CPAs and Advisors with Your Growth in Mind

Private Universities to Receive Tax Relief

Private colleges and universities subject to the Tax Cuts and Jobs Act’s 1.4% excise tax on their net investment income may get a break from the Internal Revenue Service. Through the issuance of Notice 2018-55, the IRS has announced its intention to issue proposed regulations providing a stepped-up basis rule to potentially lower the amount of capital gain subject to the new tax. Specifically, the notice states that the basis of property held on December 31, 2017, later sold at a gain will not be less than the property’s fair market value on that date, plus or minus any adjustments. Read More.

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Arrival of PCAOB Guidance on Credit Loss Model Unknown

The Public Company Accounting Oversight Board’s (“PCAOB”) interpretive guidance for the Financial Accounting Standards Board’s (“FASB”) new current expected credit losses (“CECL”) model is unlikely to be published before the audit regulator’s proposal on auditing accounting estimates is finalized. Release No. 2017-002, Proposed Auditing Standard—Auditing Accounting Estimates, Including Fair Value Measurements, was issued by the PCAOB to enhance the requirements for auditors examining hard-to-value assets and liabilities such as oil company reserves. Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, is effective in 2020, and will require companies,. Read More.

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FASB Progresses on Segment Reporting Project

At a June 13 meeting on the Financial Accounting Standards Board’s (“FASB”) segment reporting project, the board gave staff members permission to proceed with their upcoming extended outreach. The extended outreach would address two alternatives: Reorganize the process for determining reportable segments and shift the quantitative thresholds earlier in the process; and Eliminate the aggregation criteria, making each operating segment reportable until a practical limit is achieved. The decision to perform extended outreach focus on both alternatives occurred after board members agreed that feedback on each alternative would benefit future discussions. Board members had also considered solely focusing on the. Read More.

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FASB Issues Guidance on Nonemployee Share-Based Payments

The Financial Accounting Standards Board (“FASB”) has issued new guidance aimed to lower costs and improve financial reporting related to nonemployee share-based payments. Accounting Standards Update (“ASU”) No. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, expands on Topic 718, Compensation—Stock Compensation to comprise of share-based payments issued to nonemployees and aligns the accounting of share-based payments to nonemployees and employees. The new standard also replaces Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees. The guidance under ASU No. 2018-07 is effective for public companies for fiscal years, as well as interim periods within those years, starting after December. Read More.

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Questionnaire Issued for Actuarial Section of OPEB Plan Reports

A six-page questionnaire to complete with comprehensive annual financial reports (“CAFRs”) for other post-employment benefits (“OPEB”) plans was recently issued by the Government Finance Officers Association (“GFOA”). Questions for the Actuarial Section of an OPEB Plan’s Comprehensive Annual Financial Report replaces the actuarial section of the GFOA checklist, Postemployment benefit systems and investment pools. The GFOA advises that the new questionnaire is exclusive to the actuarial section of the CAFRs for OPEBs that have applied Governmental Accounting Standards Board Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. An update for the entire checklist is expected soon. The questionnaire is available on the GFOA website.

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SEC Deputy Chief Accountant Discusses Impact of Tax Reform

Earlier this month at the 37th annual Securities and Exchange Commission (“SEC”) and Financial Reporting Institute Conference, SEC deputy chief accountant Sagar Teotia spoke on the financial reporting impact of the Tax Cuts and Jobs Act. In particular, Teotia shared his observations on Staff Accounting Bulletin (“SAB”) No. 118, which was issued in January to help public companies and auditors adjust to the tax changes . He noted that SAB No. 118 does not offer companies an option to defer the application of the income tax guidance and splits the accounting for the income tax effects caused by the Act into three “buckets”. Teotia also cautioned that the disclosure guidance under SAB No. 118 offers financial statement users vital information concerning how. Read More.

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