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Tax

Reasonable Compensation

Determining what constitutes reasonable compensation is a long-standing issue for C corporations. IRC section 162(a)(1) allows a deduction for reasonable compensation for personal services actually rendered. The IRS views unreasonable salaries as disguised dividends, making them nondeductible by C corporations and taxable to the shareholder. This means employee shareholders are

Technology

The AICPA, XBRL US and XBRL International sponsor a conference on development and use of the extensible business reporting language (XBRL). Speaking at the gathering ( www.xbrlusaseattle.com ), which takes place November 3–7 in Seattle, will be representatives from accounting organizations around the world, professional services firms, financial institutions and

Losses Trust Deducted Were Not From Passive Activity

IRC section 469(a)(1) defines a passive activity as one involving the conduct of any trade or business in which the taxpayer does not materially participate. In section 469(a)(2), the statute describes a taxpayer as any Individual, estate or trust. Closely held C corporation. Personal service corporation. In general, the IRS

Government Accounting

The Federal Accounting Standards Advisory Board (FASAB) issues an exposure draft of Statement of Federal Financial Accounting Standards (SFFAS), Heritage Assets and Stewardship Land: Reclassification from Required Supplementary Stewardship Information. The proposed standard would move such assets and land to a “basic information” reporting category. Currently SFFAS 8, Supplementary Stewardship

Funding Medical Expenses

axpayers needing to fund large and/or ongoing medical expenses should explore tax-minimizing ways to pay them beyond deducting them under the 7.5% of adjusted-gross-income threshold. Potential alternative funding vehicles are described below. CPAs should become familiar with such mechanisms to aid eligible clients. CAFETERIA PLANS IRC section 125 cafeteria plans

Tax Notes

Tn The IRS proposed regulations that explain the tax consequences to partnerships of contributions of contracts accounted for under the long-term contract method. In addition the proposal described the impact of transfers of interest in—and distributions from—partnerships holding such contracts ( www.irs.gov/taxpros/article/0,,id=112047,00.html ). The proposed regulations, which also list the

Webcast

Arresting Financial Fraud: The Inside Story From The FBI A FREE Interactive Webcast By The AICPA Live Webcast! November 6, 2003 1 – 2:55 pm ET Recommended CPE: 2 credits www.cpa2biz.com/CS2000/Products/CPA2BIZ/Arresting+Financial+Fraud: Presented by: AICPA FBI The public has recently been inundated with media reports of accounting scandals at the likes

Tax Services After Sarbanes-Oxley

EXECUTIVE SUMMARY THE PASSAGE OF SARBANES-OXLEY LEFT MANY TAX practitioners wondering where they fit in under these new rules. The act did not list most tax services as one of the prohibited nonaudit services but said firms could perform such functions for audit clients with audit committee approval. THE ACT

Bankruptcy and S Corporation Pass-Through

Although there are some signs the economy is improving, many businesses continue to fail. Recently the Tax Court considered the effect of an S corporation’s selling an asset while in bankruptcy. All S corporation shareholders contemplating filing for corporate bankruptcy need to consider the potential tax outcome of such a

Auditing

The SEC defers until January 1, 2005, a requirement that auditors of nonpublic broker-dealers register with the Public Company Accounting Oversight Board (PCAOB) ( www.sec.gov/rules/other/34-48281.htm ). The Sarbanes-Oxley Act of 2002 required auditors of financial statements of public companies or “issuers,” as defined in the act, to register by October

Investment Adviser Advertising

EXECUTIVE SUMMARY THE SEC REGULATES THE ADVERTISEMENTS investment advisers create to promote their services under rule 206(4)-1 of the Investment Adviser Act of 1940. The goal is to prevent advertisements that are false and misleading. RULE 206(4)-1(a) INCLUDES FIVE RESTRICTIONS advisers must follow. They can overcome two of these restrictions

International

The international auditing and assurance standards board (IAASB) of the International Federation of Accountants (IFAC) exposes two draft international standards of auditing: ISA 240, The Auditor’s Responsibility to Consider Fraud in an Audit of Financial Statements, and ISA 300, Planning the Audit. ISA 240 outlines the responsibilities of all those

International

The International Federation of Accountants (IFAC) issues an exposure draft of a revision to its Code of Ethics for Professional Accountants. The ED proposes elevating its ethics code to a standard requiring IFAC member compliance from a “model” on which to base national requirements. It expands guidance for all individual

Accounting

  For news from the AICPA and state societies, visit www.cpa2biz.com , which also offers online CPE, AICPA professional literature, practice management aids and links to state society Web sites.   FASB issues as final five staff positions on Interpretation no. 46, Consolidation of Variable Interest Entities ( www.fasb.org/fasb_staff_positions/final_fsp.shtml ).

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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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