FASB took another step forward in its plan to codify U.S. GAAP with the release Friday of an exposure draft on changes to the GAAP hierarchy. FASB is taking comments on the proposal until May 8. In the draft, the standard setter reiterates the planned July 1 effective date for
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IRS Revises Inflation Adjustment Amounts
On Friday, the IRS issued Rev. Proc. 2009-21, which modifies the inflation-adjusted amounts to be used for certain tax credits in 2008 and 2009. The modified numbers reflect recent statutory changes by the Tax Extenders and Alternative Minimum Tax Relief Act of 2008, PL 110-343 (Tax Extenders Act), and the
First Circuit Vacates Textron Workpaper Privilege Decision
The First Circuit has vacated its January decision in the Textron case, and a full panel of First Circuit judges will rehear the case in June. The January decision (No. 07-2631 (1st Cir. 1/21/09)) had held that the work-product privilege could operate to prevent the disclosure to the IRS of
More CFOs Predict Staff Cuts Than Hirings for Second Quarter
The uncertain economic climate is making CFOs re-evaluate accounting and finance staffing levels. For the first time in more than five years, more CFOs interviewed for the Robert Half International Financial Hiring Index predicted decreases than predicted increases in personnel. Seven percent of CFOs interviewed by Robert Half expected to
IRS Advises How Part Owners Handle $1 Million Mortgage Deduction Limit
The IRS Office of Chief Counsel has issued a memorandum outlining how partial owners of a principal residence with a mortgage bigger than $1 million should handle their mortgage deduction (CCA 200911007). Under IRC § 163(h)(3), taxpayers can deduct interest paid on certain mortgages and home equity loans, but the
CRS Reports on Capital Loss Treatment
The Congressional Research Service (CRS) has released a report analyzing the effects of a proposed increase in the net capital loss limitation. Currently, noncorporate taxpayers can net capital gains and losses and can use up to $3,000 in capital loss to offset ordinary income for that tax year (IRC §
Casting Doubt on the Accrual of Interest
Due to the recent turmoil in the credit markets, creditors and borrowers alike are evaluating the tax treatment of interest accruals related to troubled loans. Generally under Treas. Reg. § 1.446-2(a), interest is taken into account by a taxpayer according to the taxpayer’s regular method of accounting. Beyond the specific
Proposed Changes to Privacy, Security Guidance Available
The AICPA released two proposals that would alter guidance for CPAs providing attestation services, advisory services or both that address IT-enabled systems including electronic commerce systems and privacy programs. The guidance relates to providing services with respect to system security, availability, processing integrity, confidentiality and privacy. The AICPA
IRS Reverses Position on Eligibility of Intangibles for Like-Kind Exchange Treatment
The IRS Office of Chief Counsel has announced a change in its position on the use of certain intangible property in IRC § 1031 like-kind exchanges (CCA 200911006). Previously (in Technical Advice Memorandum 200602034 and Field Attorney Advice 20074401F) the IRS had decided that registered trademarks, trade names, newspaper mastheads,
Standard Setters Outline Possible Lease Accounting Approach
FASB and the International Accounting Standards Board (IASB) released a paper on a possible new approach to lease accounting. The paper Leases: Preliminary Views responds to concerns raised by investors and other financial statements users about the treatment of lease contracts under IFRS and U.S. GAAP. In the paper, the
IRS Releases Guidance for Ponzi Scheme Investors
Because the Ponzi scheme perpetrated by Bernard Madoff involved potentially thousands of taxpayers, the IRS has issued guidance on the tax aspects of losses from a Ponzi scheme and created a safe harbor under which investors can claim theft loss deductions. IRC § 165(a) allows taxpayers to deduct losses sustained
Madoff Auditor Charged with Securities Fraud
Federal officials filed criminal and civil charges against Bernard Madoff’s auditor on Wednesday, and the AICPA expelled him from the Institute after concluding its own ethics investigation. In a civil complaint filed in federal court in Manhattan, the SEC alleges that from 1991 through 2008, David G. Friehling and
Bill Would Limit Family Limited Partnership Discounts
In January, Rep. Earl Pomeroy, D-N.D., introduced HR 436, Certain Estate Tax Relief Act of 2009, which has been referred to the House Ways and Means Committee. The bill would continue the federal estate tax exemption at $3,500,000, and set the tax rate for estates exceeding that amount at 45%
Service Gives Guidance on New 5-year Carryback of NOLs
The IRS issued guidance on how eligible small businesses may take advantage of the enhanced net operating loss (NOL) carryback provisions of the American Recovery and Reinvestment Act of 2009, PL 111-5 (ARRA). Under those provisions, eligible small businesses may carry back a 2008 NOL up to five years instead
FAF and FASB Call for Additional Study of IFRS Conversion
FASB and its parent organization, the Financial Accounting Foundation (FAF), are calling on the SEC for additional study of “strengths, weaknesses, costs, and benefits of possible approaches” to a U.S. shift to IFRS. In a 134-page comment letter, the FAF and FASB reaffirmed support for the development of a single
International Tax Provisions Introduced and to Be Considered This Year
President Obama’s budget proposal for the 2010 fiscal year includes “certain international tax reform and enforcement measures,” but the only detail on this is the following one-line item from the associated revenue table: “implement international enforcement, reform deferral, and other tax reform policies.” This is estimated to raise $210 billion
AICPA Issues Financial Reporting Guidance for Credit Unions
The AICPA staff issued guidance to help preparers and auditors consider the financial reporting issues resulting from recent actions taken by the National Credit Union Administration (NCUA) to stabilize the corporate credit union system. The NCUA is injecting $1 billion in cash from the National Credit Union Share Insurance Fund
IRS Lowers Interest Rates on Over- and Underpayments
The IRS announced that interest rates on tax overpayments and underpayments will drop by one percentage point for the quarter starting April 1 (Rev. Rul. 2009-7). IRC § 6621 establishes the interest rates on tax overpayments and underpayments. The rates are based on the federal short-term rate (most recently published
Appeals Court Finds $20 Million Bonus Reasonable
The Seventh Circuit Court of Appeals reversed a Tax Court decision that held that most of an executive’s $20 million compensation was unreasonable and therefore a nondeductible dividend (Menard, Inc., No. 08-2125 (7th Cir. 3/10/09), rev’g T.C. Memo. 2005-3). John Menard is founder and CEO of Menard Inc. In 1998,
Green Energy Incentives Among Recovery Act’s Tax Provisions
From fitting a home with energy-efficient windows to harnessing the power of waves and tides, activities that conserve energy or produce it from clean and renewable sources enjoy new or expanded tax credits in the American Recovery and Reinvestment Act of 2009 (ARRA). The next generation of electric vehicles gets
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