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How The Tax Bill Affects Coops

Published on January 29, 2018

By the time you read this post, it is likely that President Trump has already signed the new Tax Act. Today’s post has been prepared by Rebecca Smith.  She is our director of tax for cooperatives.  This post if fairly long, but we want to get the information to our cooperative clients.  We would strongly suggest talking the tax bill over with your tax advisor now since there may be some actions needed before year-end.  

Tax Reform overall appears to be a win for cooperatives as well as their patrons.  A key change is the repeal of the Section 199 deduction which many cooperatives and their patrons have benefited from since its inception in January 2005. For cooperatives that currently benefit from the deduction and/or pass it through to patrons please consult your tax advisor prior to December 31st to discuss the implications. 

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IRS Issues 2018 Standard Mileage Rates

Published on December 22, 2017

The optional standard mileage rates for business use of a vehicle will increase slightly in 2018, after decreasing in the two previous years, the IRS announced (Notice 2018-3). For business use of a car, van, pickup truck, or panel truck, the rate for 2018 will be 54.5 cents per mile, up from 53.5 cents per mile in 2017. Taxpayers can use the optional standard mileage rates to calculate the deductible costs of operating an automobile. 

Driving for medical or moving purposes may be deducted at 18 cents per mile, which is one cent higher than for 2017. (The medical and moving expense deductions may be affected by the pending tax reform legislation.) 

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U.S. Accounting Rulemaker Chief Outlines 2018 Goals

Published on December 22, 2017

The 2018 objectives for FASB include assisting companies with accounting implementation challenges on four important standards—revenue recognition, leases, credit losses, and hedging—Financial Accounting Standards Board Chairman Russell Golden told Bloomberg Tax.

Additionally, FASB will initiate or advance new projects relating to accounting for life insurance, distinguishing liabilities from equity, and improving segment reporting, Golden said. 

Golden said the revenue recognition standard is “ready to go with an on time implementation beginning in 2018.” Approximately one month from the effective date of the new standard, this news could be viewed with relief, or anxiety, depending on where companies stand with their implementation efforts.

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7 Key Steps to Master Revenue Recognition Implementation

Published on December 22, 2017

Standard setters have made game-changing revisions to revenue recognition standards, and the effective date for implementation is fast-approaching. The new standard replaces the existing transaction- and industry-specific revenue approach with a principles-based approach. Is your organization ready for this shift? 

The new standard was originally issued by the Financial Accounting Standards Board as Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers , and several clarifying amendments have since been issued. The guidance affects all entities—public, private and not-for-profit—that have contracts with customers. The standard’s original effective date was postponed because of the complexity involved. 

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Practical Considerations for Lease Accounting

Published on December 22, 2017

On the heels of a transformative and challenging revenue recognition standard, FASB's new lease accounting standard presents a potential tsunami of changes to the financial statements of public and private companies.  

In February 2016, FASB issued new lease accounting guidance in Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). This new guidance was initiated as a joint project with the International Accounting Standards Board to simplify lease accounting and improve the quality and comparability of financial information for users. The IASB also issued guidance in IFRS 16 during January 2016. 

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Do You Know Where Your Leases Are?

Published on December 22, 2017

Complying with the new lease accounting standard will require collecting data from lease contracts across numerous locations and geographies. 

The clock is ticking to fulfill the requirements of impending changes to lease accounting standards, which are creating a handful of organizational challenges for corporations. One of the more complicated of these challenges is finding lease rights and obligations from numerous (sometimes thousands) of lease agreements or other contracts across numerous locations and geographies. Many corporations are hampered by the uncertainty of where to start or how to tackle this issue and lack preparedness to make the transitions required by the new standards. Earlier this year Forbes reported a survey that found only 14% of companies considered themselves prepared for the new rules. 

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FASB Plans to Ease Lease Accounting Requirements

Published on December 22, 2017

The Financial Accounting Standards Board decided to ease some of the implementation burdens and possible costs of the new lease accounting standard by making several adjustments and offering some practical expedients. 

In the area of land easements, FASB decided to proceed with issuing a final accounting standards update that offers a more practical expedient as an optional transition to the new standard. If elected, the option wouldn’t require an organization to reconsider its accounting for existing land easements that aren’t currently accounted for under the proposed leasing standard known as Topic 840 in FASB’s Accounting Standard Codification. FASB is also clarifying that new or modified land easements should be evaluated under Topic 842 (the final standard for leases), once it becomes effective. 

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IRS Could Bring ACA Penalties to Many Employers

Published on December 22, 2017

The IRS is assessing penalties based on employers’ 2015 Affordable Care Act (ACA) filings on Forms 1094-C and 1095-C.

Penalties are triggered by:

Not offering coverage to enough full-time employees, or

Not offering affordable coverage to one or more full-time employees 

These penalties could potentially affect any employer required to comply with ACA for the year 2015. 

Understanding your organization’s penalties

In many cases, employees mistakenly took subsidies from ACA, even though they were offered employer coverage. This means that the IRS may issue penalties to the employer even though the employer is not at fault. In addition, mistakes made by employers in the complex coding of Form 1095-C can result in large penalties, costing up to $3,120 per full-time employee. 

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FASB Combines Guidance for Income Statement, Comprehensive Income into One Topic

Published on November 21, 2017

In an effort to simplify its Accounting Standards Codification, FASB has combined its guidance for income statements and comprehensive income into one topic.

Previously, FASB’s guidance on these subjects has been located in Topic 225, Income Statement, and Topic 220, Comprehensive Income. Under the changes, all guidance on both subjects will be contained in Topic 220.

FASB did not make any substantive changes to the actual guidance on these subjects. The combined topic will be renamed Topic 220, Income Statement—Reporting Comprehensive Income.

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Advice for Mitigating Cybersecurity Threats

Published on November 21, 2017

Finance leaders’ involvement in cybersecurity is growing. Responses to cyberattacks include increased spending, according to a global survey.
 
Nearly three-fourths of company finance leaders have become more involved in cybersecurity in the wake of increases in phishing scams and credit card and database breaches, according to a new global survey.

Forty-nine per cent of respondents said their business had fallen victim to a cyberattack in the past two years. Sensitive information, reputation, and business operations were viewed as most at-risk, according to a survey of more than 700 finance leaders from the Association of International Certified Professional Accountants.

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