CPA Review (CPAR)

Course ID # 42 Course Name Field of Study Accounting and Financial Reporting Segment Month 4 Segment Course Description Year 2000 With the passage of the millennium mark, many companies no longer feel the need to devote major resources to the restructuring and upgrading of their software systems. Yet, whether it is a matter of meeting a businesss e-commerce needs, or installing an enterprise resource planning system, companies are still buying and customizing accounting software. Our expert, Jonathan Schiff, advises you on how to advise them. The Financial Accounting Standards Board wanted to establish standards for disclosures about a companys products and services, the geographic areas in which it does business, and its major customers, finally issuing SFAS No. 131. Timothy Lucas, FASB's director of research, describes what surprises are being found as auditors look at financial statements with segment information for the first time. One of the major efforts currently taking place involves the recodification of the Statements on Standards for Attestation Engagements. The goal is to improve both the understanding and the utility of these SSAE statements for accountants and users. Debra Hopkins brings us up-to-date on the progress so far and explains why the attest function remains so critical to the success of the accounting profession. In addition, Jonathan Schiff discusses how accountants can assist distressed companies, and the extent to which CPAs can and should offer turnaround management services to their clients. Revenue recognition is in the headlines, as many businesses, from the perspective of the SEC, recognize sales too early in the order process. With the issuance of a staff accounting bulletin on the topic, expert commentator William Holder discusses the role of financial managers and auditors in revenue recognition and what disclosures should be provided in financial statements. You are preparing a financial statement to be sent to the client's bank, and you must prepare tax returns to go with it. You take the statement, and you create it in PDF and send it to them, or you send it in a Word document and hope that they have the same software, or you even fax it to them. In either case, it's not a smooth loop or information flow. A roundtable of experts explains how Extensible Business Reporting Language (XBRL) solves that problem. What happens when you retire a manufacturing facility, but there is still an obligation to clean up contamination resulting from a manufacturing process that was conducted at that site? Prof. William Holder discusses the proposed financial reporting guidance recently issued by the Financial Accounting Standards Board, as well as pooling of interests

Accounting and Financial Reporting

48

FASB: Segment Information

Accounting and Financial Reporting

2000

54

Schiff's Shelf/Turnaround Management

Accounting and Financial Reporting

2000

60

Accounting & Financial Reporting: Holder's Course/Revenue Recognition

Accounting and Financial Reporting

2000

70

Accounting & Financial Reporting: Financial Data Over The Internet

Accounting and Financial Reporting

2000

76

Accounting & Financial Reporting: Asset Impairment And Disposals

Accounting and Financial Reporting

2000

and other items on the FASB agenda. 87 Accounting & Financial Reporting: Recognizing Liabilities And Reporting Issues Accounting and Financial Reporting 10 2000 FASB is mandated to develop and promote accounting standards that would be practical and applicable to realworld situations. But to what extent would financial statement users be better served by simpler, more understandable standards that are uniformly applied? Former FASB chairman Dennis Beresford assesses the current state of financial reporting guidance including some basic questions that need to be answered, such as when does a liability arise? Financial statement users increasingly demand additional information, such as operating results and performance measures. As a result, the FASB took on a Business Reporting Research Project. FASB board member Edward Trott describes what they found in the voluntary disclosure of business information. The position statements issued by the Accounting Standards Executive Committee (AcSEC) qualify as GAAP level B. Current chairman Mark Sever explains why AcSEC often takes an industry-specific or narrow scope in its standards setting. He describes how AcSEC incorporated existing financial reporting guidance for entities that finance the activities of others into a single accounting guide. Certain business and financial transactions of Internet companies do not fall within standard guidance. For example, it is quite common for these businesses to exchange rights to place advertisements on each other's web sites. A panel of commentators, including Norman Strauss of Ernst & Young and Frank Scheuerell of FASB, discuss whether nonmonetary transactions involving advertising rights result in recorded revenues. The Financial Accounting Standards Board recently decided that it would require the use of a nonamortization approach to account for goodwill. Under the FASB's approach, goodwill would not be expensed against earnings annually over a period of up to 20 years as was originally proposed. Financial reporting veteran Norman Strauss describes how to account for goodwill under the proposed statement. In recent years, many financial professionals have begun to see the need for a set of harmonized accounting principles. In this special report, we take a look, from the perspective of several insiders, at the recent establishment of the International Accounting Standards Board (IASB) and the restructuring of the IASC. Expert commentary is provided by: Thomas Jones, newly installed Vice Chairman of the IASB; James Leisenring, the IASB's new Liaison to the FASB; and Phil Livingston of FEI. The ongoing debate over the proper accounting treatment for stock options shows no signs of abating. The topic remains as timely as ever with many companies currently repricing existing stock options in order to provide

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Accounting & Financial Reporting Business Reporting Research Project

Accounting and Financial Reporting

11

2000

102

Accounting And Financial Reporting: Recent ACSEC Guidance

Accounting and Financial Reporting

12

2000

109

Accounting & Financial Reporting: E-Commerce Revenue Recognition

Accounting and Financial Reporting

2001

114

Accounting & Financial Reporting: FASB And Accounting For Goodwill/ FASB Consolidations Project International Accounting Standards: Is Now the Time?

Accounting and Financial Reporting

2001

120

Accounting and Financial Reporting

2001

131

Accounting & Financial Reporting: Controversy Over Accounting For Stock

Accounting and Financial Reporting

2001

Options

incentives for their employees. Teresa Iannaconi examines the existing accounting guidance in this area and indicates where new pronouncements may create traps for the unwary. Accounting and Financial Reporting 6 2001 It has become increasingly important for companies and their advisers to provide complete and transparent information to investors. Regulators, such as the Securities and Exchange Commission, consider it vital that financial reporting reflects, on a timely basis, the underlying economics of the transactions in which companies are engaged. In a recent speech, Lynn Turner, Chief Accountant at the SEC, indicates the disclosures that he believes will be closely examined this year. The Securities and Exchange Commission, which recently launched a Financial Fraud Task Force, is currently investigating several well-recognized corporate names for accounting improprieties. Improper revenue recognition is but one of many creative accounting situations that raise the specter of significant exposure to legal liability, and Commissioner Isaac Hunt of the SEC is making companies and their financial executives aware that there is potential criminal liability as well. For several years, FASB has fast-tracked a project to measure and account for all assets and liabilities at fair value in the financial statements. While FASB is committed to resolving the issues related to determining the fair values of financial instruments, Board member Ed Trott reports that the techniques for refining the measurement of the fair values of all financial instruments continue to develop at a rapid pace. The trading hub or shopping bazaar can be traced back to the Phoenicians. Over the years, from town squares to tradeshows, it's been better for merchants of related products and services to exhibit their wares in close proximity to each other. Internet marketing expert Larry Chase discusses the current role of business-to-business websites and the future use of vertical hubs. As business usage of computers rises, so does computer crime. The fact that computers are increasingly networked leaves them vulnerable to infiltration. Preventing infiltration into computer systems ranks as a major challenge to computer security, and an increased concern for auditors. Prosecutor-turned-forensic investigator Jason Paroff explains why these breaches of security are seldom detected and what can be done to prevent them. There's no doubt that fraud is costly to our economy probably $400 million annually, according to a recent estimate. And accountants - whether they like it or not - are becoming more involved in the prevention, detection, and investigation of fraudulent activities. Expert Gary Zeune discusses what it means to perform fraud-related services on a proactive basis and on a reactive basis.

136

Achieving Quality And Transparency In Financial Reporting

143

Accounting & Financial Reporting: When Financial Reporting Becomes Criminal

Accounting and Financial Reporting

2001

26

Fair Value/Asset Impairment

Accounting /Financial Reporting

2000

32

Challenge of Internet Purchasing

Accounting /Financial Reporting

2000

31

Fingerprints in Cyberspace

Auditing Practice

2000

41

Auditing Practice

Auditing Practice

2000

47

Auditors Independence

Auditing Practice

2000

In the midst of pressure from the media and regulators to assure that auditors are independent, there is very little guidance on what constitutes independence in today's environment of consulting and financial reporting. While most CPAs are committed to obeying the independence rules, expert commentators Jonathan Schiff reminds us, of the origin and the application of the professional independence standard. Independence Standards Board executive director Arthur Siegel discusses the impact of auditor independence on the integrity of the financial reporting process. Materiality is in the headlines as businesses allegedly record accounting entries that contain intentional errors of amounts that fall below specified materiality ceilings. Their argument to auditors: the effect on the bottom line is too small to matter. William Holder discusses the impact of the SEC's accounting bulletin on company practices as well as the effect of SAS No. 89, Audit Adjustments, on auditors. In addition, Holder also reminds us of the origin and application of the professional independence standard. There is no doubt that many businesses are looking for new ways to maximize the value of their assets. Drawing significant attention in today's economy is IP, a term that now encompasses intangible property as well as intellectual property. In this segment, Alex Arrow and Russ O'Haver look at what these assets consist of, how companies determine their value, and what the financial reporting considerations are. Revenue recognition is in the headlines, as many businesses, from the perspective of the SEC, recognize sales too early in the order process. With the issuance of a staff accounting bulletin on the topic, expert commentator Teresa Iannaconi discusses the role of financial managers and auditors in revenue recognition, and what disclosures should be provided in financial statements. Not only have significant changes occurred in the accounting profession, but also major shifts have taken place in the economics and demographics of American business. As a result, the SEC is proposing a series of regulations to modernize the rules on auditor independence. Expert commentator Jonathan Schiff discusses the implications of the proposals particularly for those who provide non-audit services to their clients. Auditors must make materiality judgments on every audit. And, although they are sometimes difficult to make, good materiality judgments are critical for planning and conducting a successful audit engagement. Because auditing standards give no formal guidance on how to implement them, Prof. Bill Holder explains the basis for sound materiality judgments. In addition, he evaluates the recommendations of the Public Oversight Board's Panel on Audit Effectiveness, such as the use of forensic accounting

53

Holder's Course/Audit Adjustments

Auditing Practice

2000

61

Auditing Practice: Maximizing Intellectual Property Assets

Auditing Practice

2000

69

Auditing Practice: Auditing Revenue Recognition Practice

2000

79

Auditing Practice: Auditor Independence

Auditing Practice

2000

86

Auditing Practice: Holder's Course Materiality/Audit Effectiveness

Auditing Practice

10

2000

methods in every audit engagement. Will they improve audit quality and help auditors perform at consistently high levels? 95 Auditing Practice Auditing Holder's Course: Practice Compilations/Attestat ion Standards 11 2000 Recently, the AICPA put the finishing touches on a proposal to make fundamental changes in the compilation engagement. Prof. William Holder explains why the current proposal actually rewrites SSARS No. 1, rather than simply trying to exempt certain financial statement engagements, such as internal use statements or computer-generated statements, from its purview. In addition, he spotlights several major revisions included in the proposed new umbrella standard for attestation engagements, SSAE No. 10. The audit function has been under a great deal of scrutiny in recent years. A panel of experts, including Louise Lancaster of DuPont and Robert Herz of PricewaterhouseCoopers, discusses the impact of recent changes that are supposed to ensure high quality financial reporting through the use of audit committees. The Securities and Exchange Commission recently voted unanimously to approve new guidelines for auditor independence. Under the new rules, firms conducting audits of publicly held companies may still perform some consulting functions for those clients. However, there will be limitations on the non-audit services that can be provided. Jonathan Schiff discusses why, as with most developments requiring consensus, the final rules were substantially less threatening than earlier proposals indicated. The pace and complexity of modern business is accelerating dramatically. While traditional industries are consolidating, advances in information technology and biotechnology are spawning whole new business models. In this interview with Michael Tucker, Mary Pat McCarthy explores the implications of these developments for the audit environment and for the auditing profession. She discusses the need for real-time auditing methodologies in the context of real-time financial reporting as already exists at major corporations. Vice-Chair of Information, Communications and Entertainment at the firm of KPMG, Ms. McCarthy examines the audit risk environment in the context of the ongoing digital transformation of the business world. Recent events have shown that a companys lack of financial infrastructure can place the entire organization in jeopardy, rather than providing it with a competitive advantage. In this case study, we feature the transformation of the corporate finance function at Liberty Mutual Insurance. Corporate CFO Paul Condrin, along with a team of his advisers, describes the process the insurer used to align the skills of corporate financial managers with the global challenges facing the organization. Traditional financial reporting was developed to measure

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Auditing Practice: Effective Audits And Audit Committees

Auditing Practice

12

2000

108

Auditing Practice: Auditor Independence Rules

Auditing Practice

2001

113

Auditing Practice: New Business Environment For Auditing

Auditing Practice

2001

121

New Skill Sets For Corporate Finance: The Liberty Mutual Transformation

Auditing Practice

2001

130

Auditing Practice:

Auditing

2001

The Value Reporting Revolution

Practice

brick-and-mortar assets and was based on historical measures of performance. Market valuations in today's knowledge-driven economy are increasingly based on intangible measures, and reports are asked to meet the needs of a world that lives on virtual or Internet time. In this program, Robert Herz discusses the current trend toward value reporting and why many companies are profiting by choosing to disclose even more information than required. 6 2001 Recent changes in the accounting profession have led to intense competition and pressure. But has meeting that competition caused a deterioration in professional ethics? Certainly, some accountants feel under increased pressure too cross-sell their firm's services and products to existing clients. In this segment, Dr. Jonathan Schiff shares his perspective on ethical, and not so ethical, behavior by the audit community. This segment meets the criteria for ethics education mandated by accreditation authorities. Internal fraud is a growing problem that costs businesses an estimated $400 billion annually. But fraud can be difficult to pin down: it can be carried out through an endless array of schemes, and the losses from individual transactions may be relatively small. In times of economic crisis and extreme competition, fraud activity tends to increase. Here, nationally recognized watchdog Gary Zeune describes the types of fraud that may be occurring within your own company! He also suggests effective strategies to keep the antifraud message at the forefront of your employees' consciousness. Even though information is important to business, many executives are just beginning to discover the information warehouse in their own credit department. By storing both internally developed and externally furnished data, the credit department is a repository for needed information. Yet, reports credit executive Hal Schaeffer, auditors increasingly question the role of credit/collection departments, as well as their ability to audit these groups. Schaeffers solution: a financial customer service department. It wouldnt seem like a new year for tax advisers without new tax legislation that requires substantial interpretation. Mike Tucker - along with Janice Johnson - analyzes the good news (credits extended) as well as the bad news (installment sales) for businesses from this years tax law: P.L. 106-170. They also discuss a practice development opportunity for tax advisers based on the recapture of depreciation. In addition, find out how to prevent your clients from becoming the latest fatalities in the IRS war against the use of the cash basis method of accounting by professionals and their service entities. Clients who are investors want to know: to what extent can they deduct the ordinary and necessary expenses of their investment activity? With the advent of the day trader, the expenses related to investment activity can be quite sizable.

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Auditing Practice: Auditors And Ethics: A Growing Concern

Auditing Practice

142

Fraud Prevention And Auditing Detection: Securing Practice Your Assets

2001

25

Financial Customer Service

Auditing Practice

2000

22

New Law Extends Credits

Business Tax

2000

28

Stock Investor vs. Trader?

Business Tax

2000

Investment tax expert Janice Johnson analyzes the tax advantages of being a trader - as opposed to an investor in stocks for purposes of schedule C deductions, and whether these traders can take ordinary loss deductions for their losses. In addition, you will find out why partially worthless debts may help your clients this tax season. 38 Research Credit Update Business Tax 4 2000 With businesses constantly scrambling to keep pace with changes in technology and markets, more tax advisers than ever before are being asked about the applicability of the research tax credit. In fact, the credit - while not made permanent - was retroactively reinstated for five years. Inside-the-Beltway tax analyst Gillian Spooner explains why Congress was so generous - and so stingy - about extending the research credit last year. In addition, find out the good news and the bad news on which costs, associated with what long-term activities, must be capitalized rather than deducted. Because of the potential hardship of reporting gain without the receipt of cash, Congress enacted the installment sale method of reporting. But in transactions taking place after December, businesses on the accrual basis are prohibited from reporting their sales of property on the installment sale method. Inside-the-beltway tax analyst Gillian Spooner describes the prospects for legislative repeal of the restriction. In addition, find out the good news and the bad news on whether temporary employees are entitled to a full package of employee benefits. Because of the potential abuses from reporting income and disbursements on the cash basis method of accounting, the Internal Revenue Code prescribes the use of the accrual basis method for many businesses. Needless to say, the IRS is constantly trying to make businesses switch to the much less favorable accrual method. Recently, the Service has provided safe harbor guidance that will allow many small businesses to continue using the cash method of accounting. In addition, expert commentator Michael Tucker analyzes the recent court decisions noting that service businesses do not necessarily maintain inventories as an incomeproducing factor. For 40 years, courts have agreed with the IRS view of damage awards: contingency fees paid to attorneys are merely an assignment of income that is taxable to the recipient. But earlier this year, at least one tribunal accepted the notion of a net-fee approach to taxation. Michael Tucker analyzes the latest developments and describes how taxpayers may still exclude attorney fees from income. In addition, Professor Tucker explains how the Service is now looking at businesses that pick up the tab for their shareholder's travel and entertainment expenses as a constructive dividend. An S corporation shareholder can deduct pass-through losses only to the extent of his or her basis in the corporation. And a loan to an S corp. will increase basis

44

Installment Sale Repeal

Business Tax

2000

50

Relief From The Accrual Method

Business Tax

2000

57

Business Tax Update: Business Excluding Attorney's Tax Fees/Heads Up

2000

66

Business Tax Update: Business Adjusting S Corp. Tax Basis/Heads Up

2000

only if the corporation is directly indebted to the shareholder. Michael Tucker examines a recent situation in which the courts took a less harsh position than the IRS concerning loan restructuring between related entities. 77 Business Tax Update: Business Temporary Work Tax Locations 9 2000 Virtually every client who stumbles out of bed in the morning and makes the daily trip to work has the same question: Can I deduct the costs of getting there and home? Michael Tucker explains why, in a country where commuting is routine for millions of taxpayers, the answer is not always clear-cut. Fortunately for many, IRS has liberalized the definition of what constitutes a temporary assignment. In addition, Tucker examines the consequences, for businesses and their employees, when companies take shortcuts on expense reimbursement arrangements. To what extent are businesses that receive damage awards subject to the same rules on income inclusion as individual taxpayers? Michael Tucker discusses the recent success of a business owner in excluding damages from income, even in the absence of sickness or physical injury. He also explains why the IRS no longer accepts industry practice as a basis for excluding tool reimbursement payments from income. One business helps out another corporation with the same owner. As a result, the owner is tagged with a constructive dividend. Michael Tucker describes what a business owner must demonstrate to avoid a tax in this situation. In addition, Matthew Tuttle examines the consequences for small business owners and self-employed professionals of buying insurance policies to funnel extra amounts into welfare benefit plans. To be classified as a personal service corporation under the tax code, substantially all of the activities of a business must involve the performance of services in one of enumerated professional fields. Michael Tucker explains how one business escaped the PSC designation and its 35% flat tax rate. In addition, we examine a recent appellate court decision that finds expense reimbursements are taxable income, but are free of employment tax and withholding. With so much emphasis in the economy being placed on the development of software, it is only natural that businesses want to receive maximum tax benefit from their software expenditures. According to Michael Tucker, a recent court decision explains why the research tax credit is generally worth the additional paperwork even for smaller businesses and their already overworked tax advisers. In addition, we examine a recent appellate court decision that allows S corporations to deduct suspended passive losses from their C corporation years. The Installment Tax Correction Act of 2000 became law just three days before the end of the year, reverting the tax code into the way things were one year ago. Expert commentator Michael Tucker examines the impact of the change on those businesses that either sold their assets or

82

Business Tax Update: Business Tax Excluding Damages from Income Hobby Loss Rules Head's Up: Accountable Plans

10

2000

90

Business Tax Update: Business Related Corporations Tax

11

2000

99

Business Tax Update: Business Tax Personal Service Corporations Disregarded Entities Head's Up: Employee Reimbursements

12

2000

105

Business Tax Update: Business Tax Research Credit For Software/Heads Up: S Corporation Passive Losses

2001

110

Business Tax Update: Business Tax Return Of The Installment Method/COD Income

2001

converted to the cash basis method of accounting. In addition, he discusses the implications for S corp. shareholders from the surprising pro-taxpayer decision of the U.S. Supreme Court in Gitlitz. 123 Business Tax Update: Business What It Means To Tax Maintain Inventory 4 2001 In recent years, it has been difficult to answer a simple question: Do you maintain inventory? Of course, the tax code and the IRS regulations contain numerous tests to aid a business in determining if it has inventory or not. However, several businesses have challenged the harshness of the IRS positions in court _ with remarkable success! Not only does expert commentator Michael Tucker tell us what is at stake in these conflicts, but he also explains how to determine if businesses do indeed have inventory. Since tips are considered to be wages, workers who receive tips must comply with special tax reporting rules. In recent years, the IRS has successfully used the so-called aggregate method to compute the amount of tips on which employers owe FICA taxes. We examine what restaurant owners and other employers should do in the wake of a recent decision that casts doubt on the procedures used by the IRS. In addition, Michael Tucker discusses recent developments affecting the long-established rule that assets unavailable to creditors are excluded when measuring insolvency for purposes of the CoD exclusion. Historically, there has been a lot of controversy over taking a deduction for the portion of a home used for work. A recent court decision provides some good news for individuals whose trade or business requires that administrative and managerial duties be performed elsewhere. Another recent controversy breaks new ground as the IRS examined the compensation received by a group of surgeons who worked for their own professional service corporation. We discuss what tax advisers should do if their professional clients receive bonuses in addition to their salaries for professional services. The changes affecting retirement plans are some of the most extensive provisions contained in TRRA 2001, and they are also among the most complex. Fortunately for your clients, with this complexity comes potential enormous tax savings: pension reform will cost the Treasury about $50 billion. Keith Davenport and Michael Tucker analyze the impact of the new retirement savings provisions on individual workers and on employers. In response to guaranteed low rates for term insurance, the National Association of Insurance Commissioners - or NAIC recently became concerned that reserve requirements were too low. Regulation XXX, requiring insurance companies to maintain higher reserves as well as additional deficiency reserves, went into effect this year. Insurance guru Dr. Lee Slavutin assesses the implications for your clients who rely on term insurance as part of their financial planning. In addition, he explains some of the advantages and disadvantages of placing insurance in a trust, and reminds us why a defective trust may be a good

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Business Tax Update: Business Heads Up: Definition Tax Of Assets Tipping The Scales On Tip Income

2001

132

Business Tax Update: Business Tax Examining The Salaries Of Professionals Heads Up: Home Office Deduction

2001

147

Business Tax Update: Business Tax TRRA 2001 Retirement Savings and Pension Reform

2001

23

Life Insurance Trusts

Estate and Financial Planning

2000

thing. 39 Valuing Claims Against an Estate Estate and Financial Planning 4 2000 Many tax advisers have had to value the assets of an estate, based on the facts as they existed at the date of death. But what about the claims against an estate in the same situation? According to trust attorney David Clark, a recent appellate case raises both estate tax and income tax consequences of settling a claim against a decedent and an estate. In addition, Dr. Lee Slavutin assesses the tax traps associated with the transfer of insurance policies and suggests a role for tax advisers in aiding their clients. The law regarding fiduciaries can be quite strict, especially if they make payments from an estate without paying a claim from the government. In fact, a fiduciary can be held personally liable up to the amount disbursed from the estate. Trust attorney Gregory Hess describes a situation where the court, despite insufficient funds to pay taxes, lets the estate fiduciary off the hook for income taxes payable. In House Call, insurance expert Dr. Lee Slavutin assesses the tax traps associated with disability insurance policies and suggests a role for tax advisers in aiding their clients selection of disability coverage. A long running controversy involving estate planning revolves around what happens when a marital trust, rather than a surviving spouse, is named as beneficiary of an individual retirement account. Estate planner Jeffrey Kolodny discusses a recent IRS ruling that allows the IRA to qualify for QTIP treatment. In addition, trust attorney David Clark explains why certain charitable remainder trusts must amend or reform their provisions before June 30th, if they want to build some flexibility into their trust. Most tax advisers are familiar with the appointment of an executor or a personal representative to handle the assets of an estate. But what happens if the executor either takes too much compensation or refuses all commissions? Trust and estate attorney David Clark tells us what rules exist for fees paid to executors. He also discusses when the IRS may challenge the reasonableness and the characterization of those payments. In addition, insurance expert Lee Slavutin reviews life insurance strategies for taxation. There has been an unprecedented accumulation of wealth by married couples over the last 20 years, along with an increasing number of divorces in this country. Unfortunately, tax consequences exist, both present and future, which must be considered prior to disposing of marital assets. CPA Financial Planner Suzette Loh analyzes what happens, and what can happen, when one of the divorcing spouses has an IRA account. Before this summer's political conventions, both houses of Congress passed the Death Tax Elimination Act. While the bill would phase out the estate tax, it would also put an end to the step-up in basis that assets inherited from an estate currently receive. Estate planner David Clark describes how

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Unpaid Estate Income Estate and Taxes Financial Planning

2000

55

Marital Deduction Rules For IRAs Deadline For Charitable Trusts

Estate and Financial Planning

2000

59

Estate & Financial Planning: Fees For Executors/House Call: Life Insurance Strategies

Estate and Financial Planning

2000

65

Estate & Financial Planning: IRAs As Property In Divorce

Estate and Financial Planning

2000

78

Estate & Financial Planning: Estate Tax Reform/House Call

Estate and Financial Planning

2000

the proposals could affect current planning strategies and what should be done until the election results are clear. In addition, Lee Slavutin points out why tax advisers should be attuned to the current trend of selling life insurance policies. 83 Estate & Financial Planning: Gift Tax Traps For The Unwary Estate and Financial Planning 10 2000 To what extent is a transfer of property, which is motivated by affection and generosity, subject to taxation? Estate planner Jeffrey Kolodny examines several situations where, even among friends and family members, the IRS has concluded there is a quid pro quo between the services provided and the cash received. In addition, trust attorney David Clark discusses the extent to which tax advisers can rely upon IRS private letter rulings in the context of a recent favorable ruling from the Service. Not only are tax advisers preparing more gift tax returns than ever before, but, estate planner Virginia Coleman believes, they should be filing even more. In addition, she explains what happens to the use of an alternate valuation The financial consequences of the increase in life expectancy are causing CPAs to reconsider their advice to aging clients. According to Peter Strauss, you must be aware that IRS is dramatically and aggressively expanding the use of levies on the social security benefits of tax delinquents. In addition, since clients are routinely outliving their assets, David Brennan explains why older Americans must remain active investors. Elder law specialist Peter Strauss returns to explain why investment and retirement planning strategies, no matter how innovative, can succeed only if the client has planned in advance for the protection of his or her assets in the event of illness or incapacity. In addition, tuition financing specialist Brenda Griebert returns to explain why qualified state tuition programs, popularly known as 529 plans, have become the hottest college saving program in the country. Estate planner David Clark returns to remind us, by using a recent case as an example, why careful administration of a trust may be just as important as careful drafting of a trust instrument. In addition, tax veteran Sidney Kess explains what is supposed to happen to joint liability when one spouse files a claim for innocent spouse relief. The recent adoption of the Uniform Principal and Income Act by several states did not make the front pages of many newspapers. And newly proposed regulations by the IRS on the definition and the allocation of trust income did not get much publicity either. Estate planner David Clark explains why these events are significant and why they should draw the interest of tax advisers and their high net worth clients. Many tax advisers have valued the assets of an estate based on the facts that existed at the date of death. But few advisers have had to value claims against an estate. Trust attorney David Clark explains the significance of two recent

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Estate & Financial Planning: Last Estate Tax Returns

Estate and Financial Planning

11

2000

101

Estate & Financial Planning: Elder Care Financial Planning Investment Planning For The Aging

Estate and Financial Planning

12

2000

106

Estate & Financial Planning: Planning For Medicaid And College Savings

Estate and Financial Planning

2001

112

Estate & Financial Planning: Administration Of Trusts/Innocent Spouse Rules

Estate and Financial Planning

2001

124

Estate and Estate & Financial Financial Planning: Significance Of Trust Planning Income

2001

129

Estate & Financial Planning: Valuing Post-Death Claims Against An Estate

Estate and Financial Planning

2001

cases considering whether post-death events should be reflected in valuing the claims against an estate. In addition, financial planner Susan Bradley explains how the needs of Sudden Money clients are unique, and what planning techniques should be used in situations of wealth assimilation. 134 Estate & Financial Planning: Sudden Money Use And Value Of Annuities Estate and Financial Planning 6 2001 Investing for retirement is the foundation of sound financial planning. But are your clients saving enough to meet their future needs? Based on biomedical advances and increases in life expectancy, more retirees should be concerned about the possibility of outliving their assets. Keith Davenport of TIAA-CREF Institute describes how annuities can aid in the process of successful retirement planning. In addition, financial planner Susan Bradley explains how professional advisers can assist clients who are the recipients of Sudden Money. Some in Congress claimed to have repealed the estate tax, but the new law only repeals the so-called death tax for one year. Under TRRA 2001, estate taxes continue through the year 2009, with ever-increasing exemption amounts and with ever decreasing tax rates. As a result of the phase-out, repeal, and reinstatement, estate planning may become, according to Jeffrey Kolodny, estate tax complexity and uncertainty. In addition, Lee Slavutin explains how estate planning might take place as the back-loaded provisions of the new tax law become effective. This month's segment examines recent answers provided by the courts and the IRS to long-running controversies involving estate and gift taxation. Trust attorney Jeffrey Kolodny examines a recent IRS ruling in response to a popular question: what are the gift tax consequences when an interest in a limited partnership is given to another family member? In addition, regular expert commentator David Clark discusses the significance of a US Supreme Court opinion on the use of disclaimers as part of an estate planning strategy. 21 AMT Relief from New Law Individual Tax 1 2000 Without substantive tax legislation in 1999, there had not been any opportunity to clean up various tax code provisions. However, the final legislation of the year did include the Tax Relief Extenders Act of 1999 (P.L.106170). Expert commentator Michael Tucker explains why the new law may not be far-reaching, but is quite helpful to many individuals - including anyone who uses personal nonrefundable tax credits on their return. In addition, CPA/financial planner Suzette Loh uses a recent ruling on capital gains to tackle the tricky issue of wealth planning strategies for lottery winners and instant millionaires. Since we live in a country with a divorce rate that's twice as high as many other affluent countries, it's important for tax practitioners to help their clients successfully negotiate the ending of the marital relationship. Well-known

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Estate & Financial: TRRA 2001 - Estate Tax Repeal

Estate and Financial Planning

2001

30

Gifts of Limited Partnership Interests

Estates and Financial Planning

2000

27

Divorce Tax Planning Individual Tax

2000

CPA/financial planner Suzette Loh what happens when based on state law - an ex-spouses support order encompasses both alimony and child support. In addition, tax guru Sidney Kess reflects on the numerous cases and rulings that have occurred in explaining which changes he will stress to clients this tax season. 37 Litigation Awards and Attorney Fees Individual Tax 4 2000 For 40 years, courts have accepted the IRS view of damage awards: the contingency fee paid to an attorney is merely an assignment of income that is taxable to the recipient. In other words, the litigant is taxed on the full amount when it is received, even though the attorney is taxed on the same income. Michael Tucker predicts that a recent appeals court decision will give new hope to individuals favoring a netfee approach to taxation. In addition, tax guru Sidney Kess reminds us that there are still actions that can be taken to reduce past-year tax liability. 43 Mutual Funds Distribution Individual Tax 5 2000 Your clients must decide whether to boost their future Social Security benefits via delayed retirement credits, or to start receiving their benefits at age 65. In either case, tax guru Sidney Kess explains the impact of the brand-new Senior Citizens' Right to Work Act of 2000. Find out what it means now that workers over age 65 can earn any salary and still claim their full social security benefits. In addition, expert Janice Johnson explains why investors lose total return due to taxes and what options are available when calculating your client's basis on the sale of mutual fund shares. The tax code generally protects from tax some minimum amount of income that could be used for the support of those who depend on the taxpayer. The issue becomes especially complicated after a divorce, explains tax guru Sidney Kess, based on which parent is entitled to the exemption versus which parent would receive the most tax benefit from the exemption. In addition, expert David Brennan explains which investments are allowed for IRA accounts as well as the extent to which tax advisers are providing investment advice to clients with individual retirement accounts. Tax law has taken the view that most education expenses are personal or capital in nature, and are not deductible. The tax code is particularly harsh when it comes travel as a form of educational experience. But a recent case involving a high school English teacher illustrates, according to Sidney Kess, how some individuals can still deduct their costs of traveling abroad. In addition, Kess explains how tax and financial advisers can assist clients in organizing and maintaining their vital documents and records. To many investors, a variable annuity sounds like a good deal. But a new report by the Securities and Exchange Commission says that individuals should exercise caution

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Kess' Korner/Ira Investment Advice

Individual Tax

2000

58

Individual Tax Update: Travel As Education/Kess Korner: Records And Documents

Individual Tax

2000

67

Individual Tax: Kess Korner/Variable Annuity Tax Traps

Individual Tax

2000

when investing in a variable annuity. CPA Janice Johnson discusses the tax advantages of these products as well as the investment traps for the unwary. In addition, Sidney Kess examines the Tax Court's views on the deductibility of payments for religious education. 80 Individual Tax Update: Investment Tax Implications/ Kess Korner: Forms Preview Individual Tax 9 2000 For the most part, investment income items present little problem for tax advisers. But as investment products have become more complex, the tax consequences have also become more difficult to understand. These days, clients are routinely investing in various types of options once considered esoteric. CPA Janice Johnson discusses the tax implications of these options investments as well as traps for the unwary. As state income tax collections have grown relative to other taxes, many individuals are paying more attention to state tax compliance issues and planning strategies. California CPA Joe Walloch explains why tax practitioners are expected to understand the specifics of taxation in their states of residence as well as the general concepts underlying the minimization of multistate taxation. Potential business owners incur expenses in connection with business investigation and start-up. Michael Tucker explains why the distinction between the two types of expenditure is important. When it comes to income taxes, the goal is to spread income out as evenly as possible. But it's a whole different story for FICA and other employment taxes. What happens when the owner of a professional corporation receives two years of salary in a single year? While one's home may be one's castle, under the tax code it is also a tax shelter. Expert commentator Gerald Cohen describes how new IRS regulations define what qualifies as a principal residence. He also discusses the interaction with the home office rules. In addition, Sidney Kess reminds us of a number of actions your clients can take before filing season to reduce their 2000 tax liability. Most states provide a credit for the taxes paid by their residents to other states, in order to minimize the possibility of double taxation of residents' income. Expert commentator Edward Zelinsky describes what happened when he and his wife were taxed twice on the same income because he worked out of his home. In addition, estate planner David Clark discusses the extent to which trusts and estates can deduct the costs of investment advice this year. Two recent major taxpayer victories in the Tax Court affirmed the use of family limited partnerships as entities in estate planning. Expert commentator Michael Tucker describes how to take advantage of this recent validation of FLPs. In addition, financial planner Matthew Tuttle reminds advisers that tax season is an excellent opportunity to reexamine the after-tax impact of retirement plans and pension contributions.

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Individual Tax Update: Minimizing State Tax Liability

Individual Tax

10

2000

91

Individual Tax Individual Update: Starting Your Tax Own Business

11

2000

98

Individual Tax Update: Home Sales Rules/Kess Korner: Year-End Tax Planning

Individual Tax

12

2000

104

Individual Individual Tax Tax Update: Double Taxation Of Income/Deductibility Of Investment Advice

2001

111

Individual Tax Update: Family Limited Partnerships/Benefiti ng From Pensions

Individual Tax

2001

122

Individual Tax Update: New Retirement Distribution Plans

Individual Tax

2001

Tax advisers have long considered the IRA distribution rules to be too complex and inflexible. Based on IRS regulations, clients have often made unfavorable decisions about taking out their retirement benefits. Earlier this year, the Service overhauled and simplified the required minimum distribution regulations. Expert commentator Michael Tucker explains how the new rules will benefit most individuals and may open the door to several planning opportunities. Tax advisers have long considered the IRA distribution rules to be too complex and inflexible. Based on IRS regulations, clients have often made unfavorable decisions about taking out their retirement benefits. Earlier this year, the Service overhauled, and simplified, the required minimum distribution regulations. Expert commentator, Jeffrey Kolodny, explains how the new rules will benefit most individuals and may open the door to several planning opportunities. Since Congress significantly cut the capital gains tax rates in 1997, most taxpayers have benefited from the huge runup in the stock market and their other assets. As individuals began to experience losses on their investments last year, tax advisers noticed that the capital gain rules also introduced an inordinate amount of complexity. Expert commentator Janice Johnson explains how the rules can benefit most individuals and presents some pitfalls to avoid. Under the new law, individual tax rates will be lowered based on a predictable schedule over the next 10 years. While most individuals come out ahead under these rate cuts, your clients may assume they can just sit back and enjoy the $1 trillion in savings from the consolidation and reduction of the marginal tax rates. Kenneth Kies and Michael Tucker explain what steps your clients need to take to maximize their benefits, from receiving advance refund checks to regaining full use of their itemized deductions. To what extent should the distributions of LLC members be subject to self-employment tax this year? Attorney David Clark reminds us of the stalemate in applying the material participation test, and describes two new safe harbors proposed in this area. In addition, he also evaluates the arguments put forward by the IRS - and by estates - in valuing closely-held voting stock held by a decedent. Many clients assume that the sale of an interest in a partnership or LLC automatically produces capital gains. Michael Tucker examines those situations when a partner may be subject to a variety of tax rates, as well as what happens when a partner contributes assets with different holding periods - or, even, corporate stock - to a partnership. In addition, Dr. Lee Slavutin assesses the advantages of using a qualified retirement plan as a source to pay insurance premiums. This months program examines recent answers provided by

127

Individual Tax: Working With The Minimum Distribution Rules

Individual Tax

2001

133

Individual Tax: Individual Dealing With Losses Tax On Investments Special Capital Gains

2001

144

Individual Tax: TRRA 2001 Individual Rate Cuts

Individual Tax

2001

24

LLCs and SelfEmployment Tax

Special Tax Topics

2000

29

Partnership Basis in Corporations

Special Tax Topics

2000

40

Special Tax Topics

Special Tax

2000

Topics

the courts and the IRS to a long-running controversy involving S corporations. When a debt is canceled, the debtor must recognize income. But, when a business is insolvent, discharge of indebtedness income is not taxable to the extent of the corporation's insolvency. Michael Tucker examines what happens when that discharge of indebtedness occurs in connection with S corporations. Does that income pass through to the S corp. shareholders and increase their basis in the company's stock? 5 2000 The expensing deduction for 179 property cannot exceed the amount of income from the active conduct of a trade or business. This month, Michael Tucker answers several important questions for tax advisers with partnership clients, such as: what income is used to limit the expensing deduction - the partnership income or the business income of the partner claiming the deduction? Many jurisdictions around the country are dramatically increasing their revenues while avoiding unpopular raises in their tax rates. They are increasingly aggressive about tax compliance, particularly by out-of-state businesses, in connection with sales and use taxes. Attorney Meredith Friedman examines a recent state sales tax controversy and discusses situations when an affiliate or an agent in a state is sufficient to create tax nexus for a business. Because of the passive income rules, taxpayers are prohibited from sheltering active income with passive rental losses even with conduit entities such as LLCs and S corporations. Real estate tax pro Peter McKenna examines the recent success of one developer in offsetting his share of the management fees paid by real estate partnerships against the management income he received. In addition, Michael Tucker reports on whether mergers involving disregarded entities (such as QSubs) qualify for nonrecognition treatment. Many investors have portfolios consisting primarily of a very profitable holding. At some point, diversification becomes desirable, but income taxes stand to claim a significant portion of the holding. David Brennan and Jeffrey Bolson describe several new investment strategies and financial services products for corporate executives and others who cannot sell their holdings, no matter how compelling the arguments are in favor of such a move. One area that continues to attract IRS scrutiny is the reasonableness of compensation to employees of closelyheld businesses. When these disputes reach the courts, the decision usually turns on which side can better document why the compensation paid was reasonable. California CPA Joseph Walloch discusses why courts have switched to the much simpler independent investor test, and what can be done ahead of time to ensure success. In light of ever-increasing college expenses, qualified state tuition programs, popularly known as 529 plans, have

46

Partnerships and Basic Adjustments

Special Tax Topics

52

Sales Tax & Affiliate Nexus

Special Tax Topics

2000

62

Special Tax Topics: Offset Of SelfCharged Items/Mergers Of Disregarded Entities

Special Tax Topics

2000

71

Special Tax Topics: Protecting Paper Profits

Special Tax Topics

2000

81

Special Tax Topics: Reasonable Compensation

Special Tax Topics

2000

85

Special Tax Topics: kess Korner

Special Tax Topics

10

2000

Qualified State Tuition Plans

become the hottest college savings strategy for many families. Sidney Kess examines why many financial advisers view these plans as tax-advantaged investment products. In addition, Brenda Griebert reviews a variety of tax incentives states are attaching to their college affordability programs. Special Tax Topics 11 2000 Many mutual fund shareholders find that the taxes on dividends and gains are the largest costs they face. According to David Brennan, no new type of fund has provided more good news for these investors than tax managed mutual funds. In addition, Michael Tucker explains whether recent court decisions will signal the end of the IRS unlimited use of the Indopco Doctrine. Trust attorney Jeffrey Kolodny provides some solutions for clients who own sufficient assets to require the payment of estate taxes, but neither spouse has sufficient assets, besides retirement benefits, to fund a bypass trust. In addition, estate planner Virginia Coleman explains how advisers can aid their clients going into second marriages. One of the most common contractual relationships in our society involves the leasing of space, but sometimes circumstances can change. Michael Tucker describes the tax implications for a landlord who wants to get out of a burdensome lease. In addition, expert commentator Janice Johnson reminds us of the tools managers can utilize when the stock market fails to fully value all the components of a companys business. The Bush Administration would like to see immediate passage of its tax reform plan for a huge reduction in taxes: $1.3 trillion over 10 years. According to Kenneth Kies, the likelihood of enactment depends, to a great extent, on the political climate of Capitol Hill. This debate is complicated by the selection of new chairmen at the Senate Finance and House Ways and Means committees and by the appointment of new tax policymakers at the Treasury Department. Mr. Kies, Managing Partner of the National Tax Office of PricewaterhouseCoo- pers, also describes the new system for taxation of foreign trade income and analyzes which industries are likely to benefit most from its adoption. Split-dollar life insurance is not a type of insurance. Rather, it is a method of funding the premium payments on a whole life or other cash value life insurance policy. Earlier this year, for the first time in decades, the IRS issued guidance on the taxability of split dollar insurance payments. Insurance guru Lee Slavutin explains exactly what to do for clients considering split dollar insurance, and what NOT to do for clients who already have split dollar arrangements with their employees. The IRS continues to scrutinize the reasonableness of compensation paid to the owner/employees of closely held businesses. When these disputes reach the courts, the

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Special Tax TopicsMutual Fund Capital Gains/Farewell To Indopco

100

Special Tax Topics: Special Tax Income Tax Vs. Topics Estate Tax Prenuptial Agreements

12

2000

107

Special Tax Topics:Lease Cancellation Payments/Use Of Tracking Stock

Special Tax Topics

2001

115

Special Tax Topics: Major Tax Reform And Rate Cuts

Special Tax Topics

2001

125

Special Tax Special Topics In Taxation: Furor Over Topics Split Dollar Insurance

2001

128

Special Tax Topics: Attacks On The Reasonableness Of

Special Tax Topics

2001

Compensation

decision usually turns on which side can better document why the compensation was (or was not) reasonable. Expert commentator Ed Zelinsky discusses why courts have switched to the independent investor test and what can be done ahead of time to ensure success. Special Tax Topics 6 2001 Congress initial steps in giving tax rates their greatest overhaul in 20 years signal that it is time to consider seriously the specifics of the proposed changes and their impact on tax planning. Expert commentators Michael Tucker and Janice Johnson suggest situations where the new tax law may create opportunities. They also assess the tax implications of converting a corporate subsidiary into a limited liability company or a disregarded entity. Not only are more baby boomers pondering how to afford the cost of sending their children to college, but more and more tax advisers are developing niche specialties in providing advice on the financing of educational choices. Unfortunately, saving for a higher education can be a daunting task, requiring careful planning and a high level of commitment. Janice Johnson explains how your clients can benefit from the package of education related savings incentives included in TRRA 2001.

135

Special Tax Topics: Tax Reform/Disregarded Subsidiaries

146

Special Tax Topics:TRRA 2001: Education Incentives

Special Tax Topics

2001