elements of Estate Planning and Divorce Law. and Because Such Agreements Can Center on Finances and Taxes, Accountants Should Be Aware of How They Operate
WHEN A PRENUP MAY BE NEEDED Prenups aren't just for rich people--they are for anyone who is concerned about losing control of his or her property as a result of marriage. They may be especially helpful when: [check] One or both spouses have significant...
Recoverability of Equity-Based Compensation Deferred Tax Assets
As the stock market slides, more stock options and related deferred compensation instruments are "underwater," and the related deferred tax assets may no longer be recoverable. The balance sheets and tax footnotes of many entities highlight the magnitude...
Social Security for Two: CPA Personal Financial Advisers Should Run the Numbers on Social Security, and for Their Married Clients, That Goes Double
[ILLUSTRATION OMITTED] EXECUTIVE SUMMARY * Part of the consideration of whether to claim early Social Security retirement benefits, for married couples, should be the effect on a lower-income surviving spouse later, after the primary wage earner's...
Statement of Federal Financial Accounting Standards 33-Pensions, Other Retirement Benefits, and Other Postemployment Benefits: Reporting the Gains and Losses from Changes in Assumptions and Selecting Discount Rates and Valuation Dates
SUMMARY During its consideration of long-term obligations, the Board discussed the need to highlight gains and losses from changes in assumptions in federal financial reports. Some of the most significant changes in amounts on the statement of net...
Stock Loan Treated as Sale
The value of a couple's stock securing a loan could not be deducted as a theft loss, even though the stock was sold without the borrowers' knowledge, the U.S. District Court for the Northern District of California ruled. Other claims, including whether,...
The AICPA's Auditing Standards Board Issued Two Final Standards on Internal Control
The AICPA's Auditing Standards Board issued two final standards on internal control. Statement on Standards for Attestation Engagements (SSAE) no. 15, An Examination of an Entity's Internal Control Over Financial Reporting That Is Integrated With...
The Confirmation Process: Auditing Interpretations of AU Section 330
AU Section 9330 1. Use of Electronic Confirmations .01 Question--AU section 330, The Confirmation Process (AICPA, Professional Standards, vol. 1), uses phrases such as written communication and mail the original confirmation when describing the...
The Death of LIFO? Changing Inventory Method Requires Managing the Accounting-Tax Differences
EXECUTIVE SUMMARY * Voluntary changes in inventory costing methods generally are applied retrospectively for financial reporting purposes. For taxation, entities generally may recognize resulting effects that increase tax liability ratably over...
The Last Word
Growing up in the small, rural town of St. Albans, W.Va., I didn't foresee any future beyond that of my family of nine. My father was a self-employed bricklayer, and my mother made $6 a day cleaning houses. I worked alongside both of them, plus milked...
VEBA's Excess Set-Aside Is UBI
The Court of Federal Claims ruled that a tax-exempt voluntary employees' beneficiary association (VEBA) recognized income subject to the unrelated business income tax (UBIT) because it exceeded the amount the VEBA could set aside to pay benefits. ...
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