In the News: Dividends, PCGAAP, Deductible Loss
Multiple news outlets, including Tax-News.com and Accounting Today covered the news that more than 2,600 letters have been written to the Financial Accounting Foundation demanding differential financial reporting standards for private companies and a separate independent board to oversee those standards. “Ninety nine percent of the letters from the privately held company constituency demanded that the FAF create differential standards for privately-held companies,” said Barry Melancon, CPA, AICPA president and CEO.
Paul Stahlin, CPA, AICPA chairman, said “now is the time for the FAF to take the bold step of creating a separate board to set relevant standards that privately-held companies sorely need. We call upon more CPAs and business leaders within the privately-held company constituency to push the FAF to make these changes.” The AICPA developed a letter writing tool to help members write letters to the FAF in support of a private company board.
A recent USA Today article helps readers make sense of the tax relief benefits which many families impacted by natural disasters may qualify for. The article notes that personal casualty losses are deductible in the event certain conditions are met. Melissa Labant, tax manager for the AICPA, noted that one such condition is that the loss was caused by a sudden, unexpected or unusual event, such as a hurricane, wildfire, flood or other natural disaster. Losses that stem from a long-running problem aren't deductible. Other conditions include the damages not being covered by insurance and the deductions must be itemized. In 2008 and 2009, Congress let homeowners who claimed the standard deduction deduct casualty losses, however Labant notes that the exception expired last year.
New York Times Bucks blogger Tara Siegel Bernard and I have something in common – we both reinvest the dividends our investments pay out without giving it much thought. However, as she details in a recent blog post, this strategy may not be best for everyone. Retirees, for example, often take the dividends as an added source of income. Others chose to avoid automatic reinvestment because it generates a new group of shares that need to be tracked for tax purposes, which can affect your cost basis. Cost basis is the amount you paid for your investment, after factoring in items such as dividends, capital distributions or stock splits. “The complaint has always been that tracking cost basis was very cumbersome,” said Lyle Benson, CPA/PFS. “You’d have to keep track of every time you got a dividend and reinvested it.” However new tax rules require brokerage firms to track and report your cost basis to the IRS are being phased in over the next three years, which should make tracking cost basis more manageable.
Did you come across a recent article of note about the profession? If so, please let me know in the comments section or send me an email.