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TOPICS / TAX

IRS practice & procedure

International

A new IFAC discussion paper examines the methods different countries’ accounting organizations advocate for defining and achieving competence in professional accountancy. Comments are due by October 31 ( www.ifac.org/News/LastestReleases.tmpl?NID=99010990012150 ). The Organisation for Economic Co-operation and Development’s initiative on harmful tax practices draws the opposition of the U.S. Treasury secretary,

Outsourcing a 401(k) Plan

EMPLOYEE BENEFITS How to make the right choices. Outsourcing a 401(k) Plan BY MAUREEN NEVIN DUFFY EXECUTIVE SUMMARY WITH 401(k) BALANCES GROWING, SMALL AND MEDIUM- sized companies are finding themselves burdened with myriad responsibilities of operating a retirement plan for employees. Many companies are choosing to outsource the plan to

Companies Focus on Derivatives Compliance

   BY THE NUMBERS Companies Focus on Derivatives Compliance FASB Statement no.133, Accounting for Derivative Instruments and Hedging Activities, issued in June 1998, requires that companies report their derivatives holdings at fair value and disclose the purpose and effectiveness of their hedging strategy. For most, the standard took effect January

How to Be Careful and Still Be Clear

EXECUTIVE SUMMARY IN AN EFFORT TO SIDESTEP POTENTIAL LIABILITY, CPAs may obscure rather than clarify important information presented to clients. The types of documents least affected by professional standards are the ones that are most important for practice development. A CPA WHO SPEAKS AND WRITES PLAIN ENGLISH develops a reputation

Some Small Biz Markets Underserved by CPAs

   When small business owners need payroll services to whom do they turn? More often than not it’s their CPA—the profession has helped fill that gap for years. But a recent survey of nearly 700 small businesses in the manufacturing, professional services, government, nonprofit and other sectors revealed they generally

Line Items

Black Tie Not An Option: Appeals Are Informal The 1998 IRS Restructuring and Reform Act contained a taxpayers bill of rights. one provision expanded taxpayers’ due-process protections when dealing with collection matters: IRC section 6330 gives taxpayers the right to a “collection due-process” hearing in the IRS appeals office before

Tip Compliance Programs Widened

TAX NEWS The IRS expanded its voluntary tip compliance programs from the food and beverage, gaming and hairstyling industries to all those in which tipping is customary (announcements 2000-19 and 2000-23; notice 2000-21). In exchange for an employer’s or employee’s participation, the IRS agrees to refrain from tip examination. Employers

Is a Contingent Attorney’s Fee Includible in Plaintiff’s Income?

   gnes, a 64-year-old resident of California, successfully sued her ex-employer in 2000 for wrongful termination; a jury awarded her $2 million. Agnes paid her attorney $800,000, 40% of the award, in accordance with their contingent fee agreement; thus, her net proceeds from the suit were $1.2 million. In March

Expensing Corporate Activities

TAX CASE One of the most difficult questions a company faces is whether it must capitalize an expenditure or whether it can deduct it. Minor variations in the facts can greatly affect the answer to the question. American Stores Co., a corporation that filed consolidated tax returns, owned and operated

Last Known Address Program Delayed

TAX NEWS Last year the IRS announced that, effective May 1, 2000, a new program would allow it to update taxpayers’ addresses using the U.S. Postal Service’s national change of address (NCOA) database. Previously a taxpayer’s “last known address,” although not defined by statute or regulation, had been determined by

Donating Excess Inventory to Charity

TAX NEWS CPAs may want to remind clients with excess inventory that they can earn a federal tax deduction when the product is donated to charity. Corporations with a fiscal year ending December 31 should be urged to check their inventory levels now. Clients that have difficulty finding an organization

Auditing 2

The Big Five accounting firms agreed to participate in an SEC-sponsored retrospective review program. Under the agreement, the firms will report certain instances, during a specific period, in which they did not adhere to the new proposed independence rules limiting financial interests in audit clients by firms, auditors and some

Valuing Closely Held Stock for Estate and Gift Tax Purposes

PAs who work with estates know that, if a decedent owned stock of a closely held business at his or her death, the value of the stock generally must be determined if an estate tax return will be filed. The value for such purposes is the date-of-death fair market value

Public Disclosure Requirements for Public Charities

lthough many public charities, as exempt organizations, technically have been subject to public disclosure requirements for a long time, Congress recently changed the law to make this information much more accessible to the public. An exempt entity must disclose and make available two sets of documents: Its exemption applications, all

What a PEO Can Do for You

EXECUTIVE SUMMARY MORE THAN EVER BEFORE, BOTTOM-LINE-CONSCIOUS companies are outsourcing HR functions by making use of professional employer organizations. PEOs perform a wide variety of tasks ranging from payroll management and employee benefit design and administration to tax filings and compliance with state and federal workplace legislation. GIVEN THE MYRIAD

Surviving An Employment Tax Audit

In recent years the IRS has examined closely the status of workers classified as independent contractors and whether they should instead be considered employees. The results of these examinations: Hundreds of thousands of workers were reclassified as employees and their employers were assessed hundreds of millions of additional tax dollars

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