The National Public Accountant

Special Edition The new tax law introduces significant changes to the tax treatment of business. These changes include the increase in the allowed self-employed health insurance deduction, the introduction of new asset expensing and depreciation provisions, the availability of home office deductions for storage of inventory and/or product samples, and the postponement of the use of the Electronic Federal Tax Payment System.

1996 tax law changes - individuals.

Special Edition The new tax law introduces significant changes to the tax treatment of individuals. These changes includes the restoration of educations assistance exclusion, the availability of adoption assistance, the deductibility of long-term care insurance, the revision of the presidential disaster area rules, the exclusion of accelerated death benefits from income, and the clarification of the definition of excludable damage.

1996 tax law changes - pensions.

Special Edition The new tax law introduces significant changes to the tax treatment of pensions. These changes include the deductibility of Individual Retirement Account distributions of up to $2,000 for each spouse, the introduction of a simplified retirement plan for small business, the repeal of family aggregation rules, the elimination of the 15% excise tax on excess distributions, and the scrapping of special five-year income averaging for lump-sum distributions.

A blast from the past: retroactivity in the Revenue Reconciliation Act of 1993.

The passage of the Revenue Reconciliation Act of 1993 has created considerable controversy because of the retroactive effective dates of several of the law's tax provisions. These provisions include those pertaining to income tax rate changes, estate and gift tax reinstatements, and amortization of certain intangible assets. The Supreme Court used to disapprove of retroactive clauses, but is now taking a favorable view of retroactivity.

Assembly of financial statements for internal use only: the solution to the plain paper/compilation report dilemma?

The AICPA Accounting and Review Services Committee's new exposure draft proposes that financial statements for internal use only be exempted from Statement on Standards for Accounting and Review Services No. 1. This would mean that statements assembled for the exclusive use of management would not be governed by Generally Accepted Accounting Principles or any Other Comprehensive Basis of Accounting, but could be prepared according to the needs of the organization.

Code Section 127 refunds.

The new law on employer-provided education assistance retroactively restores the previous law's annual exclusion of up to $5,250 for educational assistance payments made to employees. It also extends the exclusion to tax years starting before June 1, 1997. However, the new law denies the exclusion to graduate-level courses leading to advanced academic or professional degrees starting June 30, 1996. Information Release 96-36 outlines the procedures for requesting refunds associated with the re...

Enhanced professional liability protection available.

National Society of Accountants' Professional Liability Program The National Society of Accountants' Professional Liability Program has new features and options intended to help public accountants minimize the risk of being sued for malpractice. The program's new offerings include full prior acts coverage, receiver and executor services coverage, defendant's reimbursement coverage, first dollar defense option, trustee services coverage, toll-free legal and loss prevention hotlines.

Hiring a lawyer: what accountants should know.

Accountants and their clients should try to exercise greater control over the engagement of their legal counsel in view of the rising costs of and the growing necessity for legal services. They could minimize their legal expenses while improving service quality at the same time by participating actively in the client-lawyer partnership. Legal representation should be carefully negotiated, and its terms should be clearly stated and documented in writing.

Mutual funds: guiding your clients through the many hazards of loaded options.

Cover Story The job of advising clients interested in investing in load mutual funds has become more challenging for accountants and financial advisers because of the sheer number of purchase options that are now available. These options include front loads, back loads, contingent deferred sales charges, management fees, 12b-1 fees and a wide range of stocks that prospective investors can buy in the same mutual fund. Financial advisers need to be familiar with these options to be of better service to the...

Ownership of working papers, books and records created by data processing.

An auditor's working papers are records of the procedures and tests used, the information generated and the conclusions reached in the audit process. In the absence of an express agreement specifying that these papers are the property of the client, auditors are usually considered the owners of the working papers. This generally holds true whether the papers are prepared manually or by compute processing. However, ethical rules dictate that auditors return the books and records owned by their...

Quality review for quality work.

Peer review of an accountant's work is necessary to ensure that financial statements are sound, responsible and in compliance with accepted professional principles. The National Society of Accountants' peer review program known as Quality Assurance Review was launched in 1991 as an educational process intended to promote high standards of accounting performance. Quality review provides a guarantee that the accounting work is reliable. Accounting practitioners are encouraged to participate in ...

Solving taxpayer problems.

A tax audit ends with the IRS issuing a statement specifying the taxpayer's additional tax liability, any penalties and the amount of interest to be paid. Taxpayers are allowed 30 days to agree with the statement, request for further discussions or bring the decision to the Division of Appeals. Aside from making appeals, taxpayers can resolve their tax problems through the IRS's Practitioner Telephone Hotline or through the Problem Resolution Program.

Statement of Financial Accounting Standards No. 125.

The FASB's Statement of Financial Accounting Standard No. 125, 'Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities,' requires additional disclosures with regard to transfers and extinguishments of liabilities that would take place after Dec. 31, 1996. The statement would take effect prospectively. It clarifies the definitions of such terms as financial asset, financial liabilities, servicing asset, servicing liabilities and transfer.

The Internal Revenue Service: bash it or better it?

The National Society of Accountants (NSA) has been given the unique opportunity of participating in the evaluation of the Internal Revenue Service to determine how it could be improved. The Society will assist the National Commission on Restructuring the Internal Revenue Service, whose tasks include assessing the management and governance structure of the Service, assessing technological issues at the organization, and making it financially accountable. The NSA will have to decide whether it ...

Where are you going, Pacioli? Will accounting standards be harmonized?

Accounting standards all over the world remain incomparable 500 years after Pacioli popularized double-entry accounting in his book 'Summa de Arithmetica.' Differences exist because of the complexity of the field of accounting, as well as the varying national economic and legal frameworks. This lack of accounting harmonization adversely affects the cost of preparing financial statements, access to capital, and international expansion of business. The International Accounting Standards Committ...