A mistake made in a taxpayer’s last-in, first-out (LIFO) computation may repeat in later-year returns if staff preparing the computation take a “same as last year” approach. When the mistake ultimately is detected, there is a question of whether the mistake represents a method of accounting or an error. Huffman
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Treatment of Gift Card/Certificate Sales: No Answers, More Questions
Gift card sales are becoming more and more a part of our retail shopping experience. The IRS is aware that the popularity of gift cards has increased “at a remarkable rate in recent years” (LMSB-04-0507-039). Gift card sales raise a variety of interesting federal income tax questions. The answers to
IRS Issues Final Regs on Automatic Contribution Arrangements
The Service on Tuesday issued final regulations on automatic contribution arrangements for 401(k) and other eligible plans. The regulations (TD 9447) adopt with modifications the 2007 proposed regulations (REG-133300-07) providing guidance on implementing provisions of the Pension Protection Act of 2006 and the Worker, Retiree, and Employer Recovery Act of
Financial Crisis Task Force Will Take Up Fair Value, Off-Balance-Sheet Transactions
The Financial Crisis Advisory Group, a joint task force assembled by FASB and the International Accounting Standards Board (IASB) to respond to the economic crisis, will take up issues including aspects of fair value accounting and off-balance-sheet transactions at its upcoming meeting. The group, which meets March 5 at
IRS Releases New Withholding Tables
The IRS on Monday released withholding tables that reflect a new tax credit, dubbed the making work pay credit, created by the stimulus package. The making work pay credit was created by the American Recovery and Reinvestment Act, PL 111-5, which President Obama signed on Feb. 17. The credit equals
Barry Melancon Reappointed President and CEO of the AICPA
The AICPA announced that Barry Melancon’s term as president and CEO has been extended for an additional five years by the Institute’s Board of Directors. Ernie Almonte, chairman of the AICPA, said the decision was the right one for the board to make. “Barry has made an enormous contribution to
ASB Issues Audit Documentation Guidance, Internal Control Standards
The Auditing Standards Board (ASB) issued the second clarified auditing standard resulting from its clarity project, which aims to make U.S. GAAP easier to understand and apply and gives each standard a principles-based objective. Statement on Auditing Standards Audit Documentation (Redrafted) supersedes AU section 339, Audit Documentation. The standard
Reminder: Support Your Auto Expenses
Auto expenses are a very common deduction for business owners and employees who must travel. Often the taxpayer does not know the exact amounts necessary to calculate the proper deduction and the tax preparer must estimate the mileage, business percentage, and ultimate auto deduction with the client’s help. Tax preparers
Financial Executives Predict Gloomy Results Into 2010
CPA financial executives in industry offered little encouragement to those hoping for a quick recovery from the current recession in the quarterly Business and Industry Economic Outlook Survey released Wednesday and conducted by the AICPA and the University of North Carolina’s Kenan-Flagler Business School. A full 75% of respondents
Requesting 9100 Relief
A taxpayer who fails to make a tax election by the due date for the election may not be out of luck. Certain extension and administrative relief options exist if the taxpayer can obtain “9100 relief” under Treas. Reg. §§ 301.9100-1 through -3. The drawback is that unless he or
Tax Aspects of Contributing a House to a Fire Department
Local fire departments often deliberately burn existing structures as a training exercise. New firefighters can practice their skills and techniques, knowing in advance that the structure is uninhabited. Often individuals will donate an old property, possibly even a former residence, to the local fire department. Obviously, where possible, taxpayers would
CAQ Offers Pointers for Integrated Audits of Internal Control
The Center for Audit Quality (CAQ) issued a report highlighting lessons learned from section 404 audits of internal control over financial reporting. The nonauthoritative report, designed to help audit firms that have not yet conducted an integrated audit, as well as more experienced firms, identifies 21 practical tips for auditors.
Individual Tax Breaks in the Stimulus Package
With its new and expanded tax benefits for individuals, the American Recovery and Reinvestment Act of 2009 seeks to get more money into the pockets of American consumers. College students and their families, homebuyers, and buyers of new cars are among the potential beneficiaries, but so too are low-income Americans,
Small Business Tax Breaks in the Stimulus Package
The American Recovery and Reinvestment Act of 2009 contains numerous tax provisions aimed at small businesses. Bonus depreciation: IRC section 168(k) is amended to extend the 50% first-year bonus depreciation through 2009 (through 2010 for certain transportation property and aircraft). The election to accelerate AMT and research credits in lieu
What to Do If a Client Is Missing a W-2
Employers had until Feb. 2 to issue Forms W-2 to their employees, showing wages and earnings for 2008. If a client hasn’t received a W-2 by now, here are the steps the IRS says to take: 1. Contact the employer. The client should contact his or her employer to find
Tax Court Can Look Outside Administrative Record in Determining Innocent Spouse Relief
The Eleventh Circuit has held that the Tax Court could consider evidence outside the administrative record when deciding on a taxpayer’s claim for innocent spouse relief (Neal, No. 06-14357 (11th Cir. 2/10/09)). The taxpayer had petitioned the IRS for equitable relief under IRC section 6015(f) because, unbeknownst to her, her
IFAC Launches Sustainability Framework
The Professional Accountants in Business Committee of the International Federation of Accountants has developed a sustainability framework for businesses. The free Web-based framework tool is designed to support professional accountants and their organizations in integrating a sustainable way of thinking and working in all business processes. The framework, which
Treasury Plan Calls for More Disclosure, Cooperation With SEC, Accounting Standard Setters
Treasury Secretary Timothy Geithner’s plan to rescue the nation’s financial system doesn’t appear to signal a major departure from the current accounting regime, observers said. “The [Treasury’s call for more transparency] doesn’t announce anything new,” said Paul B.W. Miller, CPA, Ph.D., a professor of accounting at the University of
Taxes in Troubled Times
The IRS has acknowledged there’s plenty of pain to go around in the current economic downturn. Financially strapped taxpayers can take advantage of several relief initiatives and provisions that could lessen their tax bite. Those with investments posting a loss may be able to “harvest” it or at least reposition
Late February 1099-B Mailings Will Compress Tax Season for Many
Some brokerage customers of Fidelity Investments won’t receive Forms 1099-B until after the newly extended Feb. 17 general deadline for sending out the information returns, the company said Thursday. Fidelity, the nation’s largest mutual fund company, asked for and received from the IRS an additional extension to the end
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