The Sex of a Hippopotamus: A Unique History of Taxes and Accounting
by Jay Starkman
Twinset Inc., 2008, 456 pp.
The Sex of a Hippopotamus by Jay Starkman is a well-documented and interesting read for professionals in the accounting and tax fields. In particular, this book is appealing to instructors, retirees, recent accounting graduates and the hard-to-buy-for CPA.
The book begins with anecdotes of accounting careers, then documents the role of accounting in the world (with special emphasis on U.S. history), and ends with tax anecdotes of the rich and famous. Career chapters address accounting and pop culture myths such as the long hours (“in every 24 hours, there are three perfectly good eight-hour chargeable days”), strict dress code, charitable requirements and difficult work environment. From Harry Potter to the Beatles song Taxman, artistic depiction of accountants ranges from boring to oppressive. Separating myth from reality takes experience and perspective.
Starkman would know. He is a recognized, practicing CPA in Atlanta with nearly 40 years of work experience in the field including audit, fraud and tax. Having worked for most of the Big Four firms and currently running his own public accounting firm, Starkman can be controversial. He compares the hours of a career in public accounting to the Japanese concept of karoshi, which loosely translates to “death from overwork,” repeating the saying “Let’s go home while it’s still dark.” He addresses abusive tax shelters and internal control weaknesses for electronic tax filing. He evaluates changes to professional ethics over time, including changes in the ability to accept referral fees, continuing education requirements and the reliability of prepackaged tax software.
Similarly, the history of tax and accounting is not sugarcoated. He includes a discussion of California’s 1850 tax on foreign laborers (primarily Chinese and Latinos), highlights Russian ruler Peter the Great’s tax levied on beards, and European taxation of Jews from medieval times through World War II. For worse or better, Starkman names names.
Underneath it all, though, is a strong ethical reckoning. “Can an honest accountant succeed?” asks Starkman (implying the answer is, “Yes, but not without being tested”). Nearly every reader will find some parts of the book drier than others. Accounting historians may trivialize some of the personal experiences, whereas practitioners may only be generally interested in the Turkish capital tax. But, there is enough of each area of accounting to make buying this book worthwhile and its reading enjoyable.
By Valrie Chambers, CPA, Ph.D., associate professor of accounting, Texas A&M University–Corpus Christi
Guide to Property Tax Valuation
by Robert Reilly and Robert Schweihs
Willamette Management Associates, 2008, 620 pp.
The Guide to Property Tax Valuation will interest both experienced and inexperienced property tax valuation professionals. Authors Robert Reilly and Robert Schweihs thoroughly cover a complicated subject: valuation for ad valorem property tax purposes. The book provides an orderly and well-laid-out approach to the topic, leading the reader from basic theory to general methodology and onto comprehensive examples for professionals needing explicit details.
The Guide addresses all types of property—real, personal, tangible and intangible. It covers valuation issues pertaining to income, sales comparison and cost approaches, focusing on the analytical strengths and weaknesses of each approach. The valuation reporting section contains an especially helpful chapter on valuation expert testimony.
Professionals looking for a well-written and practical text on ad valorem property tax valuation need look no further. Few books provide information on this subject, making this a reference library must-have for those involved in ad valorem property tax compliance, appeal and litigation.
By Marc Andrew Landis, a partner in and the chair of the Real Estate Department of Phillips Nizer LLP
The Complete Guide to Investing During Retirement
by Thomas Maskell, MBA
Adams Media, 2009, 256 pp.
If you, or a client, have reached retirement age with only a modest savings for retirement, this book is for you. With no market experience, former engineer Thomas Maskell started his investing career during retirement and learned the business of buying and selling stocks from the ground up. Now he shares that knowledge so others can get into the game.
According to Maskell, a retiree’s chances for success are enhanced, not hurt, by a market collapse. Yet fears of risk may deter them from entering the market at such a late stage. He warns that by keeping a tight grip on what little savings they do have, retirees are losing money. “It is time to defeat the fear standing between you and financial success,” Maskell declares.
The book defines stock market terminology and procedures in layman’s terms and explains its associated risks and rewards. A self-assessment exercise helps readers determine the kind of market players they will be (investor, stock trader or speculator) and develop their strategy accordingly.
Readers will learn to develop a stock-analysis regimen, “spot cause and effect relationships…to profitably predict stock price movements,” and develop the confidence to recognize market opportunities and how to react to them.
By JofA Senior Editor Loanna Overcash
Exiting Your Business, Protecting Your Wealth: A Strategic Guide for Owners and Their Advisors
by John M. Leonetti
John Wiley & Sons Inc., 2008, 238 pp.
Private business owners who need a business exit strategy should read Exiting Your Business, Protecting Your Wealth. With considerable experience in the realm of exit planning, author John Leonetti helps business owners assess their exit readiness in order to choose the option best-suited for their level. This book is not about selling your business. “Believing that an exit strategy is simply the sale of your business is a major trap to avoid,” Leonetti writes. Through a fictional exiting owner named Bill, readers get to explore various exit options and understand how his decisions affect the overall outcome of each strategy.
Exit options include:
- Selling the business. This option may provide the highest return, but taxes and fees generated by the sale often reduce the final amount of money received by the owner.
- Private-equity group recapitalizations. Through an employment agreement, the owner maintains operational control while selling off a majority of the business. Owners can continue to receive income and participate in future business deals.
- Employee Stock Ownership Plans (ESOPs). This option allows an owner to maintain control while gaining some liquidity and diversification. ESOPs can be customized, combined with other options and/or implemented over several years.
- Management buyouts. Passing a business along to a management team might be an option for business owners who are financially prepared for their future.
- Gifting programs. This option is best suited for business owners who do not want to extract a financial value from their business but instead want to give it to family, employees or charities while limiting tax liabilities.
Regardless of the exit option chosen, technical components will impact the net amount an owner receives. Leonetti’s book can assist business owners (and those who advise them) in choosing the best strategy to protect the wealth of their business while allowing them to choose either an active or inactive role in its future.
By JofA Senior Editor Loanna Overcash
Mastering Accounting Research for the CPA Exam, Second edition
by Anita L. Feller
John Wiley & Sons Inc., 2008, 208 pp.
True or False: A CPA exam candidate should search both the Original Pronouncements and Current Text sections of the Financial Accounting Research System (FARS) to find answers to research questions on the CPA exam.
False. Searching both is too time-consuming. A candidate should become proficient in either one of these infobases to quickly locate the necessary information.
The newest part of the CPA exam, the research component, requires a more specific familiarity with the accounting standards, auditing standards and tax code than before. Candidates must demonstrate a professional application and understanding of the requirements and information in the literature as it applies to the three research components: Financial Accounting and Reporting (FAR), Auditing and Attestation (AUD) and Regulation (REG). Instead of a complex problem, candidates will be asked to solve a minicase, or simulation, that requires “locating a specific definition or rule in the literature…it will not ask for a candidate’s opinion; it will ask a research question that has one correct answer.”
Anita Feller has applied her experience as an instructor of CPA Review courses (among other accounting-related subjects) to Mastering Accounting Research for the CPA Exam. The book is designed to help CPA candidates develop the knowledge they need to tackle the research portion of the exam. She provides an overview of the literature, its available commercial forms (for example: hard copy versus FARS CD infobase versus FARS online infobase) and their organization, and teaches strategies for researching those forms. She strongly encourages candidates to become thoroughly familiar with the CPA exam interface and its search commands through practice testing. Each chapter contains a test yourself section on the information within and study tips. Students who use this book as part of their CPA exam preparation will learn how to approach the research portion in a strategic and organized manner.
By JofA Senior Editor Loanna Overcash
Private Foundations: Tax Law and Compliance, Third Edition
by Bruce R. Hopkins and Jody Blazek,
John Wiley & Sons Inc., 2008, hardcover, 768 pp.
Only about 75,000 private foundations exist in the U.S. But like the people who create them, they exert an influence far beyond their numbers. Mostly, they do so by their largesse. Including community foundations, they distributed $36.5 billion in 2006, more than 12% of all charitable giving. Also, smaller family foundations have been increasing in number and volume of spending. Or at least they were before the current recession.
Private Foundations , part of Wiley’s Nonprofit Series, is a handy how-to reference for stewards of these charitable arms, bound as they are by the IRS Code and regulations. The book’s dual legal and accounting approach seamlessly reflects the teamwork of lawyer Bruce R. Hopkins, with his expertise representing tax-exempt organizations, and CPA Jody Blazek, with a similar specialty. Blazek has chaired and served on several AICPA committees on tax-exempt organizations. Both have written extensively on nonprofits, both together and separately.
The book is organized with an eye to procedural questions, from organizing and applying for tax-exempt status to managing mandatory distributions, to reporting annually to the IRS, to winding up a foundation’s affairs. Throughout, the authors provide checklists and samples of letters, reports and IRS forms, schedules and attachments. They give tips on navigating such hazards as an IRS examination, correcting a sanctionable error and seeking reasonable-cause abatement of excise taxes. They include a distribution timing plan for minimizing excise tax on investment income and a checklist for establishing reasonability of compensation to disqualified persons, an essential monitoring task if foundations are to avoid self-dealing penalties.
The book also helps readers understand the place of private foundations within the realm of tax-exempt charitable organizations and the historical background for their regulatory regime, comparing them with public charities and—particularly timely—setting forth the currently evolving strictures on donor-advised funds. Beyond helping foundations toe the legal line, the authors advise on administrative considerations as easily overlooked as state disclosure requirements for nonprofit corporations and as novel as how to use the Internet to best advantage.
As they note in a preface, keeping such a book updated with changes in tax law can be frustrating. If it were only that easy. Investment losses that steepened in October 2008, when the book was released, have no doubt wrought still more momentous change. While guidance on what constitutes proscribed “jeopardizing investments,” for example, remains fairly settled, it’s safe to say that foundations have experienced some jeopardy, and from quarters neither they nor the IRS expected.
By JofA Senior Editor Paul Bonner