February 2018 Article Archives

FASB Proposes Corporate Reporting Change Related to New Tax Law

Published on February 21, 2018

One challenging effect of new P.L. 115-97, called the Tax Cuts and Jobs Act, on company financial statements would be eliminated under a proposal FASB issued recently. 

The proposed Accounting Standards Update (ASU) is intended to help organizations reclassify certain so-called stranded income effects in accumulated other comprehensive income resulting from the new tax law, which was enacted in December. 

“After the Tax Cuts and Jobs Act was enacted, stakeholders expressed concerns about current generally accepted accounting principles that required organizations to adjust deferred tax liabilities and assets after a change in tax laws or rates,” FASB Chairman Russell Golden said in a news release. “This proposed ASU will eliminate the stranded tax effects associated with the Act’s change in the federal corporate income tax rate, while improving the usefulness of information reported to financial statement users.” 

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FASB Task Force Tackles Cloud Computing Costs

Published on February 21, 2018

The Financial Accounting Standards Board’s Emerging Issues Task Force plans to propose new rules for how to deal with cloud computing service costs. 

At a meeting last week, the EITF discussed how to account for implementation, setup, and other upfront costs incurred in cloud computing arrangements that are service contracts. They decided to propose an accounting standards update that will be issued in the next few weeks about the topic. 

Under the proposed guidance, a customer in such service contracts would look to the existing guidance on internal-use software to determine which implementation costs to recognize as an asset. The EITF members also decided that implementation costs that are recognized as an asset should be expensed over the term of the hosting arrangement. The term of the hosting arrangement would be the non-cancellable period of the arrangement along with certain periods covered by options to renew (or not to terminate) the arrangement. 

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Beware W2 Phishing Again This Year

Published on February 21, 2018

Tax authorities warn employers again this year about a W-2 phishing scam that victimized organizations — and thousands of employees — last year. 

During the last two tax seasons, cyber-crooks conned payroll personnel or those with access to payroll information into disclosing sensitive information for entire workforces from small and large businesses to public schools and universities, hospitals, tribal governments and charities. 

Cybercriminals pinpoint chief operating officer, school executives or others in authority. Fraudsters pose as execs to e-mail payroll personnel, requesting copies of W-2s for all employees. Criminals use that information to file fake returns or sell it on the Dark Net. The scam may open with a friendly exchange before the fraudster asks for W-2 information. In several cases, fraudsters who acquired the information immediately followed up with a request for a wire transfer. 

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Top Five Ways Tax Reform Impacts Dairy Industry

Published on February 21, 2018

We have just witnessed the most sweeping change in tax law since 1986. It is too early to make dramatic changes to your farm operation in response to the new tax code, but dairy producers should understand several changes that could affect their operations. 

Under the new tax law, if a dairy farm sells all of its product to a non-cooperative, the farm will qualify for a tentative deduction equal to 20 percent of net farm income. This deduction may be limited if the farmer’s taxable income is more than $315,000 (married filing joint or $157,500 single). In that case, the limit will be the greater of:

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IRS Announces 2018 Pension Contribution Limits Under Tax Reform Act

Published on February 21, 2018

The IRS announced that the 2018 dollar limitations on retirement plan contributions, outlined in IR-2017-177 and Notice 2017-64, were unchanged by P.L. 115-97, known as the Tax Cuts and Jobs Act (IR-2018-19). Although the new law made changes to the method of calculating cost-of-living increases, after applying the new methods, the contribution limits are unchanged from the ones announced in 2017. 

Therefore, the limit on elective deferral for contributions to Sec. 401(k) plans, Sec. 403(b) plans, most Sec. 457 plans, and the federal government’s Thrift Savings Plan increased from $18,000 in 2017 to $18,500 for 2018. However, the catch-up contribution limit for those 50 and older remains $6,000. Most other inflation-adjusted amounts related to pensions increased from 2017 to 2018. 

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