The International Federation of Accountants issues a paper, E-Business and the Accountant: Risk Management for Accounting Systems in an E-Business Environment. The study can be downloaded at www.ifac.org/store —the group’s Web site.
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TOPICS
Tax
Top Earners = Top Taxpayers
TAX MATTERS Source: Tax Foundation, www.taxfoundation.org .
Professional Issues
Less than two weeks before its self-imposed March 31 termination, the Public Oversight Board publishes a white paper, The Road to Reform, ( www.publicoversightboard.org/White_Pa.pdf ) proposing the creation—through federal legislation—of an independent organization that would assume the board’s responsibility for voluntary private-sector regulation of the profession. Among other things, the
Tax Reform Alters ESOP Landscape
EXECUTIVE SUMMARY PROVISIONS IN THE ECONOMIC GROWTH AND TAX RELIEF Reconciliation Act of 2001 raised ESOP contribution limits and liberalized companies’ combined use of ESOPs and 401(k) plans. The new law raises the contribution limits that can be added annually to an individual employee’s account—from both employer contributions to ESOPs
Banking
The Office of Thrift Supervision (OTS) says it is closely monitoring compliance with a new law, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001. In March the OTS provided savings institutions with guidance ( www.ots.treas.gov/docs/48896.pdf ) on complying
Tax Notes
The IRS issues final regulations governing the determination of the basis of a partner’s interest under IRC section 705. The purpose of the regulations is to prevent inappropriate increases or decreases in the adjusted basis of a corporate partner’s interest in a partnership that result from that partnership’s disposition of
Online Sales to EU Consumers May Be Taxed
uropean Union member countries impose a value-added tax (VAT) on sales of goods and services originating within the EU (regardless of where the goods and services are consumed), while those suppliers outside the union are not subject to VAT—even when they deliver products to consumers within the EU. Many EU
Financial Reporting
The Council of Institutional Investors decides to support including the cost of stock options as an expense on businesses’ reported income statements—a reversal of its long-standing opposition to the practice ( www.cii.org/press/expensing.htm ). The group, which includes pension funds, money managers, other financial services entities and lawyers, says its new
Smart Stops on the Web
EXECUTIVE COMPENSATION SITES Case Studies and Reviews www.compensationresources.com CPAs at firms and companies can find case studies—with required actions and outcomes—for implementing nonqualified deferred compensation arrangements, as well as reviews of customized packages at this site. Visitors also can use a compensation calculator and get an overview of stock-option-program designs.
Big Changes, Big Benefits
EXECUTIVE SUMMARY THE ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION Act made significant changes to pension and retirement planning. Maximum contributions to 401(k) plans jumped to $11,000 for 2002 and will increase $1,000 per year until 2006. Similar increases apply to 403(b) and 457 plans as well as SAR-SEPs. IRA contributions—both
FYI
Giovanni P. Prezioso replaces David M. Becker as the SEC’s general counsel. Coming from the Washington office of international law firm Cleary, Gottlieb, Steen & Hamilton, Prezioso has extensive experience in securities-related legal matters. Becker resigned to return to private practice after serving as the commission’s chief legal officer since
International
The IASB’s former standing interpretations committee—now the international financial reporting interpretations committee—issues guidance ( www.iasb.org.uk/cmt/0001.asp ) on accounting for Web site costs under international accounting standards (IASs). The interpretation clarifies existing requirements of IAS 38, Intangible Assets, that apply to expenses associated with an entity’s development and operation of an
Spotlight on Midlevel ERP Software
n many ways, the attributes you want in enterprise resource planning (ERP) accounting software resemble those you’re likely to seek when choosing a spouse. You want a faithful (accurate) helpmate who grows with you (capable of being scaled up). You want someone you can cherish through sickness (financial loss) and
Sales Taxes Climb
TAX MATTERS Source: Vertex, Inc., www.vertexinc.com .
Line Items
Economic Stimulus Bill Enacted The Job Creation and Worker Assistance Act of 2002 made a number of changes to the tax law to offer short-term help to the unemployed and long-term stimulus to create jobs. Among its other provisions, the $40 billion measure Allows additional 30% depreciation of certain capital
Same-Sex Partner Benefits Do Not Disqualify Tuition Plan
TAX BRIEF In letter ruling 200137041, the IRS decided that providing graduate courses and benefits for employees’ same-sex partners did not disqualify a university’s tuition reduction plan. However, it said employees would be taxed on such courses and benefits. Under IRC section 117(d)(1), gross income excludes any qualified tuition reduction.
FICA Wages?
TAX CASE Both employees and employers are required to pay FICA tax on all wages—a broadly defined term. In today’s economy, many workers are being laid off or asked to take early retirement. In some cases employees receive lump-sum payments to vacate their positions. Are these payment wages for FICA
U.S. Export Rules in Question
.S. taxation of profits companies make from exporting goods has gone through several stages over the years. For a long time, U.S. multinational corporations were able to set up and use foreign subsidiaries whose income was free from U.S. income tax (as long as it was not repatriated and brought
Self-Rental Regulation Upheld Again
TAX CASE Taxpayers can deduct passive losses only to the extent they have passive income. If a taxpayer rents property to his or her wholly owned corporation, IRC section 469 generally categorizes this as a passive activity. However, when a taxpayer materially participates in the wholly owned corporation, Treasury regulations
E-Filing Experiences Sought
May 2002 > Tax Matters Tax Matters TAX CASES FICA Wages? B oth employees and employers are required to pay FICA tax on all wages—a broadly defined term. In today’s economy, many workers are being laid off or asked to take early retirement. In some cases employees
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