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Tax Court Says Country Club Must Pay UBTI Taxes

An Ohio country club may not deduct losses incurred from nonmember services. The Tax Court ruled that when Losantiville Country Club filed its annual Form 990-T, the organization did not show intent to profit from nonmember sales since its nonmember sales did not surpass the direct and indirect costs about those sales and thus it could not apply those losses to negate its taxable investment income. Losantiville had claimed losses against investment income earned from 2010 and 2012, resulting in no unrelated business taxable income (“UBTI”). More on the Tax Court ruling on Losantiville Country Club is available on the Journal of Accountancy website.

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GASB Releases Fiduciary Activities Article

The Governmental Accounting Standards Board (“GASB”) recently published an article covering its new guidance for governmental entities to help identify fiduciary activities, and determine whether and how business-type activities must report fiduciary activities. The article, Statement 84: Understanding Costs and Benefits: Fiduciary Activities, explains the board’s assessment of the expected costs and benefits of GASB Statement No. 84, Fiduciary Activities, and how the GASB concluded that the expected benefits exceed the cost. In addition, the article covers the board’s due process in implementing GASB Statement No. 84 and summarizes the standard’s costs and benefits.

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Senate Proposal Levies Same College Endowments Tax as House

The U.S. Senate’s proposed tax reform would levy the same tax to private college endowments as the House’s version. Both the Senate and the House are calling for a 1.4 percent tax on net investment income, which will impact about 70 colleges with endowments over $250,000 per student. The focus on endowments is part of Congress’ recent attempts on how endowments can help reduce the cost of attendance at colleges and universities. More on the proposed college endowment tax is available on the Accounting Today website.

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Gary Buesser Appointed to FASB

Financial Accounting Foundation Chairman Charles Noski has announced that Gary Buesser will replace outgoing Financial Accounting Standards Board (“FASB”) Marc Siegel next year. A director and research analyst of a global firm, Buesser has more than 30 years of experience covering investment management with financial statements. He is a member of the Financial Accounting Standards Advisory Council and served for two years as a co-chairman of the board’s Investor Technical Advisory Committee. Buesser will take Siegel’s seat on the FASB effective July 1, 2018.

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CAQ Issues Auditing Request for Proposals for 2018

The Center for Audit Quality (“CAQ”) has issued a request for proposals (“RFPs”) to finance auditing projects for academic research. This marks the tenth annual request by the CAQ, which is asking for applicants to submit RFPs concerning critical policy issues and topics of interest such as auditor risk assessment, cybersecurity, non-GAAP measures, and professional skepticism. Proposals must be submitted via the CAQ online submission form by March 15, 2018. The CAQ’s Research Advisory Board will review all proposals, and the CAQ will award grants to the selected projects in June 2018.

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Agency Discovers Revenue Standard to Significantly Impact Software Companies

Moody’s Investor Service says the Financial Accounting Standards Board’s (“FASB”) long-awaited revenue recognition standard will have a significant impact on the software industry. In a report issued on November 14, the credit rating agency found that the FASB’s standard will allow for faster recognition of revenue for numerous software companies. The result, according to Moody’s Vice President and Senior Accounting Analyst David Gonzales, is a drastic shift in revenue. Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers (Topic 606), introduces a streamlined method wherein most companies must disclose the top line in their financial statements. This method replaces several. Read More.

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