FASB Backs EITF Decisions on Four Issues

Based on the FASB's decisions at its most recent meeting, three Emerging Issues Task Force (EITF) consensuses will be issued as proposals for public comment. A fourth will be published as a final standard.

1. EITF Issue No. 09-G, “Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts,” will be issued as a final standard.
2. The board also agreed to publish EITF Issue No. 09-H, “Health Care Entities: Revenue Recognition,” as a proposal. The proposed amendment to U.S. GAAP calls upon health care providers to disclose the policy for considering the collectability of an unpaid medical bill.
3. The task force agreed to seek public comments on EITF Issue No. 10-A, "How the Carrying Amount of a Reporting Unit Should Be Determined When Performing Step 1 of the Goodwill Impairment Test,"
4. The task force agreed to seek public comments on EITF Issue No. 10-G, “Disclosure of Supplementary Pro Forma Information for Business Combinations.”

Source: WG&L Accounting & Compliance Alert Checkpoint 9/30/2010

AFRs for October 2010

The Applicable Federal Rates (AFRs) for the month of October are as follows:

	Annual	Semiannual	Quarterly	Monthly
Short-term (≤ 3 years)	0.41%	0.41%	0.41%	0.41%
Mid-term (> 3 years but ≤ 9 years)	1.73%	1.72%	1.72%	1.71%
Long-term (> 9 years)	3.32%	3.29%	3.28%	3.27%

2010 Largest Accounting Firms

ThomasYork was ranked #44 on the SF Business Times Largest Accounting Firms list in the Greater Bay Area. We moved up three spots from last year. The ranking for this list is based on the number of professionals (CPA and CPA-track staff) in the Greater Bay Area. Everyone at TY looks forward to moving up the list year after year.

SMALL BUSINESS JOBS ACT OF 2010

Looks like the folks in Washington are finally agreeing on something. Yesterday, September 23, the House passed the Small Business Jobs Act of 2010 (H.R. 5297). It is expected to be signed by the President soon.

Here are some of the key provisions:

• §179 expanded: For tax years beginning in 2010 and 2011, expense limit is increased to $500,000 and phaseout threshold increased to $2 million;
• §179 for (some) real estate: For tax years beginning in 2010 and 2011, taxpayers can elect to treat certain real estate as §179-eligible. Qualifying real estate includes:
• Qualified leasehold improvements;
• Qualified restaurant property; and
• Qualified retail improvement property.
• Bonus depreciation extended: Available for property purchased through December 31, 2010;
• Luxury auto depreciation increased: As a result of the extension of bonus depreciation, first-year depreciation of automobiles is bumped up $8,000;
• Deduction for start-up expenditures increased: Under IRC §195, increased from $5,000 to $10,000 for taxable years beginning in 2010 (only);
• Exclusion for small business stock: For purchases made after the date of enactment and before January 1, 2011, the exclusion for small business stock under IRC §1202 is increased to 100%;
• Five-year carryback for general business credits: Effective for credits determined in the taxpayer’s first taxable year beginning after December 31, 2009 (one year only), the carryback period for an “eligible small business” is increased from one to five years. In addition, the credit is not subject to the AMT limitation;
• Built-in gain period shortened to five years: For taxable years beginning in 2011 (only), the recognition period for the BIG tax is shortened to five years;
• Deduction for health insurance for SECA purposes: For 2010 (only), the deduction for self-employed health insurance is also a deduction for purposes of the SE tax;
• Cell phones removed from listed property: Permanent and effective for tax years ending after 2009;
• Information reporting required for rental property: Effective for payments made after December 31, 2010, rental real estate is treated as a trade or business for information reporting purposes. IRS to prescribe de minimis exceptions;
• Higher information return penalties: Penalties under IRC §6721 are substantially increased beginning in 2011;
• §457 plans can include Roth accounts: For tax years beginning after December 31, 2010; and
• Rollovers from elective deferral plans to in-plan Roth accounts allowed: Effective on the date of enactment. Will allow a two-year deferral (2011 and 2012) for rollovers done in 2010.

Now let's see what else happens by the end of the year.

Franchise Tax Board Auditing Head Of Household Returns

Sacramento - The Franchise Tax Board (FTB) announced mailing more than 135,000 review letters to taxpayers who claimed the “Head of Household” filing status on their 2009 state tax return.

Taxpayers who do not qualify will have their tax reassessed at either a single or married-filing-separate filing status. Nearly 29,000 taxpayers who used this status last year did not meet its requirements and were issued more than $31 million in tax assessments.

Each year FTB reviews tax returns of taxpayers who claim the Head of Household filing status because the qualifications are commonly misunderstood. The status generally results in lower tax liabilities for unmarried taxpayers who care for a dependent. To qualify, the taxpayer must provide care for more than one-half of the year and pay more than one-half the cost of maintaining their home. The qualifying person must be related to the taxpayer and meet the requirements to be a qualifying child or relative. More than 2 million California taxpayers use this filing status each year.

FTB advises taxpayers who receive an audit letter to respond promptly by completing the enclosed questionnaire. Failure to respond could result in a tax assessment and penalty. Questionnaires can be submitted by any of these methods:

• Respond electronically at ftb.ca.gov. Use HOH Audit Letter Web Response page.
• Respond by fax at 866.223.8195.
• Respond by mail using the pre-addressed envelope provided with the audit letter.

FTB provides the following tools on its website to assist taxpayers:

• Head of Household “self-test.”
• Answers to frequently asked questions.
• Publication 1540, “CA Head of Household Filing Status,” in English and Spanish.

Final Schedule on Disclosures of Uncertain Tax Positions

The IRS has looked at the comments submitted in response to its proposed schedule of uncertain tax positions, and it's ready to produce a final version. Some of the concerns that businesses raised have been incorporated into the finished product.

Internal Revenue Service Commissioner Douglas Shulman said the agency plans to move forward with an unpopular plan to require businesses with more than $10 million in assets and have taken a reserve on the financial statements to file the new Schedule UTP, Uncertain Tax Position Statement. The schedule will require annual disclosure of uncertain tax positions with a concise description of the positions. The proposal does not require companies to disclose their risk assessment or tax reserve amounts, even though the IRS can issue a summons to compel submission of the information.

Many businesses are required by FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes, (FASB ASC 740-10), to identify and quantify a tax position relating to a specific federal tax return for which a taxpayer is required to reserve an amount. The IRS said that the information developed in the course of complying with FIN No. 48 or other accounting standards is highly relevant to understanding the tax positions and assessing how those affect the taxpayer’s tax liability, Shulman said in a speech at Financial Executives International's Washington Policy Conference on September 21, 2010.

The agency said the information would allow it to focus its examination resources on returns that contain specific uncertain tax positions that are of “particular interest or of sufficient magnitude to warrant inquiry, as well as allowing examination teams to identify all of the issues underlying the tax returns more quickly and efficiently.” The proposed schedule and instructions seek information related to three categories of tax data:

• Positions for which a reserve is reflected in the taxpayer’s financial statements;
• Positions for which no reserve is reflected because the taxpayer expects to litigate and win the position; and
• Positions for which no reserve is reflected because the IRS has a general administrative practice of not examining the position.

The IRS released Announcement 2010-09 in January 2010 and extended the comment deadline in March. It was followed with a proposed Schedule UTP and draft instructions in Announcement 2010-30 in April. The comment period ended June 1.

Many accountants voiced concerns during the comment period. One complaint centered on the burden on taxpayers who are already stretched to meet current disclosure requirements. Some accountants argued that the proposal could undercut the integrity of the financial statement process by creating tension between taxpayers and tax advisers. They also feared that a disproportionately large share of the costs would fall on small businesses.

Source: WG&L Accounting & Compliance Alert Checkpoint 9/22/2010

GAAP Just for Private Companies?

A blue ribbon panel on private company financial reporting, expected to make its final recommendations before the end of the year, does not believe the current approach for setting generally accepted accounting principles (GAAP) related to private companies is meeting user needs in a cost-effective matter. The panel also has rejected any near-term future model based solely on International Financial Reporting Standards (IFRS).

The panel was formed earlier this year by the AICPA, the Financial Accounting Foundation (FAF) which oversees the Financial Accounting Standards Board (FASB), and the National Association of State Boards of Accountancy (NASBA) to explore the future of standard setting for private companies.

Three financial reporting models are being considered by the panel and would result in appropriate differences in GAAP for private companies. The panel will be deciding whether to recommend either: (1) U.S. GAAP with exclusions and enhancements for private companies, (2) a basic U.S. GAAP with public company add-ons, or (3) separate, stand-alone standards for private companies based on current U.S. GAAP.

The panel also is exploring whether to recommend a board separate from the FASB to oversee private company standards.

Input on how accounting standards can best meet the needs of users of private company financial statements may be given by visiting www.fasb.org, and the public comment period ends Wednesday, September 15, 2010.

Source: http://www.aicpa.org/News/FeaturedNews/Pages/BlueRibbonPanelUpdate.aspx

Employer Information Report (EEO-1) Due September 30th

The deadline for filing the Employer Information Report (also known as the EEO-1 Report) with the Equal Employment Opportunity Commission (EEOC) is September 30th. The report must be filed by: (1) employers with federal government contracts of $50,000 or more who have 50 or more employees; and (2) employers who do not have a federal government contract but have 100 or more employees.

The report requires employers to provide a count of their employees by job category, ethnicity, race, and gender. Employment numbers may be obtained from any pay period in July through September of 2010. The EEOC prefers the report to be filed using the EEO-1 online filing system. The system requires a login ID and password. Other filing options for private employers include submitting the report as a data file or filing the report as a computer printout. EEOC will only allow the report to be filed on paper if so requested by an employer with no Internet access.

The EEOC website contains a list of frequently asked questions on the report which can be viewed at http://www.eeoc.gov/employers/eeo1survey/faq.cfm. Further information on the reporting process can also be obtained by calling the EEO-1 Joint Reporting Committee at: (866) 286-6440.

Just Announced: 2010 Best Accounting Firms to Work For

New York, NY – September 16, 2010 – 100 accounting firms have been honored as the 2010 Best Accounting Firms to Work For in our third annual program created by Accounting Today and Best Companies Group. These top firms will be announced and honored at an awards luncheon on November 17 during Accounting Today’s Growth & Profitability Summit in Las Vegas and published in the December 13 issue of the magazine.This survey and award program was designed to identify, recognize and honor the best places of employment in the accounting profession, which benefit the nation's economy, its workforce and businesses.

The Best Accounting Firms to Work For list comprises 100 companies organized into three size categories: 45 small-sized companies (15-49 employees), 45 mid-sized companies (50-249 employees) and 10 large-sized companies (more than 250 employees). To be considered for participation, companies had to be public or privately held U.S. accounting firms with at least 15 employees.Firms from across the country entered the two-part survey process to determine the Best Accounting Firms to Work For. The first part consisted of evaluating each nominated firm's workplace policies, practices, philosophy, systems and demographics. The second part consisted of an employee survey to measure the employee experience. The combined scores determined the top companies and the final ranking. Best Companies Group managed the overall registration, survey and analysis process and determined the final rankings.

For more information on the Best Accounting Firms to Work for program, visit http://link.p0.com/u.d?f4GrW2cTthyrG_83F0V8h=591.

2010 Best Accounting Firms to Work For (alphabetical order, no ranking)

Anchin Block & Anchin LLP Anglin Reichmann Snellgrove & Armstrong Anton Collins Mitchell LLP Averett Warmus Durkee Bader Martin, P.S. Baker Newman Noyes Barfield, Murphy, Shank & Smith, PC Bartlett, Pringle & Wolf, LLP Bartolomei Pucciarelli, LLC BeachFleischman PC Berlin, Ramos & Company, P.A. Berntson Porter & Company, PLLC Biscotti, Toback & Company, CPA's, P.C. Blue & Co., LLC Bond Beebe Accountants and Advisors Boyer & Ritter, CPAs and Consultants Brown Schultz Sheridan & Fritz Brown Smith Wallace LLC Burr Pilger Mayer, Inc. Citrin Cooperman Clark Nuber Cohen & Company Coulter & Justus, P.C. Covenant Consulting Group LLC Cowan Bolduc Doherty LLC Daszkal Bolton LLP Deemer Dana & Froehle LLP DeLeon & Stang CPAs & Advisors DiSanto, Priest & Co. Dixon Hughes PLLC Dunton & Associates, LLC E. Cohen and Company, CPAs Edelstein & Company LLP Ennis Pellum & Associates, CPAs Fesnak and Associates LLP Fulcrum Inquiry GALLINA LLP Ganze & Company Garcia, Espinosa, Miyares, & Co. LLP GBH CPAs, PC Hancock Askew & Co., LLP Hemming Morse, Inc. Hertzbach & Company, P.A. Homes, Lowry, Horn & Johnson, Ltd. Howard, Wershbale & Co. Hoyman Dobson Hughes Pittman & Gupton, LLP Hungerford, Aldrin, Nichols & Carter, PC Isdaner & Company, LLC Johanson & Yau Accountancy Corporation Johnson Jacobson Wilcox Kahn, Litwin, Renza & Co., Ltd. KatzAbosch Kaufman, Rossin & Co. Kearney & Company Kolb+Co. SC KraftCPAs PLLC Kreinces Rollins & Shanker, LLC Lanigan, Ryan, Malcolm & Doyle, P.C. LaPorte Sehrt Romig Hand Layton Layton & Tobler LLP LMGW Certified Public Accountants, LLP Lumsden & McCormick, LLP Mahoney Ulbrich Christiansen & Russ PA Mark Bailey & Company Martin Starnes & Associates, CPAs, P.A. May & Company, LLP Montgomery Coscia Greilich LLP Onisko & Scholz, LLP Certified Public Accountants Pannell Kerr Forster of Texas, P.C. Payne, Nickles & Company Pender Newkirk & Company Petrinovich Pugh & Co, LLP Pittman & Brooks, P.C. Porter Keadle Moore, LLP PSK LLP RBZ, LLP RINA Accountancy Corporation Riney Hancock CPAs PSC Rodman & Rodman, P.C. Sample and Bailey CPAs SGA GROUP, PC Sikich LLP SingerLewak Sisterson & Co. LLP Smith Leonard PLLC Squire Swindoll, Janzen, Hawk & Loyd, LLC The Bonadio Group The Whitlock Company ThomasYork, LLP Wall, Einhorn & Chernitzer, P.C. Walter & Shuffain, P.C. Wessel & Company WhippleWood CPAs, P.C. Whitley Penn LLP Wilkin & Guttenplan, P.C. Williams Benator & Libby, LLP Windham Brannon WithumSmith+Brown, PC

About Accounting Today and SourceMedia, Inc. SourceMedia's Accounting Today has served as the premier news vehicle for the nation’s tax and accounting community since 1987. Regular coverage includes news and features surrounding tax-law changes, regulatory and legislative updates, technology, financial planning, practice management, mergers & acquisitions and international developments. Accounting Today’s readership encompasses one of the widest demographics of any publication in the field, from the sole practitioner, to firms with multi-professionals, to national firms and ultimately, to the Big Four. SourceMedia, an Investcorp company, is a leading provider of timely and essential news, analysis, research, and insights for members of the financial services community, and the related fields of professional services and technology. SourceMedia offers its clients and subscribers professional publications and online information services, industry-standard data applications and in-depth seminars and conferences.

San Bruno Explosion Employer Payroll Tax Extension

Tax relief extended to Employers Affected by San Bruno Explosion and Fire

Employers in San Mateo County, California, that have been directly affected by the explosion and fire that occurred in that county in September 2010 may request up to a 60-day extension of time from the California Employment Development Department (EDD) to file their state payroll reports and/or deposit state payroll taxes without penalty or interest. Written requests for extension must be received within 60 days from the original delinquent date of the payment or return to file/pay. Related information is available on the EDD Web site at http://www.edd.ca.gov/Payroll_Taxes/.

Source:

http://www.edd.ca.gov/Payroll_Taxes/Emergency_and_Disaster_Assistance_for_Employers.htm#sanmateoseptember

Are Business Owners Risk-Takers?

I recently read the following summary, and as a new business owner found it intriguing. During tough economic times like we have now, many business owners, including yours truly, wonder if it was the right decision to start their own business. Thankfully I can still answer with an emphatic yes.

I hope you find this interesting as well.

Chris-

Are Business Owners Risk-Takers? Not When It Comes to Their Finances

Are entrepreneurs financial risk-takers? Conventional wisdom says yes, but a recent research report from the Kauffman Foundation, Business Owners, Financial Risk, and Wealth, suggests otherwise.

Tami Gurley-Calvez, from the Department of Economics at West Virginia University, studied 1989 to 2007 data from the Federal Reserve Board, Survey of Consumer Finances (SCF) to research three questions:

1.) Are business owners generally more or less financially conservative than their non- business-owning counterparts?

2.) Do business owners accumulate more wealth?

3.) Do business owners hold a smaller share of their financial assets in risky stock holdings?

While entrepreneurs are typically portrayed as financial risk-takers, Gurley-Calvez found that when it comes to saving and borrowing, they are actually more conservative than non-business owners. For instance, 45 percent of business owners said it was important to them to save for retirement; just 32 percent of non-business owners said the same. In addition, business owners were focused on saving for the long term; they were more likely than non-business owners to say their savings horizon was five or more years in the future.

Finally, whether investing, saving or borrowing, business owners were more thorough than non-business owners in investigating their financial options. Ninety-one percent said they spent a "moderate" amount of time or more shopping for the best investment or borrowing terms; just 82 percent of non-business owners said the same.

Business owners accumulate more wealth over time than non-business owners. But although business owners showed more willingness to assume above-average risk in return for financial gain, in reality, both business owners and non-business owners invested similar shares of their portfolios in safe assets.

Business owners were less likely to say that an important reason for saving is having liquid cash available. However, they were substantially more likely than non-business owners to say they could borrow $3,000 from family or friends if needed.

They are also more likely to borrow from other sources. In the past five years, 84 percent of business owners had applied for a loan, compared to just 64 percent of non-business owners. And only 23 percent of them had been declined, compared to 31 percent of non-business owners.

Gurley-Calvez thinks perhaps the reason business owners aren't so concerned with liquidity is that they have "a stronger financial safety net." Compared to non-business owners, business owners seem to have more financial resources available to them—meaning that what others perceive as "risky" does not seem that way to them

Source: http://smallbiztrends.com/2010/09/business-owners-risk-takers-finances.html

OBAMA TO PUSH TAX BREAK

It has been awhile since our last post so I thought this would be a good one to get back on track. I received the following news alert today and thought I would share it. As it says below the details will be released this coming Wednesday but if it does include the ability to write off 100% of new purchases for plant and equipment it could be a huge benefit for lots of businesses. I'm sure there will be all kinds of caveats and limitations but lets keep our fingers crossed that some of this actually comes to be.

__________________________________ News Alert from The Wall Street Journal

President Barack Obama, in one of his most dramatic gestures to business, will propose that companies be allowed to write off 100% of their new investment in plant and equipment through 2011, a plan that White House economists say would cut business taxes by nearly $200 billion over two years. The proposal, to be laid out Wednesday in a speech in Cleveland, tops a raft of announcements, from a proposed expansion of the research and experimentation tax credit to $50 billion in additional spending on roads, railways and runways. http://online.wsj.com/article/SB10001424052748704392104575475920686869934.html?mod=djemalertNEWS