Given the many levels of taxation (federal, state and local) that most taxpayers are subject to, it is safe to say that tax laws are changing constantly. Some of these changes are minor (changing a rate or adding a deduction) while others may involve major substantive changes (changing from an
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Tax
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. The Financial Accounting Standards Advisory Council (FASAC) releases the results of its annual survey, which asks council and FASB members to
Leave It to the Pros
TAX MATTERS Source: IRS, www.irs.gov .
Securities
Amid ongoing turbulence in the equity and debt markets, Paul F. Roye, director of the SEC’s investment management division, warns investment companies—also known as mutual funds—against laying off essential compliance personnel to cut costs. U.S. mutual funds’ combined assets climbed 3.1% to $6.6 trillion at the beginning of October, says
Fraud
The SEC is investigating more Fortune 500 companies for financial fraud than ever before and the market impact of failed corporations is growing, said Charles Niemeier, chief accountant of the commission’s division of enforcement, at the annual AICPA conference on current SEC developments. Until recently, the SEC rarely investigated large
Effect of Built-in Gain on Value of Closely Held Stock
TAX CASE The valuation of stock in a closely held corporation is a difficult issue frequently argued before the courts. Since no independent valuations, such as market quotations, are available, a stock’s fair value may be difficult to determine. Treasury regulations section 20.2031-2(f) and revenue ruling 59-60, 1959-1 CB 237,
Tax
The U.S. Senate signs into law an extension through November 1, 2003, of the Internet Tax Freedom Act’s moratorium on state or local taxation of electronic commerce. The temporary ban does not affect Internet taxes in place before October 1, 1998. ( http://thomas.loc.gov/cgi-bin/bdquery/z?d107:h.r.01552: )
Government Accounting
The Federal Accounting Standards Advisory Board (FASAB) issues three pronouncements that amend Statement of Federal Financial Accounting Standards (SFFAS) no. 7, Accounting for Revenue and Other Financing Sources. The changes relate to the elimination of certain tax revenue transaction disclosures by the IRS, the Customs Service and others (SFFAS no.
Pro Bono
The AICPA creates a nationwide network of CPA volunteers to provide pro bono financial counseling to survivors of the September 11 attacks and their families. Members of the public can request assistance by contacting the AICPA at 877-CPA-4all or www.CPA4all.org . CPAs interested in contributing their services should either call
Income Tax Consequences of Certain Gift Transactions
January 2002 > From The Tax Adviser Some transfers may result in income or gain to the donor. From The Tax Adviser: Income Tax Consequences of Certain Gift Transactions state planners most often focus on minimizing estate and gift taxes when dealing with their clients’ situations. However,
Professional Issues
The statement on responsibilities task force of the AICPA consulting service executive committee’s litigation and dispute resolution subcommittee issues Proposed Statement on Responsibilities for Litigation Services no. 1. The exposure draft lists the responsibilities of a practitioner in a litigation service consulting engagement. It also analyzes the scope of such
Banking
The Office of the Comptroller of the Currency (OCC) reports that U.S. commercial banks boosted their derivatives holdings to $51.3 trillion in the third quarter of 2001—an increase of $3.5 trillion over the previous three months. This continued an upward trend that began after the third quarter of 2000. The
Settling a Debt Guarantee
TAX CASE If a taxpayer transfers appreciated property to repay a liability, the law treats the amount of the liability as proceeds from the sale of the property and the taxpayer must recognize a gain. Recently, the Tax Court considered the taxation of a transfer of appreciated property to settle
Employee Benefits
The Pension Benefit Guaranty Corporation (PBGC) raises to $3,579.55 per month (or $42,954.60 per year) the maximum amount it guarantees for retirees in underfunded single-employer, defined-benefit plans terminating in 2002—5.5% higher than in 2001. The Employee Retirement Income Security Act of 1974 requires the PBGC to adjust this amount annually
Life Insurance Compliance Rules
nsurance is among the most highly regulated of the financial services industries. When coupled with the professional standards inherent in the practice of public accounting, compliance issues can quickly become complicated for CPA firms that maintain insurance practices. Many CPAs believe they know enough about insurance to advise their clients.
Financial Reporting
In speeches and advisory announcements, the SEC’s chairman, Harvey L. Pitt, and chief accountant, Robert K. Herdman, lay out the commission’s plans for enhancing the accuracy and completeness of corporate financial disclosures, simplifying the standard-setting process, modernizing the financial reporting model and responding more swiftly to registrants’ requests for proactive
Auditing
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. Both the Institute and the Big Five issue statements describing their latest initiatives to improve the quality of financial reporting and
FYI
International corporate and securities legal expert Alan L. Beller becomes director of the SEC’s division of corporation finance, where he will lead efforts to enhance corporate disclosure and improve the efficiency of the registration process for securities issuers. He also will serve as senior counselor to the commission, a newly
International
The board of the International Federation of Accountants (IFAC) approves changes to independence rules in the group’s code of ethics. The revised provisions lay out a conceptual framework that addresses factors threatening auditor independence as well as steps auditors can take to preserve their integrity. The new rules apply to
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. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which replaces no. 121—an earlier pronouncement
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