October 2019 Article Archives

Operating vs. Finance Leases: The Impact of the New Standard

Published on October 22, 2019

The clock is ticking on the countdown to the implementation of the new lease accounting standard for private companies.

According to reports from the Securities and Exchange Commission and the U.S. Chamber of Commerce, U.S. companies currently have an estimated $2.8 trillion in operating lease obligations that are presently off-balance sheet. Under the new accounting standard, nearly all leases will be required to be recorded on a company’s balance sheet. However, the reality is the new standard is much more complicated than that.

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Hidden in Plain Sight: Accounting for Embedded Leases

Published on October 22, 2019

FASB’s new lease accounting standard is having a significant effect on a broad range of balance sheets for all types of entities, with some companies reporting financial obligations of billions of dollars.

In addition to requiring large sums to be placed on balance sheets, the new standard is causing difficulties for preparers as they struggle to locate and extract data from their many lease contracts so they can comply with the new rules. But this is not the only difficulty preparers are facing.

Under the new standard as codified in FASB ASC Topic 842, Leases, contracts that are not clearly identified or labeled as leases may be “arrangements that contain a lease.” For example, a lease may exist when equipment is provided by a vendor in connection with the purchase of consumables or the delivery of a service. Discovery and deeper evaluation of these arrangements where leases may be hidden in plain sight has been a significant challenge for many preparers.

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Unclaimed Property Audit Fallacies and Myths

Published on October 22, 2019

Despite the strong economy and their fuller coffers, states across the nation continue to take an aggressive approach in administering their unclaimed property statutes. Illinois, for example, has eliminated its business-to-business exemption. And Delaware, the domicile for many U.S. companies and unquestionably the most aggressive state in this area, has once again begun issuing audit notices.  

Every U.S. state, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and some foreign countries have unclaimed property laws. Companies that find themselves in the crosshairs of an audit often discover that some of their assumptions about the examination process are incorrect. The following seven misconceptions, in particular, are prevalent and can leave businesses exposed to costly and protracted audits.

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IRS Finalizes Rules for 100% Depreciation Deduction

Published on October 22, 2019

The Internal Revenue Service and the Treasury Department released the final regulations for the new 100 percent additional first year depreciation deduction included as part of the Tax Cuts and Jobs Act, allowing businesses to write off most depreciable business assets in the year they are placed in service, along with a new set of proposed regulations on the tax break.

The deduction generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances and furniture usually qualify for the deduction. It applies to qualifying property acquired and placed in service after Sept. 27, 2017.

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IRS Updates Per Diem Rates for Lodging and Meal Expenses When Traveling

Published on October 22, 2019

The Internal Revenue Service issued new per diem rates for business travelers to use for lodging, meals and incidental expenses, effective Oct. 1, 2019.

Notice 2019-55 provides the annual update to the rates that taxpayers can use to substantiate the amount of expenses for lodging, meals, and incidental expenses when traveling away from home. The notice also includes the special transportation industry rate, the rate for the incidental expenses only deduction, and the rates and list of high-cost localities for purposes of the high-low substantiation method.

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