Tax news and information - Journal of Accountancy

TOPICS

March 1, 2003

FYI

The SEC appoints Charles D. Niemeier, CPA, acting chairman of the Public Company Accounting Oversight Board to serve until the commission fills the post permanently. Previously, he was chief accountant in the SEC’s division of enforcement. The Fdration des Experts Comptables Europens (European Federation of Accountants) (FEE) appoints as its

March 1, 2003

International

The International Federation of Accountants now offers free access to all documents it and the international auditing and assurance standards board post on the IFAC Web site ( www.ifac.org/store ).

March 1, 2003

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 Statement no. 148, Accounting for Stock-Based Compensation—Transition and Disclosure ( www.fasb.org/news/nr123102.shtml ), amending Statement no. 123, Accounting

March 1, 2003

Payments to the Needy Rise

Source: Social Security Administration, www.ssa.gov .

March 1, 2003

When Is a Wage Not a Wage?

ot all payments to employees from employers are wages. If remuneration is not wages, an employer may be able to withhold less income tax, pay reduced employment taxes and accrue fewer retirement benefits. Thus, it is important for CPAs to understand the situations in which payments to workers may not

March 1, 2003

Contributing Appreciated Property

TAX CASE Contributing Appreciated Property A lthough the stock market has fallen significantly below its historic highs, many taxpayers still own appreciated stock or other property. In certain situations, donating these types of assets to a charity can provide the donor a double benefit—a deduction at fair market value and

March 1, 2003

Banking

The Federal Reserve Board issues as final a rule amending its international lending regulations ( www.federalreserve.gov/boarddocs/press/bcreg/2003/20030106/attachment.pdf ). To simplify matters and thus reduce banks’ regulatory burden, the board’s action eliminates from subpart D of Regulation K the requirement they use a particular method to account for fees on international loans.

February 1, 2003

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 an Invitation to Comment, Accounting for Stock-Based Compensation: A Comparison of FASB Statement No. 123, Accounting for Stock-Based

February 1, 2003

Social Security Lags for Ladies

Source: Social Security Administration, www.ssa.gov .

February 1, 2003

Technology

The AICPA issues its annual ranking of the ten technologies that are most likely to significantly affect practitioners, their clients and their employers in the coming year. Topping the current list ( www.cpa2biz.com/toptechs ) is information security, followed by business information management, application integration, Web services, disaster recovery planning, wireless

February 1, 2003

Loan Guaranties and Tax-Free Transfers to Controlled Corporations

IRC section 351 allows a taxpayer to make a tax-free transfer of property to a controlled corporation in exchange for stock. Section 357(c), however, requires the taxpayer to recognize a gain when the liabilities the corporation assumes, plus the liabilities on the transferred property, are greater than the property’s adjusted

February 1, 2003

Tax Notes

TAX NOTES The IRS in December proposed a revenue procedure ( www.irs.gov/pub/irs-drop/n-02-79.pdf ) that would permit some businesses that use the accrual method of accounting to delay, by one year, the reporting of advanced payments for services. Currently they must report the advanced income in the tax year they receive

February 1, 2003

Auditing

The Auditing Standards Board exposes a suite of seven draft statements on auditing standards (SASs) ( www.aicpa.org/members/div/auditstd/auditrisk120202.asp ) to improve auditors’ application of the audit risk model. The proposed SASs require auditors to develop a better understanding of audited entities and their environments, to use that knowledge to more rigorously

February 1, 2003

Computer Software and the Research Credit

TAX CASES Congress enacted the research credit to encourage businesses to engage in additional, high-risk research activities. Whether computer software development qualifies for the credit is an ongoing question. Recently the Tenth Circuit Court of Appeals, in a case of first impression, reversed the district court that had allowed a

February 1, 2003

FYI

The AICPA and the Association of Certified Fraud Examiners release a free one-hour PC-based training program. How Fraud Hurts You and Your Organization , that can be downloaded at no charge from http://antifraud.aicpa.org/Resources/ How+Fraud+Hurts+Your+Organization.htm The course also is available on CD from the AICPA at 888–777–7077 (product code 056513JA). It

February 1, 2003

Payroll Taxes on Terminated Employees

mployers who withheld taxes on severance pay granted to certain terminated employees may be entitled to refunds. In CSX Corp., 52 Fed. Cl. 208 (2002), the Court of Federal Claims approved the refund of Railroad Retirement Tax Act (RRTA) taxes and Federal Insurance Contributions Act (FICA) taxes collected on amounts

February 1, 2003

International

The International Federation of Accountants issues exposure drafts of three international standards on auditing (ISAs) and one amendment to an existing ISA ( www.ifac.org/Members/Source_Files/Exposure_Drafts/ED-Audit_ Risk_Oct021.pdf ). Comments are due by March 31 on the proposed guidance, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement; The

February 1, 2003

Is the Tax Court Becoming a Divorce Court?

EXECUTIVE SUMMARY THE IRS WORKLOAD IS INCREASING AS A RESULT OF MORE innocent spouse claims. A 1998 change in the law is also bringing more work to the Tax Court, which is considering a wide range of domestic issues that previously were the purview of the divorce courts. THE 1998

January 1, 2003

Accounting

AcSEC, the AICPA accounting standards executive committee, in agreement with FASB and the SEC, rescinds SOP 92-3, Accounting for Foreclosed Assets. FASB statement no. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, effectively superseded the SOP, the scope of which did not include non-long-lived assets such as inventories

January 1, 2003

Intentionally Defective Irrevocable Trusts

n tumultuous economic times, intentionally defective irrevocable trusts (IDITs) offer taxpayers a powerful triple play: an estate-freeze and wealth-transfer technique, as well as an estate planning opportunity—despite terrorism, the market’s vagaries and recent estate tax legislation. CPAs should become become familiar with IDITs to help eligible clients preserve wealth. WHAT

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Making the right choice when no one is watching

The true test of one’s character is the decision made when no one is looking over your shoulder. Learn how CPAs can uphold ethical standards and take actions that help limit liability risk.