Real Estate & Construction
FASB Simplifies Provisions in Lease Standard
The Financial Accounting Standards Board (“FASB”) has asked its staff to prepare a final draft of an amendment to the board’s lease standard that would simplify how lessors account for specific property leases with recurrent service charges. At its March 28 meeting, FASB members agreed to allow lessors combine receipts from property leases and service income related to those leases by meeting certain requirements. To be accounted for as one, the lease part of the rental arrangement and the service charges need to be bound by the same transfer between the tenant and the landlord. Also, the lease contracts will. Read More.
Simplified Transition Method to FASB Lease Standard Approved
At its March 7 meeting, the Financial Accounting Standards Board (“FASB”) agreed to offer companies an easier method for transitioning to its lease standard. When adopting Accounting Standards Codification 842, Leases, companies will be able to recognize the cumulative impact of the standard as a change to the starting balance of their retained earnings. Previous guidance required companies to disclose the last two years of comparative results. Harold Schroeder was the lone FASB member to reject the streamlined transition method. Schroeder once stated that allowing companies to avoid retrospectively adopting the new standard would not clarify a company’s financial position. Read More.
Art and Real Estate Clash in Federal Court
When a real estate developer decided to replace 5Pointz in New York City with condominiums, 21 artists filed a lawsuit claiming that demolishing the popular mural space without notice violated the Visual Artists Rights Act. The landmark trial in U.S. District Court in Brooklyn would determine whether graffiti receives federal protection. After three weeks of hearing arguments from both sides, the judge ruled in favor of the artists and awarded them over $6.7 million in damages for their art being destroyed. The ruling is viewed as a precedent for protecting street art. More on this case is available on the Nonprofit Quarterly website.
Phil Shechter Discusses Tax Reform with South Florida Legal Guide
In a recent interview with South Florida Legal Guide, Cherry Bekaert’s (“the Firm”) Phil Shechter, CPA, discusses the impact of the Tax Cuts and Jobs Act on both individual and business taxpayers. Shechter, the Firm’s National Leader of Litigation Support Services, provides general information on tax reform affecting individual tax rates, mortgage interest deductions, small businesses and pass-through entities. Read Phil’s full interview on the South Florida Legal Guide website. Additionally, if you seek guidance on forensic and litigation matters, Cherry Bekaert’s Forensic & Litigation Advisory Services team is ready to help.
Planning for the New Business Interest Expense Deduction Limitation
As part of the Tax Cuts and Jobs Act (“TCJA”) signed into law on December 22, 2017, some important changes have been made with respect to the deductibility of business interest expense for tax years beginning after December 31, 2017. Under prior law, business interest expense was generally deductible in the year in which the interest was paid or accrued, except that corporations were subject to certain limitations under IRC Section 163(j) (“the earnings stripping rules”). TCJA created a new limitation, which replaces the “earnings stripping rules” and applies to all businesses, regardless of form, on the deductibility of net. Read More.
Companies Seek More Guidance on Adopting FASB Leases Standard
Before the year ends, the Financial Accounting Standards Board (“FASB”) intends to take another look at Accounting Standards Update No. 2016-02, Leases (Topic 842). According to FASB Chairman Russell Golden, the board will likely consider revising the method companies must use when transitioning to the new leases standard, how landlords determine common area maintenance charges in rent payments, and updates to disclosures regarding leases in foreign currency and short-term lease expense. The standard, which requires balance sheet disclosures regarding a company’s assets and liabilities related to rented property and equipment, has raised questions concerning whether companies are prepared to implement. Read More.