EXECUTIVE SUMMARY THE AICPA HAS ISSUED EIGHT STATEMENTS on Standards for Tax Services as enforceable standards for AICPA members. Effective October 31, they replaced the advisory Statements on Responsibilities in Tax Practice. COMMENT LETTERS RAISED QUESTIONS ABOUT the necessity of enforceable tax practice standards. The strongest argument for enforceable
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Tax
Uncle Sam’s Budget for 2001
TAX MATTERS Source: Tax Foundation, www.taxfoundation.org.
Paying the Piper: Some Tax Rules for Daytraders
TAX BRIEF INDIVIDUAL One of the new vocations of the Internet age is day trading; it is characterized by traders’ rapidly buying and selling securities to take advantage of small movements in their value and liquidating the portfolios by the end of the trading day. Coverage in the news media
Taxes Take Largest Bite Out of Work Day
TAX MATTERS
Tax Services Standards Issued
TAX NEWS In late July the AICPA tax executive committee approved as final eight Statements on Standards for Tax Services (SSTSs), which superseded and replaced Statements on Responsibilities in Tax Practice. (See “Standards for Tax Services Proposed,” JofA, June00, page 77.) Although the substance of the rules contained in each
Corporate Acquisition Issues
TAX CASE In today’s economy, many business owners—both large and small—are considering buying other companies or selling the one they own. A recent case addresses some of the issues that may arise when the acquisition is structured to take advantage of opportunities in the financial market. Jordan Co. negotiated the
LMSB Deputy Commissioner Stresses Fairness for Taxpayers
TAX NEWS In a recent interview with the JofA, Deborah M. Nolan, CPA, IRS Deputy Commissioner of the Large and Mid-Size Business (LMSB) division, spoke of the service’s strategic goals that would make filing returns easier and increase fairness of compliance enforcement. When asked specifically how she planned to improve
IFAC Study Examines Public-Sector Corporate Governance
In July the International Federation of Accountants released for comment a proposed study intended to improve public-sector entities’ self-governance. Corporate Governance in the Public Sector: A Governing Body Perspective recommends that governments use private-sector corporate governance concepts and practices to achieve their objectives more openly and effectively, and in the
Being a Trader in Securities
eople today are much more familiar with the workings of the stock market and more likely to have investments in securities. Armed with some basic knowledge and using discount brokers (to save on transaction costs), many individuals buy and sell stocks on a regular basis. Taxpayers who buy and sell
Line Items
Too Late to Transfer A married couple owned assets in excess of twice the unified credit “exemption equivalent.” The husband had a terminal illness. Through his will he wanted to establish a unified credit shelter trust, but he owned insufficient assets to fund the trust. However, he jointly owned with
Auditing 2
The Big Five accounting firms agreed to participate in an SEC-sponsored retrospective review program. Under the agreement, the firms will report certain instances, during a specific period, in which they did not adhere to the new proposed independence rules limiting financial interests in audit clients by firms, auditors and some
IRS States Position on Hybrid Plan Arrangement
The IRS released a coordinated issue paper for all industries on the use of pension plan distributions to pay for certain benefits. The paper says the portion of pension plan distributions former employees use to purchase benefits in their employer’s cafeteria plan under a tax-free salary reduction does not reduce
Self-Rental Income Considered Active
IRC section 469 states that a taxpayer can use losses from a passive activity only to offset passive activity income. In other words, passive losses cannot shelter active income such as salaries, commissions, wages or portfolio income such as interest, dividend or annuity income. Under IRC sections 469(c)(2) and (c)(4),
International
IASC Addresses Share-Based Payment While the first phase of the IASC’s restructuring moves forward—the new group of trustees met for the first time in June under the chairmanship of Paul A. Volcker, former chairman of the Federal Reserve Board—the committee has been busy issuing guidance on international accounting. The IASC
Determination of a Profit Motive
Tax Matters TAX NEWS IRS States Position on Hybrid Plan Arrangements T he IRS released a coordinated issue paper for all industries on the use of pension plan distributions to pay for certain benefits. The paper says the portion of pension plan distributions former employees use to
Valuing Closely Held Stock for Estate and Gift Tax Purposes
PAs who work with estates know that, if a decedent owned stock of a closely held business at his or her death, the value of the stock generally must be determined if an estate tax return will be filed. The value for such purposes is the date-of-death fair market value
State Voluntary Disclosure Programs
Given the growing number of states seeking to increase revenues by taxing out-of-state businesses, a company located in one state may find it has had a taxable presence in another for several years, but has neither filed a return in nor paid tax to that state. This can present a
Mortgage Interest and Bankruptcy
Individual taxpayers often engage in more than one business venture. However, when a business also involves personal pleasure or recreation, the IRS may take notice. If the operation generates large losses that offset income from other sources, a taxpayer should consider all facts and circumstances before deciding to deduct the
Automatic Consent to Change Accounting Method Available
Under IRC section 446, taxpayers generally can choose any method of accounting to compute taxable income as long as that method clearly reflects income. However, many small business taxpayers who wish to use the cash method are prevented from doing so because of Treasury regulations section 1.446-1(c)(2)(i), which states a
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From The Tax Adviser
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Current developments in taxation of individuals: Part 2
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