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Tax

Tax

President George W. Bush last month signed the Working Families Tax Relief Act of 2004. The legislation extends a number of tax provisions affecting individuals and businesses, such as marriage penalty relief and the research and development credit that expired June 30, 2004. Additional information is available at http://waysandmeans.house.gov/Links.asp?section=343 .

Pro Bono

The AICPA launched an online database ( http://volunteers.aicpa.org/financialliteracy ) where CPAs now can register as volunteers in 360 Degrees of Financial Literacy, the Institute’s program to improve Americans’ ability to manage their personal finances (see JofA , Aug.04, page 14, and www.aicpa.org/pubs/jofa/aug2004/special.htm ). Both member and nonmember CPAs are eligible

Avoid the Tax Trap When Repaying Shareholder Loans

t is not uncommon for S corporation shareholders to make cash advances to the corporation during years when the company’s operating results are unfavorable or cash is tight. In return shareholders get an increase in their basis that they can use to deduct additional flow-through losses. It’s also not unusual

Professional Issues

The AICPA Peer Review Board issued revised standards for performing and reporting on peer reviews, as well as revised and new interpretations that will help CPAs understand how to apply the standards. Both are effective for reviews beginning after December 31, 2004; early implementation is not permitted ( www.aicpa.org/members/ ).

Telephone Excise Tax: Does “And” Mean “Both” or “Either”?

When long-distance telephone service does not take into account the distance of the call, should the 3% federal excise tax apply? In two recent cases, two district courts reached opposite conclusions. American Bankers Insurance Group (ABIG), a Florida corporation, purchased interstate and international long-distance and intrastate long-distance phone service from

Avoid the Payroll Tax Trap

EXECUTIVE SUMMARY AN EMPLOYER BECOMES A TRUSTEE FOR THE U.S. government when it distributes payroll checks to employees. Withheld payroll taxes are called “trust fund taxes” and, in the eyes of the IRS, belong to the government. Companies should not use these funds to pay salaries, business expenses or for

Nonindividual QTP Contributions

RC section 529 qualified tuition programs (QTPs) provide a tax-favored way to invest for qualified higher education expenses (QHEEs). While individuals usually contribute to benefit family members, nonindividuals also may contribute. Thus, employers may wish to fund QTPs as fringe benefits for employees. CPAs should understand the myriad tax issues.

Enforcement

The Public Company Accounting Oversight Board (PCAOB) introduced communications links that make it easier to contact the board when a registered public accounting firm—or anyone associated with it—may have violated provisions of the Sarbanes Oxley Act of 2002, PCAOB rules or other applicable laws ( www.pcaobus.org/tips ). Concerned parties now

Auditing

The AICPA launched an improved version of its Audit Committee Matching System (ACMS). The upgrade responds to suggestions from members, who now can add their resumes to the system so that companies can search among them for potential candidates. The ACMS and related resources are available at the Institute’s Audit

Managing Change

Robert L. Bunting, chairman and CEO of Moss Adams LLP in Seattle, assumed the AICPA chairmanship at the Institute’s annual meeting. His acceptance speech will appear verbatim in a future issue of the JofA . oss Adams is in the vanguard of midsize firms skilled at serving an international clientele.

Technology

The Accounting Hall of Fame announced three inductees for 2004. The honorees are Dennis R. Beresford, E&Y Executive Professor at the University of Georgia, former chairman (1987–1997) of the Financial Accounting Standards Board and writer of professional articles; Gerald A. Feltham, a professor of accounting at the University of British

International

The International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC) issued a staff-prepared series of questions and answers relating to international financial reporting standards (IFRSs), First Time Adoption of IFRSs—Guidance for Auditors on Reporting Issues. The document is available online ( www.ifac.org/store ) at no

Employee Benefits

To stave off double-digit increases in the cost of employee health plans, small and midsize companies cut benefits in 2003, according to a survey and analysis by Mercer Human Resource Consulting and Marsh Inc. ( www.marsh.com ). This held costs to an average of $6,130 per worker, up 9.8% since

Users Size Up Tax Software

lthough AICPA tax practitioners rated this year’s crop of tax-preparation software superior to the products they used last year, they gave lower grades to vendors’ technical support. But for many tax practitioners, the bigger story was that the number of tax-software products continued to decline, forcing newly orphaned customers to

FYI

The General Accounting Office on July 7, 2004, changed its name to the Government Accountability Office in accordance with the GAO Human Capital Reform Act of 2004, which reorganized the watchdog agency’s personnel management and compensation systems ( www.gao.gov/about/namechange.html ). The Public Company Accounting Oversight Board (PCAOB) named Richard D.

International

The International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants issued an exposure draft (ED)—mentioned briefly in the September JofA News Digest —that proposes improving the board’s due process and working procedures by encouraging broader constituent participation through public forums or requests for comments on proposed

FROM THIS MONTH'S ISSUE

4 ways solo practitioners can stand out

Five years ago, a grieving Angel Zhen started his own CPA firm with no clients and no revenue. Today, he has 300 clients, $600,000 in revenue and 12 weeks of annual vacation. In this JofA article, he shares how he set up his firm and how you could do the same.

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