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10 posts from October 2016

5 Scary Tax Characters to Watch Out For

ZombieHalloween is my favorite holiday, bar none. Once a year, we all have license to use our imagination and be someone or something else. And beyond the goblins, pumpkins, ghosts and black cats, there is the absurd amount of candy floating around the stores and office. 

The late Vincent Price, an actor who unquestionably had the best horror movie voice in the world, said, “It’s as much fun to scare as to be scared.” Vincent, wherever he is, may be pleased to know something can spook the unwary taxpayer in the same way his voice could invoke fear and trembling: tax creatures like the ones listed below. The good news is that you can avoid or at least minimize these horrors if you start thinking about these things now.

  • Count AMT (aka Line 45 on Form 1040) – Dracula could not have devised a better way to suck the money or refund out of your life than the alternative minimum tax. If your income reaches a certain amount, you must recalculate the tax you owe based on a higher income, one that does not have some of the deductions that helped to lower it. Devised as a tool to ensure that wealthy taxpayers could not use loopholes to avoid paying taxes entirely, the AMT now preys on taxpayers who are not so wealthy. The current AMT exemption is $59,900 for single taxpayers and $83,800 for joint filers. Talk to your CPA about ways to soften the impact and be aware that certain deductions act as triggers for the AMT.

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CPAs with Clients in the Marijuana Industry Need to Consider Risks

MarijuanaOn Nov. 8, voters in nine states will consider ballot initiatives to legalize marijuana – a move that could create new businesses that will need CPA services. However, conflicting federal and state laws mean that CPAs have to carefully consider the risks of providing services to these businesses. The AICPA spoke with Stan Sterna, vice president for Aon Insurance Services, the national administrator of the AICPA Professional Liability Insurance Program, and Mike Komoll, assistant vice president of professional service claims for CNA, the underwriter of the AICPA Program, to discuss key considerations for CPAs providing services to the expanding marijuana industry.

Which states are considering legalizing marijuana in November, and why might CPAs be interested?

Sterna: Five states – Arizona, California, Maine, Massachusetts and Nevada – will vote whether or not to legalize recreational marijuana, while four states – Arkansas, Florida, Montana and North Dakota – will consider legalizing medicinal marijuana. In the 26 states and jurisdictions where marijuana is already sold legally, businesses in this industry have increasingly sought out accounting and tax services. CPAs in any states that pass marijuana initiatives next week will likely start seeing similar requests, which makes sense when you consider the size of the industry.

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3 Potential Financial Reporting Errors Found at Not-for-Profit Organizations

Shutterstock_388167307As a CPA who has been in public practice for many years, I know the challenges that not-for-profit organizations face in financial reporting, and, more specifically, in applying generally accepted accounting principles.

Financial statements provide a compelling picture of the not-for-profit entity’s activities. However, in my experience, there are potential financial reporting concerns not-for-profit organizations need to be aware of to make sure that picture is conveyed properly. Here are three errors that come to mind.

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Tax Due-Diligence Checklist for Sharing-Economy Clients

UberPeople have been sharing services and property, and generating money from it, for years. For example, someone with a spare bedroom might have posted a note on a bulletin board at the local grocery store or advertised in the local paper to find a tenant. But do we understand the tax implications of the shared economy? That’s where CPAs come in.

Today’s technology allows for easier publishing and access to a wider pool of people for matching offers and acceptances. Using Airbnb or similar sharing websites, the owner with a spare bedroom will find that short-term rentals are relatively simple to arrange. Yet that same owner is unlikely to know the full tax consequences of this convenient rental, so it will be up to the tax preparer to ask the right questions.

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Why CPAs Should Learn about Integrated Reporting

Shutterstock_217047778Integrated reporting <IR> is receiving a growing amount of coverage worldwide lately, from both academics and from the accounting profession, and this trend shows no sign of slowing down. Books, research articles, presentations and other publications that highlight the potential opportunities of integrated reporting are becoming commonplace. The International Integrated Reporting Council has developed a plethora of resources including case studies and reports that provide a solid introduction to this topic. But a fundamental question remains unanswered. In terms of day-to-day implementation and data that can be acted upon, what exactly is an integrated report, and what does it mean for the CPA profession?


What is it?

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Four Steps to a Happier, Successful “Business” Retirement


Shutterstock_339672998As CPA financial planners and advisers, we spend a considerable amount of time addressing the technical aspects of IRAs, 401ks and defined benefit plans. We work to convert enterprise value into retirement assets. We consider diversification, funding strategies and tax implications.

Those issues are important, but it can be the personal and emotional aspects of helping your clients retire from their businesses that set you apart from other planners. Here are four critical steps to help you be a better partner to your clients who own a business.

Step One: Adjust the Conversation

The first step, and for many retirees the hardest one, is the mental adjustment of retiring after decades building a business and creating value. Then, one day, they sign a contract and turn those work responsibilities over to others.

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3 Steps to Mitigate and Respond to a Security Breach in the Cloud

The AICPA is participating in National Cybersecurity Awareness Month with a series of blog posts to help CPAs understand the role they can play in addressing cybersecurity issues. This is our second post in this series. Our first post discussed low- and no-cost ways to protect data.

Cloud securityMuch like their counterparts who run growing companies in virtually every industry, many accounting firm executives have their heads in the cloud. They have implemented, or are considering, cloud computing options for everything from data storage and networking to task automation and product delivery. Some firm executives see an additional opportunity: offering consulting services to help clients understand and use the cloud.

It’s clear that cloud computing provides proven advantages over on-premises options, such as savings, convenience and flexibility. However, the cloud also presents some unique challenges, including often complex deployment options, operational issues and substantial security concerns. Below you’ll find three steps to take to address cloud computing security.

Step One: Know the Risks

The first way to mitigate a security breach is to understand and prioritize the risks related to using cloud services. For accounting firms and their clients that use a cloud service provider (CSP), cloud-based solutions present the same risks as traditional information security, plus the risks associated with managing and governing a third-party service provider.

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5 Tips for Becoming a Firm of the Future

Shutterstock_362297912 (1)Here’s a familiar scenario: A firm has been in business for decades, achieving success using a tried-and-true formula of providing high-quality work and great client service. As a new generation takes over and market demands change, however, the firm’s partners begin to wonder how they can grow the practice while maintaining the winning attributes that have made the firm what it is. They worry a major change will distract their team from the important business of serving clients—and eat up too much time and money.

That’s the situation my firm faced about five years ago. As the recession was coming to an end, the firm, which has been in business roughly 70 years, had about 25 people and around $3.5 million in revenues. Our culture had long been to work hard and play hard. We’ve held on to the spirit of camaraderie and the family environment our founders built, but as we moved forward into the millennium we hadn’t developed the internal structures we would need to manage growth. However, by making some strategic decisions, over the course of five years we have grown to a firm of 35 people and $5 million in revenues.

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It’s a Great Day to Be a CPA!

Christen_Tim_headshot_As someone who grew up in the small farming town of Belmont, Wisconsin, the past year has been remarkable for me. I’ve visited more than half the states and met thousands of CPAs working in every professional accounting role you can imagine. And I’ve learned something from every one of them.

There’s nothing like talking with CPAs working with or in real businesses facing complex accounting and tax issues to understand what is important to the future of our profession. They understand we need to evolve to maintain our relevance. The confluence of complexity and rapidly evolving technology has accentuated the imperative for change.

We often discuss the four areas I spoke about at my inaugural address last October. CPAs want to modernize their services, which means adopting new technologies and being a step ahead of what the marketplace demands. They’re asking about everything from how auditors can leverage data analytics, to the latest standards from the Financial Accounting Standards Board and the impact Brexit will have on the work they do.

Something else they want to talk about, and the second area where we can shape our own future and ensure relevance, involves the speed in which we are developing new fields of expertise. These efforts are in response to the changing needs and requirements of our clients and employers. Today the world moves too fast to wait.

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5 Low- or No-Cost Ways for CPAs to Help Slam the Door on Cybercriminals

CybercrimeThe AICPA is participating in National Cybersecurity Awareness Month with a series of blog posts to help CPAs understand the role they can play in addressing cybersecurity issues. This is our first post in this series.

October is National Cybersecurity Awareness Month, but fighting cybercrime is a year-round battle. As experienced keepers of confidential information, CPAs are uniquely positioned to support cybersecurity initiatives for their firms, clients, or employers. But cybersecurity is costly, and budgets are always limited, especially in the public and not-for-profit sectors. Consider these five simple steps CPAs can take to help protect data without breaking the bank.

  1. Know email scams and warn others. People are increasingly the weak link in organizations’ cyber armor. You know not to give your checking account info to an unknown foreign government dignitary. But what if you get an email from your CEO instructing you to wire funds for a deal that you know is about to close? This scenario was all too real last year for a finance employee who was tricked into wiring $730,000 to a bank in China, according to an FBI report. Since the FBI started tracking business e-mail scams in late 2013, it has compiled statistics on more than 7,000 U.S. companies that were targeted. Total losses exceeded $740 million.

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