The practice of extracting natural gas from shale through hydraulic fracturing, commonly referred to as “fracking,” is becoming more widespread throughout the country. It is essential for practitioners to understand the tax issues that could arise for clients who own property with shale gas deposits. From 2001 to 2011, Americans
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Personal financial planning
New opportunities for CPAs in proposed crowdfunding rules
Rules on crowdfunding proposed by the SEC on Wednesday would create opportunities for startups and small, private businesses to raise cash through internet-aided sales of securities—and would create opportunities for work by CPAs. The SEC commissioners voted 5–0 to propose the rules that are designed to comply with a provision
Federal impasse could crush investor confidence, survey shows
The federal government shutdown and the lack of congressional agreement on raising the debt ceiling have the potential to crush investor confidence, according to a new Center for Audit Quality (CAQ) survey. If the shutdown lasts another week, investor confidence in U.S. capital markets would shrink to 60% from 69%,
How the government shutdown affects taxpayers and tax practitioners
The failure of Congress to agree on a continuing spending resolution on Monday led to the first federal government shutdown since 1995–1996. The shutdown involves a large number of federal government functions, including many affecting taxpayers and tax practitioners. As this item was posted, it was not clear how long
Self-directed IRAs: A tax compliance black hole
The appeal of investing retirement funds outside of the typical securities market has driven a surge in the use of self-directed IRA (SDIRA) investment structures. These structures come in various forms, but they all start when an IRA account holder forms an SDIRA with a custodian (e.g., a bank or
The brave new world of cost basis reporting
Recent tax law changes have made accurately calculating and reporting clients’ capital gains even more critical with higher effective tax rates being imposed on those with higher adjusted gross income (regardless of source) and the new Sec. 1411 net investment income tax taking effect for tax year 2013. It had
The qualified dividend multiplier effect
With the passage of the American Taxpayer Relief Act of 2012, P.L. 112-240, taxpayers can continue to save significant taxes on qualified dividends and long-term capital gains. Excluding the special 25% and 28% rates, Sec. 1(h)(1) now provides for three rates on qualified dividends and long-term capital gains (preferential income):
Many U.S. adults don’t understand basic health insurance terms
Many U.S. adults lack a basic understanding of common financial terms found in health insurance plans as they face critical decisions about their future coverage, according to an AICPA survey. More than half of respondents (51%) could not accurately identify at least one of the following terms: premium, deductible, and
SEC strengthens broker-dealer audit requirements
The SEC on Wednesday approved rule amendments that strengthen audit requirements for broker-dealers. The amendments are intended to increase protections for investors whose money and securities are turned over to SEC-registered broker-dealers. The final rules are available on the SEC’s website. Under previous rules, broker-dealers are required to file annual
Loan guarantee terminates IRA
The Tax Court held that two taxpayers’ personal guarantees of a loan to a company whose stock was owned by their individual retirement accounts (IRAs) were indirect extensions of credit to the IRAs, a prohibited transaction. Thus, the IRAs ceased to qualify as IRAs at the beginning of the tax
Applying business provisions of the American Taxpayer Relief Act
While the comprehensive corporate tax reform desired by the business community remains highly elusive, businesses did receive a number of concessions via the American Taxpayer Relief Act of 2012 (ATRA), P.L. 112-240, which was signed into law Jan. 2, 2013. The act extends through 2013 an assortment of expired or
SEC lifts ban on advertising for certain private securities
Issuers of certain private securities, including hedge funds, will be able to advertise to the general public under a rule the SEC adopted Wednesday. But only “accredited investors” will be permitted to invest in these private securities offerings as a result of rules adopted by the SEC on Wednesday. Accredited
PFP Q&A: Planning for change
With the Baby Boomer generation hitting retirement age, personal financial planning has become an increasingly important service for many accounting firms. But practitioners are dealing with plenty of changes, including the implementation of new tax laws and the landmark rollout of new standards. The JofA assembled a team of industry
Proposed PFP services standards available for public comment
The AICPA released an exposure draft of a Proposed Statement on Standards in Personal Financial Planning Services on Tuesday as part of an initiative that’s expected to help boost the profile of CPA personal financial planning (PFP) practitioners. The proposal outlines members’ responsibilities in PFP engagements. These responsibilities include: General
Proposed Statement on Standards in Personal Financial Planning
This spring, following a two-year drafting process involving practitioners from across the AICPA, the AICPA Personal Financial Planning Executive Committee issued an exposure draft for public comment on a Proposed Statement on Standards in Personal Financial Planning Practice. The proposed statement addresses the responsibilities of AICPA members when providing personal
IRS gives details of operations on furlough dates
To help taxpayers plan for the upcoming furlough dates on which the IRS will be closed (see “IRS Decides to Shut Down Completely on Furlough Dates”), the IRS issued a news release detailing how the shutdown days, the first of which is May 24, will affect operations (IR-2013-51). The other
Survey: Financial stress taking a toll on Americans
Problems created by financial stress aren’t limited to people’s pocketbooks. A new survey found that money-related stress is also taking a toll on Americans’ waistlines, friendships, and sleep habits. The telephone survey, conducted March 14–17, asked 1,011 U.S. adults to name all the ways financial stress is affecting their lives.
Conservation easement tax donation update
The deductibility of a charitable donation for a conservation easement or restriction on a real property interest is provided for under Sec. 170(h). Even with almost 13 pages of regulations (Regs. Sec. 1.170A-14), this provision is not straightforward, as evidenced by the number of taxpayers challenged by the IRS. Careful
Award honors significant contributions to PFP discipline
Clark M. Blackman II, founder of Alpha Wealth Strategies in Houston, received the AICPA’s 2012 Personal Financial Planning Distinguished Service Award. The annual award, which was presented at the 2013 Advanced Personal Financial Planning Conference in Las Vegas in January, recognizes an AICPA volunteer who significantly contributes to the advancement
Making a “backdoor” Roth IRA contribution
Sec. 408(d)(1) ordinarily requires a pro rata allocation between taxable and nontaxable amounts (using the Sec. 72 annuity rules) when reporting distributions received from an individual retirement plan (an individual retirement account or annuity (IRA)). The practical effect is that a taxpayer must recover any nontaxable amount (basis) ratably as
Features
FROM THIS MONTH'S ISSUE
Tax-efficient drawdown strategies in retirement
Want to stretch retirement funds and avoid tax pitfalls? This article shares tips and models for smarter drawdown strategies that maximize after-tax wealth, manage Social Security and Medicare impacts, and minimize surprises. Also see: Tax season preview and quick guide.
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