Taxing Emotions: Death, Section 754 Elections and Serving the Client

Estate Planning 2Confronting the cold monetary and business realities of an estate is extraordinarily difficult in the midst of mourning. Even a well-planned estate’s complexity could mean the process drags on for months or even years, drawing out not only raw emotion but also tax exposure. Careful planning and a detailed explanation of your clients’ wishes are a must if you want to save their loved ones additional suffering.

My mother’s estate was moderate in terms of her personal holdings, but she also participated in substantial limited partnerships that passed to my brothers and me upon her death. While her home and personal effects were relatively simple to liquidate, the partnerships were a different matter.

There was no provision for a buyout of my mother’s interest upon her death. We found ourselves in business with people who didn’t know us, and had conflicting ideas about the future of the entity itself. Like so many partnerships, ours rarely had K-1s prepared in time to allow us to file our individual returns in advance of April 15th. We faced an indeterminate future of filing expensive extensions, estimating our individual tax liabilities and possibly increasing our exposure to an audit.

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5 Key Facts about the New FASB Leases Standard


Shutterstock_165181559What is a lease? And how should it be reported on a balance sheet? While your clients may not have spent much time pondering those questions in the past, the answers will take on new importance for them when a new Financial Accounting Standards Board standard on Leases becomes effective. While it’s true that the final guidance generally does not depart from existing GAAP as much as some earlier FASB proposals on this topic, practitioners should be prepared for significant changes in how all organizations that have lease assets—including private entities and not-for-profits—will account for leases. As practitioners begin to educate themselves on the guidance, here are five critical issues to keep in mind.  

  1. Lessees must now recognize operating lease assets and liabilities on the balance sheet. This is the most significant change, since it will require all organizations and their CPAs to take a different approach to lease accounting. Before this standard, U.S. GAAP only required this type of recognition for capital leases. Operating lease amounts were generally shown in the financial statements as rent expense on the income statement and in disclosures to the financial statements. In implementing the new guidance, entities will have to reconsider the ways they identify lease arrangements.

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Technology Revolutionizes the Transfer of Private Company Information

Shutterstock_104783210How can CPA firms, their clients and the investors and lenders with whom they do business easily access shared documents? How can CPA firms ensure that their signature won’t be used fraudulently or that there won’t be unauthorized changes in their financial reports? I spend a lot of time speaking with CPAs across the country, and these are some of the questions on the minds of firms that serve private company clients.

Public companies have a simple solution for sharing financial information in a secure environment. The Securities and Exchange Commission’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) System collects, validates, indexes and forwards submissions from public companies’ SEC filings. It was launched in 1984 and offers public companies an efficient way to share corporate information, but there has never been a similar system to fit the needs of private companies. 

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Salsa, Scenery, and the CGMA


BSachdeva-3605Bikram Sachdeva loves salsa and bachata dancing. You might also find him capturing landscapes, skyscapes, and nature scenes with his camera during travels to Senegal, Ghana, Tanzania, Mongolia, El Salvador, Nicaragua, and Jordan—countries where he’s monitored over $ 1.5 billion portfolio of projects.

Sachdeva is a CPA and CGMA, to name just two of five professional designations on his business card. “I hear a lot of stereotypes when people see my business card,” said Sachdeva, director of fiscal accountability at the Millennium Challenge Corporation (MCC), an independent U.S. Government aid agency that works to reduce global poverty through economic growth. “Some people assume that because I’m a CPA, I’m not outgoing. They’re surprised when I tell them I love to dance and take pictures, especially because these interests tend to be outside the norm of what people expect from an accountant.”

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Summer Reading Recommendations

Summer reading 3Part III

Looking for things to read on your summer vacation? Here is the third and final installment of the AICPA summer reading recommendations. You can catch up if you missed Part I or Part II.

Valrie Chambers, CPA, MBA, Ph.D, Associate Professor of Taxation and Accounting, Stetson University, and regular AICPA Insights contributor recommends:

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5 Tips to Maximize Productivity - Both at Home and at Work

Shutterstock_438684127“Amateurs sit and wait for inspiration, the rest of us just get up and go to work.” ― Stephen King 

Whether it be racing to the office to conquer the business world, or managing all of our other daily commitments, we work hard every single day. And it’s not easy to stay productive with conflicting priorities. 

To keep you on track (and your sanity intact), below are five tips to inspire productivity at home and at work. 

(1) Don’t Be Afraid to Say “No.” 

Apple co-founder Steve Jobs put it the best. ”Focusing is about saying no.” From a professional standpoint, in order to truly do your job and meet your objectives, every time someone asks you to do something, you need to evaluate whether you are the best person to be doing that job, or even whether it should be done at all. Many of us are people pleasers and want to help, but saying “yes” is not necessarily the best thing for you or the organization. 

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How to Supercharge Your Not-for-Profit’s Board to Achieve Scalable Impact

Shutterstock_174469097When considering the future success of a startup organization, thoughts naturally turn first to a clearly defined vision, mission and strategy for putting plans into action. After that, many ask, “How do I galvanize my staff and volunteers to lead?” Social impact organizations affect the most critical challenges facing our society-- for example, lifting individuals out of poverty, providing access to vital services and fighting inequality. Having the right staff is critical and having the right board of directors is equally important. Scaling an organization’s impact means not just maintaining core processes, but also constantly sharing knowledge to build the organization’s capacity to affect change. Without leadership to keep the organization focused, staff can fall victim to fighting the daily fires that are a distraction from the larger goal of expanding the organization’s reach.

So how can you supercharge your board of directors? Here are four things to consider:

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Get to the Point: How to Make Travel Rewards Work for you


I don’t always get mail, but when I do it’s usually a credit card offer. And these cards are often tied to a particular hotel chain or airline. Many of these offers tout initial low-APRs, a waived annual fee and, increasingly, an obscene amount of rewards points – enough for a ROUND TRIP flight!!!! - if I only spend a few thousand dollars in the first couple of months.

However, my wife and I have been diligent about putting all of our charges on a credit card with a rewards program for a particular hotel chain and booking rooms at this brand whenever possible. The last thing I want is to lose our status with that chain by spreading ourselves too thin. This approach is working for us; over the past few years alone, we’ve paid for hotels in Denver, Boston, Puerto Rico, Baltimore and New Orleans using our rewards points. I’m by no means an expert travel hacker – that is, someone who has mastered collecting rewards points to earn free travel – but I’m making sure the money I spend on my card and the trips I take is working to my advantage. Seems simple, right? 

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6 Planning Ideas for CPAs Who Have Aging Clients

Aging clientsYou might have noticed the “graying” of your clients and thought “how can I, as a CPA and trusted adviser, provide services that meet their changing needs? What are the practice considerations surrounding those services?”

Recently, we served on a panel at the AICPA Conference on Tax Strategies for the High-Income Individual that focused specifically on these issues. Consider some of the following ideas gleaned from the session and how you may be able to incorporate them into your practice:

  1. Services: Cognitive challenges often affect executive functioning, such as the ability to handle day-to-day finances. Services you might offer include automating finances such as bill paying, monitoring investments, and reviewing banking records to identify elder financial abuse. With clients more commonly living into their 90s and beyond, budgeting and the recurring financial responsibilities of an individual or family take on a very different nature.

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Backstage Pass: EDGE Experience

Social mediaOften times, in-person conferences are the best time to get updates on industry news and to learn new things. The EDGE Experience, the premier career development event for young CPAs, focuses on building young professionals not only technically, but with soft skills as well.

Yesterday, Stacie Saunders, Senior Manager of Social Business at the AICPA, sat down with three CPAs to talk about how they began a professional strategy on social media. Saunders began the conversation by saying “most of us started on social media for personal reasons, but as you start to use it you can see how the benefits can cross over into a professional space.” So, how does one begin to use social media professionally?

As a special treat for AICPA Insights readers, we listened in and pulled tips and tricks for some of the most common questions surrounding social media.

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Advising on U.S. DOL’s Overtime Rule and Worker Classification Issues

Shutterstock_282297254I don’t know about you, but I’ve been having more conversations with my clients on employment issues lately. The new U.S. Department of Labor’s (DOL) overtime rule was announced May 18 and goes into effect December 1, 2016. Among other things, the new rule extends eligibility for overtime to certain white-collar workers by increasing the wage threshold from $455/week to $913/week ($47,476/year).

When my clients call with a “quick question” about the new rule, I chuckle to myself. These calls usually take an hour or more, as one question leads to another. These worker classification decisions can have major budget implications, particularly for small businesses and not-for-profits, and there is little time to come into compliance before December 1. In many small businesses without an HR department, employment issues fall under the finance or accounting function. 

Here is the basic guidance I’ve given to clients:

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AICPA Insights Celebrates Five Years

20386-312 AICPA Insights 5th Anniversary_update_R4-2

 

The 4-Step Coach Approach to Client Service

CoachBefore CPA financial planners can provide expert counsel to clients, they first must get to know them in a very meaningful way. The process involves asking self-reflective questions and something I like to call the “coach approach” to client discovery.

The coach approach is a cooperative process, or a two-way street, and comes from material published by motivational expert Michael Pantalon. A good planner (the coach) guides and motivates, imparting knowledge along the way, but the client must also have some skin in the game with a commitment to executing the plan. After all, a basketball player could be coached to improve his game, but the player must commit to practice, and ultimately perform, before any real progress can be made.

Here are four steps to the “coach approach”:

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Buying a Home? You May Have Missed an Important Step


Shutterstock_164412314Anyone who is going through the process of buying a home knows that it can be a long and expensive process. And it’s one that you need to get right to build a solid financial future. From finding the right realtor to determining the most important factors for your next home, there are many important steps to take. Luckily, 360 Degrees of Financial Literacy and Feed the Pig are here to help. Here are four essential tips (including one many people overlook) to help you with the home-buying process:

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7 Models to Consider When Implementing the FASB’s New Credit Losses Standard


Shutterstock_408188569The Financial Accounting Standards Board has finalized its credit loss standard, Accounting Standards Update 2016-13—Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new standard marks the end of accounting for credit losses using the Incurred Credit Loss model and replaces it with the Current Expected Credit Loss (CECL) model. The standard will have a significant impact on financial institutions. Additionally, it will apply to most debt instruments, trade receivables, lease receivables, reinsurance receivables, financial guarantee contracts and loan commitments.

Since the FASB did not restrict the type of methodologies institutions can use when implementing the new standard, I recommend that CPAs working at financial institutions, along with CPAs with financial institution clients, begin reviewing the different models now. You will want to consider the specific portfolio makeup of your or your clients’ institutions when deciding which method will work best. Here are some of the more common models currently in use by financial institutions that can be modified and used under the new standard:

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5 Steps to Increase Effectiveness for Not-for-Profit Leaders

Photo-panel-nfp
At AICPA’s Not-for-Profit Industry Conference, keynote speaker Barry Melancon, President and CEO of AICPA joined a panel that included Michael Forster, CFO of Woodrow Wilson International Center for Scholars; Carolyn Mollen, CFO of Independent Sector; and Joe Stradinger, founder of EdgeTheory. The panel was moderated by Lou Mezzina of KMPG LLP.

Financial professionals face ever-changing business and regulatory challenges that necessitate a wider range of skills and competencies. This was a topic of discussion at this year’s AICPA Not-for-Profit Industry Conference. Outlined below are five ways to run your not-for-profit more effectively, inspired by our panel of nonprofit executives.

  • Connect the mission with strategy. A not-for-profit’s success is measured not just by the strength of its balance sheet, but by its ability to execute its mission. . Keep in mind that mission-related decisions have financial implications. Before deciding on a fundraising campaign or a revamp to your program design, consider if the effort is fiscally sound and if it will bring you closer to achieving your mission. Because finance and mission goals are inseparable, leaders must have a deep understanding of operational complexities.
  • Think holistically. Leading change requires more than just technical skills. Today’s financial leaders need to be adept communicators and adaptable in order to bring about transformation. Delivering results in a fast-paced environment means focusing on both preserving financial viability and thinking holistically about strategies needed to drive results. Many Chief Financial Officers report spending the majority of their time tackling big picture issues rather than detail oriented technical ones.

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Passion for Performance: A CGMA’s Perspective

Lindsey Branston for AICPA_074Lindsey Branston, CPA, CGMA, is director of financial operations for the 70,000-member BMW Car Club of America and director of finance for the club’s charitable foundation in Greenville, S.C.

What’s your passion?

I’ve been fortunate to join an organization where my passion for strategy and financial analysis fit hand in glove with my love for cars and driving. As a CGMA, I know many financial strategies work on paper, but success depends on a deep understanding of how the club operates and of our members’ needs and desires. Our members are BMW enthusiasts—I’m one too. I go to car events all over the world to keep my finger on the pulse of BMW owner culture. Both my husband and I drive BMWs: an X5 SUV and a 435 convertible. Like many of our members, there’s a car I dream about owning. For me it’s an E9, a coupe built from 1968 to 1975.

How did you end up in a finance job for BMW?

When I was in public accounting, I worked with the BMW Car Club doing their audits. Then I started my own accounting firm and contracted with the club to provide financial management services. Since becoming a CGMA, I’ve expanded the work that I’ve done with the club and the foundation.

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3 Things to Keep When You Tackle Clutter

Shutterstock_375900517The world now seems chockful of tips to streamline your desk, your home and even your life. This isn’t a bad thing. For CPAs, the files pile up fast. Not to mention the articles, notes, e-mails and phone messages.

At home, the challenge to keep a grip on all the stuff can be even bigger with old clothes, shoes, sports equipment, tchotchkes and other stuff.  The cappuccino maker that your brother-in-law bought you is collecting dust but you feel guilty giving it away.  Or, in the case of my parents, it was books, tons of them. “They were like houseguests who never left,” my brother observed.  In her bestseller, “The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing,” Marie “KonMari” Kondo advises getting rid of things that don’t bring you joy.

Being surrounded by useless things, be they old magazines or appliances or clothes, can be draining. I am a big fan of regular (ok, semi-regular) sweeps to free up visual space, bringing an “ah” feeling to your eyes and brain. However, I want to caution you in your zeal to unclutter to consider keeping a few items that you may regret tossing later.  With all due respect to Kondo, it doesn’t have to bring you joy, but provide a crucial link with a person or memory you cherish.

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The Current Expected Credit Loss Model is Here… Now What?

HamiltonYou know the feeling you get when you are excitedly looking forward to something? It just can’t come soon enough. For instance, you enter Broadway’s mega-popular Hamilton -- the musical lottery -- every morning and anxiously await the email saying that you won. Even if the chances are only 909 to 1. 

The financial institution community has been anticipating the release of the Financial Accounting Standards Board’s credit losses standard. We have been following the process since the beginning. We reviewed drafts and submitted comments along the way. We participated in focus groups and met with the FASB to discuss the community banks’ concerns. The final standard is here. Now what?

Last month, the FASB issued Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326). The release of this new standard marks the end of accounting for credit losses using an incurred model. Institutions should not only consider all factors that have been incurred as of the reporting date, but also should estimate losses over the life of the loan. If an institution cannot estimate credit losses to the end of the loan’s life, taking into consideration any anticipated prepayments, it must estimate as far as it can and then revert back to the mean for the remaining years. This process sounds simple enough to implement, right?

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Summer Reading Recommendations

Summer reading 2Part II

Looking for things to read on your summer vacation? Here is the second installment of the AICPA summer reading recommendations. Missed Part I? You can find it here.

Tammy Atkins, Manager, Brand Management recommends:

  • All the Light We Cannot See by Anthony Doerr (2014)

This Pulitzer Prize-winning book is set during WWII. A blind French girl and young orphaned German boy offer the experience of war through children/young adults’ eyes. The young girl flees Paris with her father. The boy is enrolled in an academy for Hitler youth. The story gradually connects the two so that eventually their paths cross.

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Introducing a New Era in XBRL Data

Financial statementsWe could soon start to see a shift in how investors and other financial statement users access and analyze public company financial statement data. With the use of a technology called inline XBRL (iXBRL), data consumers will have access to view XBRL metadata while reading financial statements within their browsers.

In June, the Securities and Exchange Commission (SEC) issued an order to permit operating companies to use iXBRL in their periodic and current reports through March 2020. iXBRL enables XBRL information to be embedded into the HTML financial statement filing — as opposed to including XBRL data in a separate XBRL Exhibit. For filers that use iXBRL in their financial statements, this metadata will be viewable on the SEC’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) system which now provides an iXBRL viewer. The SEC’s iXBRL viewer also provides enhanced search capabilities within the filings that use iXBRL.

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Do You Remember a Mentor’s Best Advice?

MentoringHave you ever approached a crossroads in your career and weren’t sure which path to take next? Or maybe you were struggling—with no luck—to gain more confidence and visibility in your job. If you were fortunate enough to have a mentor at these critical junctures, there’s a good chance you gained valuable insights into the best solutions and smartest next steps. In fact, 75% of executives in a poll by the Association for Talent Development said that a mentor had been critical in helping them ascend to their current position.

Mentoring includes imparting wisdom that the mentor has gained through a lifetime of business and personal experience. We reached out to members on LinkedIn and asked them to share some of the best advice they’d received from mentors throughout their careers. Here’s what they had to say:

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Modernizing Fax Filings with the IRS


Shutterstock_156974060Federal and state agencies, including the court systems, are modernizing by allowing the electronic filing of petitions and other court documents. For example, Alabama, Texas, Illinois and Missouri have e-filing systems for court petitions. In 2014, two federal courts (2nd and 9th Circuit Courts of Appeals) piloted an e-filing program for all courts in which the user is authorized to file electronically. The program is expected to become national in the next few years.

The IRS is also modernizing, although not as fast as many practitioners (or the AICPA) would like. Calls to the IRS and cases can be routed to any IRS employee or office all over the country. We are seeing more appeals conferences conducted by telephone with the various service centers instead of in person and expect Skype-type conferences to become more common. For many years, the IRS has electronically processed bank account and wage levies on delinquent accounts. Now, the IRS is also able to issue electronic summonses to eBay and PayPal.

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3 Things CPAs Need to Understand about Crowdfunding


Shutterstock_270504203If a client came to you 10 years ago with an innovative idea for a new product, such as a winter coat that is warmer and lighter than any other on the market—you might say “Great idea. How will you fund development of a prototype?” Back then seeking funding was not yet a simple task. But in 2016, there are myriad crowdfunding sites available to help would-be entrepreneurs take their ideas and make them a reality. As a CPA, you are in a position to help ensure your client seeks this funding properly and in a fiscally responsible manner.

You may not yet be familiar with the rules and regulations surrounding crowdfunding, but the U.S. Securities and Exchange Commission released new rules in May. These guidelines, along with revisions last year to the existing Regulation A rules, expand the opportunities for small business capital raising by simplifying requirements for small businesses to access the capital markets. Both rules were issued by the Securities and Exchange Commission under the Jumpstart Our Business Startups (JOBS) Act.

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The Impact of Brexit on Your Clients’ Investments

BrexitUncertainty related to Brexit – the recent vote in the United Kingdom (UK) to move away from the European Union (EU) – sent shock waves throughout Europe and foreign markets. Here in the United States, investors have also expressed concern about the volatility of their portfolios.

Chances are good that some of your clients have already contacted you with questions about how this will impact their personal finances. To help you have this conversation, we sought advice from three well-known professionals: Chris Benson, CPA/PFS, L.K. Benson & Company; Jean-Luc Bourdon, CPA/PFS, BrightPath Wealth Planning, LLC; and Michael E. Goodman, CPA/PFS, Wealthstream Advisors, Inc. Here are their observations:

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CPA Financial Planning: Rewarding in Every Way

Lori LuckA client comment last week propelled me back to my business decision 15 years ago to jump in with both feet to the world of CPA financial planning.

Pausing on her way out the door after a particularly fruitful discussion, she remarked, “We’ve been together a long time.”

Indeed. I’ve been a CPA and tax adviser for her small business for 25 years. I added the full scope of financial planning and investment monitoring for her when I found that clients needed more focus on these services and I was in the best position as a CPA to give them the advice they were seeking.

We’ve monitored her assets and her retirement planning. We’ve made decisions about Social Security. We’ve helped her iron out various issues with estate planning, as many people have after second marriages. Her children were young when we started; now they’re out of college and on their own. Now she’s retiring and has sold her business. And we’ve been with her every step of the way.

It’s been wonderful, for both of us, really. And it’s that way with many of our clients. Shifting our practice to focus more intentionally on financial planning is one of the best decisions I ever made.

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Lifelong Learning and Leadership: A CFO Perspective

YousefAwwadAs CFO of Portland Public Schools in Oregon, Yousef Awwad, CPA, CGMA, manages an operating budget approaching $1.2 billion annually. He is directly responsible for the school district’s finance, budget, purchasing, risk management, publication services and records management functions, comprising a total head count of 70 directors, managers and employees. Before coming to Portland in 2014, Yousef served as finance director for the Arizona Department of Education and as CFO and deputy superintendent for the Tucson Unified School District.

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Keeping the Cash Method Promotes Simplicity and Economic Growth

We know what we are, but know not what we may be.

   -William Shakespeare

Followers of my blogs know that I periodically write about tax reform, but it’s been a while. So, I’ve decided to dust off this quiz – here we go:

What will be the greatest driver of tax reform?

  • Bipartisan compromise?
  • Congressional leadership changes?
  • Current events?
  • Revenues?
  • Good tax policy?

CompassI know you’re thinking: “Ed, are you forgetting that it’s a presidential election year and you recently predicted that tax reform won’t happen before 2018? Does it really matter?”

Well, it does. (And there may be more than one correct answer to my quiz.) Our profession must remain vigilant on what is being discussed now to safeguard businesses (including our own) and taxpayers later on down the line.

In its current iteration, tax reform has been top of mind on Capitol Hill for about five years. Hearings, task forces, discussion drafts and bills. Lots of conversations. It’s part of the normal vetting process and quite important. It’s how we separate the wheat from the chaff and arrive at much better legislative solutions; a process that continues today even if we “know not” the result.

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Advising Same-Sex Married Clients After Medicare’s Rapid Changes

Same-sex coupleBy now, most CPAs should be familiar with tax strategies for same-sex couples, but due to a Supreme Court ruling in 2015, one possibly overlooked area CPA financial planners should address is the Medicare benefits available to couples in a same-sex marriage.

Before 2013, married couples of the opposite sex could qualify for Medicare benefits through their spouse, and before the U.S. Supreme Court’s Obergefell vs. Hodges ruling in 2015, state law still controlled whether a same-sex couple was treated as married. In layman’s terms, this resulted in inequality among same-sex couples, where some had full marriage rights because of the state in which they lived, while others were denied marriage rights because of their state of residence.

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360 Degrees of Financial Literacy Introduces Spanish-Language Resources

360FinancialLiteracyThe AICPA constantly searches for ways to enhance the 360 Degrees of Financial Literacy program and provide a wider audience with knowledge that will start them on the path to financial success. For this reason, the AICPA’s 360 Degrees of Financial Literacy program recently launched a new consumer Spanish-language resource center to address the need to educate the growing number of Spanish-language consumers in the United States.

The resource center offers help in several areas, such as fraud, paying for an education, how to raise a saver, tips for online shopping and credit card information. In the next few months, we plan to provide more content for the resource center that touches on popular personal finance issues and questions.

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Alternative Investments and UBIT: Weighing the Options


Keep calmPart two of a
two-part series on tax consequences of alternative investments. Part one can be found here.

Not-for-profits need to weigh their options carefully if they are thinking of adding alternative investments such as partnerships, private equity funds, real estate investment trusts and hedge funds to their portfolios.  As part of a well-designed investment strategy, alternative investment vehicles have the potential to provide greater returns than traditional stocks, bonds or money market funds, with the added benefit that they can counter risk exposure in volatile markets.

However, these investments can trigger tax liability under the unrelated business income tax (UBIT, pronounced “you-bit”) rules, and the resultant taxes (and accrued interest and penalties, if discovered subsequently) can take a bite out of an organization’s budget.

So what can be done to take the bite out of UBIT? 

There are basically three options:

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CPA Exam Q3/Q4 2016 Score Release Timetables

The Q3/Q4 2016 score release timetable is now available. Score release timelines are updated biannually on AICPA Insights and on the CPA Exam website. For more information about score release and the scoring process, please visit the Psychometrics and Scoring page.

The National Association of State Boards of Accountancy releases the scores to candidates and state boards of accountancy based upon the target score release dates listed in the tables below.

July august q3

 

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CPA Execs Grow More Confident about U.S. Economy

2Q16 CPAOIThe latest Economic Outlook Survey found CPA executives are growing more confident about the U.S. economy over the next 12 months. In fact, 37 percent of survey takers now express optimism about the U.S. economy, which is up from a three-year low of 28 percent last quarter. The survey, which polls CEOs, CFOs and other CPAs who hold executive positions in U.S. companies also found that expectations for profit and revenue both increased this quarter.

The AICPA survey is a forward-looking indicator that tracks hiring and business-related expectations for the next 12 months.

The brightest spot for the economy this quarter was likely the outlook on hiring, with 19 percent saying their organizations are ready to hire immediately, up from 15 percent last quarter. The percentage of executives who say their company needs employees but are reluctant to hire also increased from 16 percent last quarter to 18 percent.

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The Internet of Things is Already Here. Are You Ready For It?


Internet of thingsBy 2020, my house will have a smart refrigerator that will alert me when I am out of eggs or cheese. It will 'talk’ to my phone and ping me a list of items that I still need to buy as I'm leaving work and headed to the grocery store. On a macro level, cities will collect data on pedestrian flows and use big data to optimize energy use and traffic patterns. These are just a few of the 50 billion smart devices that we'll have by 2020.

AICPA staff recently gathered over coffee and discussed ideas and insights on the Internet of Things (IoT), a term you may start to hear being used more frequently. It refers to everyday wireless objects that communicate with each other over the internet and send useful information to consumers and businesses.

Truth is, many of these smart devices are already everywhere– and they are not just for the tech-savvy. You may already benefit from this technology without realizing it, like when you receive your online shopping purchases ahead of schedule. Retailers and distributors are employing smarter freight management systems that improve the efficiency of the shipping process.

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The Public Interest: Client Confidentiality Versus Disclosure of an Illegal Act

Muhammad AliThe late Muhammad Ali once said, “Silence is golden when you can’t think of a good answer.” What about when a CPA learns that a client is not complying with laws and regulations? Should the CPA maintain client confidentiality (a paramount pillar of the profession), or disclose information to appropriate authorities in order to protect investors, creditors, employees and even the general public?

In terms of non-compliance, is silence “golden”? Or, is the “good answer” to protect the public by disclosing information that is concealed by the boundaries of the AICPA Code of Professional Conduct (Code)?

Over the next several months, the AICPA Professional Ethics Executive Committee (PEEC) will consider updates to the Code to assist AICPA members in determining the best course of action in such scenarios.

Specifically, the PEEC will consider converging the Code with an April 2016 pronouncement by the International Ethics Standards Board for Professional Accountants (IESBA), which is an independent standard setting body of the International Federation of Accountants (IFAC). The pronouncement provides guidance to professional accountants who encounter non-compliance by a client, employer, those charged with governance, or by management or employees of the client or employer.

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5 Reasons Your Firm Needs Benchmarking Data


BenchmarkingRunning a CPA firm offers many satisfactions and more than a few challenges. It also involves asking yourself a lot of difficult questions - Are we on the right path to meet our short- and long-term goals? Are we competitive in our marketplace? Are we positioned to find the staff we need? When it comes to decision making—whether on day-to-day issues or long-term strategic planning—it’s a lot easier to find answers for those questions when you know how firms like your own are handling similar concerns. The PCPS/CPA.com National Management of an Accounting Practice (MAP) Survey offers the solutions you need, and its benefits are available to US and Canadian Public Accounting firms of all sizes. I encourage you to participate today. The CPA profession’s premier benchmarking study, it provides key metrics broken down by firm size and region that will help you understand where you stand in relation to your peers. Here are five ways your firm will benefit from the survey’s benchmarking data.  

Find out how other firms are performing. You may know you’re doing well, but there’s no way of estimating, for example, how your growth in overall revenues compares with those of other firms of the same size. Similarly, you may have improved your utilization and realization rates over time—or be trying to—but would you do anything differently if you could see how your rates stack up against those of other practices? Once you see the comparison side-by-side, you may decide to set new goals for any number of key performance indicators. On the other hand, the data may confirm that you’re on the right course, which can give you confidence in the way your firm is operating. 

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Four Critical Budgeting Steps Your Not-for-Profit May be Forgetting


BudgetFor any organization, budgeting can be more than just an annual exercise of putting numbers in columns. The budget is the financial interpretation of your work plan. It’s the tool you use to ensure that your finances are on track to meet your goals and that you are making the most of your financial resources— two achievements that are mission critical for not-for-profits. Based on work with not-for-profits over the years, I’ve identified 10 steps that should be a part of every budget process. Unfortunately, though, many organizations omit the last four steps, despite their importance to your process and, ultimately, reaching your strategic goals. Is your organization skipping some key aspects of the budgeting process?

Getting Started

Most organizations follow the first six steps of the budgeting process, so chances are you’ve got these covered:

  1. Put the budget in writing.
  2. Establish a team to oversee and champion the budget.
  3. Create a calendar and timeline for the process.
  4. Set guidelines to help ensure the budget mirrors organizational goals and priorities.
  5. Start drafting the budget.
  6. Have the budget reviewed and approved.

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The Powerful Impact of Women in Accounting and Tax

Superwoman CPAJane Doe, CPA, also known as Super Woman, woke up this morning at 5 a.m., jumped on her computer to address some urgent work emails, proceeded to pack her children’s lunch, get them out of bed (easier said than done), dressed, and off to school – and then worked all day, leading her team and conquering the business world. She runs from one business meeting to the next, finally stopping only to make dinner for her family, help her oldest child with his homework, bathe her two-year-old, and put both kids to bed. Oh, and she also helped her husband with his PowerPoint presentation, fed the pets and paid the household bills. It’s now 9 p.m., time to jump back on the computer and wrap up more business.

Does this sound familiar? We all know women like this in our accounting profession – and these women should be celebrated.

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Client Advocacy: Susan Tillery, CPA/PFS, Takes a Unique Approach

Susan TilleryWhat does an ancient biblical word meaning “holy spirit” have to do with financial planning in the 21st Century? Plenty, according to Susan Tillery, CPA/PFS.

Susan is president and co-founder of Paraklete® Financial, Inc., a fully-integrated personal financial planning (PFP) firm with offices in Georgia, North Carolina and South Carolina. With more than 30 years’ experience in financial services, Susan sticks to one, basic tenet: placing her clients and their financial well-being first. We recently sat down with Susan to learn about her unique service model, business mentality and outlook on the profession.

AICPA: Paraklete operates on a fee-for-service model and your catchphrase is “An Advocate in Financial Services.” What is this model all about, and how does the advocacy tagline ladder up to your firm’s operations?

Susan Tillery: “Your Advocate in Financial Services” comes directly from the meaning of the name of our firm; Paraklete is the Greek word for advocate, counselor and one who walks alongside you, which best describes what our business model is all about and what we offer our clients.

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Are You Helping Protect Your Older Clients From Financial Scams?

Elderly man being scammedMost everyone, at least once, has received an email from a “Wealthy Prince” who claims to know of a massive inheritance in their name. If only you would wire $10,000 U.S. to unlock $10 million … Sounds too good to be true, right? It is. In order to get the inheritance, this “Wealthy Prince” typically requires you send your bank account information, social security number, birthdate and other personal information. This leads to a financial disaster.

Unfortunately, this is just one of an increasing number of financial scams that people have fallen victim to, especially older Americans. Recently, an American World War II veteran was scammed out of $43,000 due to a fake sweepstakes that told him he won $4.7 million and a new Mercedes-Benz, as long as he provided personal information and opened a bank account where the money could be deposited. The elaborate scam involved multiple bank transactions over an extended period of time, each with the purpose of gaining the victim’s trust. Unfortunately, once the money is wired, it is very difficult to recover.

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In Case You Missed It: Golf, Beyoncé, and the Next Version of the CPA Exam

BeyonceAnother busy tax season has passed and I can see the heads of CPAs have now risen from the grindstone. While your focus was on tax business and financial statements over the last several months, you may have missed some important news.

Golfer Jordan Spieth’s dream of winning back-to-back Masters sunk on the 12th hole, Beyoncé (or Queen Bey) released her deeply personal Lemonade album and set off a social media storm, the Villanova Wildcats upset UNC at the NCAA tournament, and the highly anticipated “Batman vs. Superman” movie could barely muster 27% on Rotten Tomatoes.

Oh, and along the lines of something important to the AICPA and the CPA profession, we announced details about the next version of the Uniform CPA Examination, which launches on April 1, 2017.

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Summer Reading Recommendations

Summer readingPart I

Nothing says summer vacation like a few good beach (or mountain, lake, backpacking… you get the picture…) reads. The AICPA Communications staff joined forces to present you with a diverse collection of books we think will make your summer vacation, wherever that may be, even more enjoyable.

Christopher Almonte, Manager, Communications recommends:

  • The Innovator: How a Group of Hackers, Geniuses and Geeks Created the Digital Revolution by Walter Isaacson (2014)

From the author who wrote the biography of Steve Jobs comes the story of how computers and the internet were created.

  • David and Goliath: Underdogs, Misfits and the Art of Battling Giants by Malcolm Gladwell (2013)

Challenge how you think about obstacles, disadvantages and setbacks to reshape the way you think of the world around you.

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5 Steps to Transform Leadership Theory into Practice

LeadershipMost of us have read numerous books on leadership development theory, because they are excellent resources that offer valuable insights. However, you need to do more than just read and understand these books for them to have any real value. You need to be personally inspired and motivated to get the most out of such personal success literature. Basically, you have to walk the walk. Embody the teachings found in these books and demonstrate positive leadership behavior every single day. The question is: how?

As everyone knows, old habits die hard. Changing behavior is frustratingly challenging, even if the habits you are trying to adopt are positive. That’s why it’s extremely useful to have a roadmap. Aristotle said, “We are what we repeatedly do. Excellence, then, is not an act but a habit.”

Here are five steps that can guide you in successfully adopting positive leadership behaviors to transform yourself into an authentic leader.

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Here’s How This Millennial Learned How to Budget

Millennial budgetingIf you have some semblance of common sense, then managing your money should be a piece of cake, right? Unfortunately, as I have seen in myself and in those around me, that is not always the case. Financial knowledge is a topic that many people think should be inherent, but in reality, this is oftentimes not true. 

As a millennial, frequent life changes become commonplace, and it can feel overwhelming. Whether transitioning to a new job, moving to a new city or deciding to get married – it’s easy to get distracted by the excitement and let personal finance fall by the wayside. According to a recent survey, over a third of millennials (34%) said that saving money was their top priority this year – more than leading a healthy lifestyle (20%) or losing weight (14%). Yet, millennials’ spending habits may be one reason they struggle to reach their financial goals: 65% of the young adults surveyed said impulse shopping got in the way of saving.

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CPA Success Story: Angela Ho

Angela HoIn celebration of Asian American and Pacific Islander Heritage Month

For Angela Ho, CPA, CGMA, dichotomy has been a constant presence in her life: East and west. Public accounting and business/industry. Young and seasoned.

Born in Virginia as a first-generation Chinese-American, Angela experienced a childhood with one foot in the United States and the other in Hong Kong, where she lived for five years, followed by two years in Tokyo.

Her father’s international work assignments were “my earliest exposure to the business world,” Angela says. “I was surrounded by businesspeople starting at a young age.”

Sage Advice for a Career Path

When it was time to return to the United States for college, many of her father’s colleagues suggested accounting as a major. It didn’t take much convincing for Angela to investigate.

“I didn’t know much about accounting specifically, or the importance of financial statements,” she says. “But I took a fairly assertive approach to learning about becoming a CPA — going to career fairs, talking to Big 4 firms, and seeking out career services. As early as my freshman year at the University of Massachusetts Amherst, I was mapping out credits and requirements to become a CPA.”

Angela never looked back. Well, almost.

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Alternative Investments and UBIT: Knowing is Half the Battle

Part one of a two-part series on tax consequences of alternative investments



Income diversificationIn the aftermath of the Great Recession, charitable organizations emerged as increasingly sophisticated savvy investors. At a time when donations dwindled and endowments were shrinking, the not-for-profit sector sets its sights on income diversification, including alternative investment vehicles such as partnerships, private equity funds, real estate investment trusts and hedge funds. No longer just the bailiwick of elite institutions, alternative investments are continuing to grow in popularity. However, the tax compliance issues associated with these investments can sneak up on unsuspecting not-for-profits, many of whom are unaccustomed to paying federal income taxes due to their preferential, tax-exempt status.

When it comes to understanding unrelated business income taxes (UBIT), knowing is half the battle. I find that it is helpful to explain to clients the history behind the legislation that brought us to where we are today. The tax rules regarding UBIT are a result of legislation passed by Congress in 1950 to ostensibly level the playing field between commercial entities and tax-exempt not-for-profit organizations that would otherwise have a built-in market advantage when conducting similar businesses due to their preferential tax status. Organizations that engage in unrelated activities pay a tax on the income from those activities at corporate rates (or at trust rates for exempt organizations that are created as trusts) unless a specific exemption or exception applies.

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What it Means to Be There for Your Clients as They Age

Elderly couple review financesMost people don’t think they need to plan for getting older. That is, until they are forced to make unexpected, and potentially no-win, decisions, or, perhaps they fall victim to a scam that targets elderly people. In the best cases, the reality of aging means the person merely finds they can’t do something they used to do with ease. Unfortunately, in many cases, the reality doesn’t hit them until after they’ve experienced a problem.

Getting older can be a challenge to your clients’ personal and financial security if their physical and mental capacity start to wane. As their trusted adviser, you can help your clients safely ease into the later decades of their lives by organizing, simplifying and monitoring their finances, and building important relationships to help them address senior issues. As you gain more experience in this area of practice, you may find yourself identifying a range of later life planning services that can offer significant practice development opportunities.

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Showcase Your Expertise: How Digital Badges Will Shape Your Profile

MeatballsI make meatballs so delicious they’ll bring tears to your eyes, but only people who come to my house for dinner know that about me.  What if I want others to know? I can post photos to social media, but that really doesn’t demonstrate the depth of my expertise.

As a CPA, you face a similar dilemma when it comes to assessing and showcasing your expertise. Of course, your need to do so is far more important and the stakes significantly higher than my need to publicize my culinary skills.

As you progress in your career, employers and clients alike expect you to continuously build your competence and stay ahead of the learning curve on regulations, standards and other changes. But how do you prove it? 

AICPA digital badges can help. These graphical representations of significant achievements are linked to online descriptions that are fast becoming the standard for recognizing and publicizing your professional development.

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States Moving to Conform Tax Due Dates with Federal Law

ConformityAs you recover from yet another grueling tax season, the optimist (and realist sometimes) in me says next year will be better with fewer practitioner frustrations. After many years of AICPA tax policy and advocacy efforts, Congress enacted several AICPA-supported federal due date changes and a de minimis safe harbor of $100 of income/$25 of withholdings for corrected Form 1099s that take effect for 2016 tax returns (2017 filing season).

New Federal Due Dates

As described in detail in the AICPA summary chart, these federal due date changes should provide a more logical workflow next year. Starting with 2016 returns, business entity investors’ Schedules K-1 are due before the investors’ returns are due, and foreign account information (FBAR) is due (and can be extended) when the individual returns are due. Here’s a brief recap of the new federal tax return deadlines: 

  • Partnership and S corporation information returns are due March 15, providing investor Schedule K-1 information to their partners and shareholders (including corporations) before the investors’ returns are due.
  • Tax returns for calendar-year corporations, individuals, trusts and estates, and FBAR are due on April 15.
  • The extended due date for partnerships continues to be September 15, along with corporations (until 2026). The extended due date for trusts and estates is September 30.
  • The extended due date for individuals and FBARs (and starting 2026, for extended corporations) is October 15.

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Use a Flowchart to Illustrate Client Wealth Transfer Goals

You consider yourself to be proactive. By age X, you have a well-thought-out estate plan. Your will states that 80% of your wealth will be distributed to your two children, while 20% will be donated to a charity close to your heart. All of this is set in stone, right?

Once estate documents are drafted, some may feel confident that their wishes and intent will always be carried out; yet, this is typically not always the case. While estate documents are static, a client’s life is dynamic and ever changing. CPA financial planners are uniquely positioned to ensure a client’s wealth transfer goals are continually being met.

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