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3 Reasons CPAs Should Care About Blockchain

Published on November 20, 2019

People’s perspectives on blockchain usually fall into two categories: You believe the technology will change everything, or you believe it’s a passing fad. The reality is probably somewhere in the middle.

At the recent 2nd Annual Blockchain Symposium in New York City, I highlighted three reasons CPAs should care about blockchain:

1. Adoption is coming
You may have heard about the Walmart mandate that will require its leafy green suppliers to use blockchain technology for food safety purposes. Even though we’re talking about the largest grocer in the world, it’s important to realize that this kind of mandate will eventually have a more local effect. By requiring use of blockchain technology, Walmart sets a certain standard and example — and rest assured, others will follow suit.

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IRS Increases Tax Deductions for 2020

Published on November 20, 2019

The Internal Revenue Service issued its annual inflation adjustments for dozens of tax items and tax schedules Wednesday, saying the standard deduction for married taxpayers who file joint tax returns will increase $400 to $24,800 in tax year 2020, while for single taxpayers and married individuals who file separately, the standard deduction will go up $200 to $12,400. For heads of households, the standard deduction will be $18,650 for tax year 2020, up $300.

Revenue Procedure 2019-44 spells out the details about these annual adjustments. Some tax law changes in the revenue procedure were added by the Taxpayer First Act of 2019, which increased the failure to file penalty to $330 for returns due after the end of 2019. The new penalty will be adjusted for inflation beginning with tax year 2021. Tax year 2020 adjustments typically are used on tax returns filed in 2021.

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Like-kind Exchanges and Personal Property

Published on November 20, 2019

With the enactment of the legislation known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, like-kind exchanges are now limited to real property held for use in a trade or business or for investment. Prior to the TCJA, taxpayers could defer the gain generated by like-kind exchanges of both real property and personal property. Most common like-kind exchanges of personal property included those of aircraft, boats, automobiles, trucks, and machinery or equipment. A taxpayer could benefit from deferring the gain on the like-kind exchange of personal property and adjust the basis of replacement property under the former rule. Because of the change in the TCJA, disposal of personal property and its exchange with other personal property of like kind is now a taxable event.

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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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FASB Proposes Relief for the Transition Away from LIBOR and Certain Other Feference Rates

Published on September 19, 2019

The FASB proposed providing temporary optional expedients and exceptions to the US GAAP guidance on contract modifications and hedge accounting in light of the expected market transition from LIBOR and other reference interest rates to alternatives, such as SOFR. 

 Under the proposal, an entity could choose not to apply certain modification accounting requirements in US GAAP to contracts affected by what the proposal calls reference rate reform, if certain criteria are met. An entity that made this election would present and account for a modified contract as a continuation of the existing contract. 

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FASB Makes a Second Effort to Improve Balance Sheet Debt cCassification

Published on September 19, 2019

After considering comments on a previous proposal for improving balance sheet debt classification, FASB issued a re-proposal on the issue. 

FASB is attempting to improve guidance used to determine whether debt should be classified as a current or noncurrent liability on a classified balance sheet. The board issued its first proposal on the issue in January 2017. 

The initial proposal contained provisions to replace the current, fact-specific guidance with an overarching, cohesive principle for determining whether debt or other instruments within the scope of the proposal should be classified as a current or noncurrent liability as of the balance sheet date. 

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