CPAs and Advisors with Your Growth in Mind

End of SEC Tax Reform Grace Period Could Increase Disclosures

Last December after the Tax Cuts and Jobs Act (“TCJA”) was signed into law, the Securities and Exchange Commission (“SEC”) issued interpretative guidance that allows companies to use good faith estimates to adapt to the income tax effects. With the guidance expiring soon, the agency is advising businesses to apply the income tax disclosure requirements under U.S. GAAP once the grace period ends. SEC Staff Accounting Bulletin (“SAB”) No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, allows businesses to use reasonable estimates and provisional amounts to calculate the new tax law’s impact. SAB No. 118 also. Read More.

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Tax Reform Could Impact Campus Parking and Transit Benefits

With little guidance provided on the Tax Cuts and Jobs Act, colleges and universities are uncertain how to handle tax law changes related to campus parking. College and university officers worry that the lack of guidance will lead to new taxes on employee parking, even if free parking is a benefit. Officers are also concerned that they will be taxed on upkeep for employee parking lots. Another unresolved issue relates to handling pretax transit programs. Colleges could face taxes on employees who use a pretax account to pay for public transportation to work. Such taxes, however, may be avoided if. Read More.

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North Carolina Passes UBIT Provision on Nonprofit Parking

In case you missed it, the North Carolina Legislature last month passed a bill that decouples state unrelated business income tax (“UBIT”) on nonprofit parking from the Tax Cuts and Jobs Act. The provision safeguards tax-exempt organizations from being taxed an additional 3-percent state UBIT or filing state tax forms for employees’ parking expenses. The North Carolina Center for Nonprofits had asked state legislators to decouple the state tax code to prevent state income tax for expenses. North Carolina’s governor had previously vetoed a budget bill that featured the UBIT amendment, but the Legislature overruled the veto. Thus, the UBIT provision is effective. Read More.

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Treasury Department and IRS Asked to Postpone New Taxes on Nonprofits

Nonprofits are asking for a delay concerning two provisions of the Tax Cuts and Jobs Act enacted earlier this year. The provisions, one relating to business income and the other on expenses incurred for employee transportation and parking, have caused confusion for several tax-exempt organizations since their applicability is uncertain without additional guidance from the Treasury Department and the Internal Revenue Service. Impacted organizations and nonprofit advocates have also submitted to both agencies extensive comments and requests for a delay in the taxes being implemented. More about the requested delay is available in the National Council of Nonprofits’ latest newsletter.

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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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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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