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FASB Q&A Issued for Staff Accounting Bulletin on Tax Reform

The Financial Accounting Standards Board (“FASB”) has published a Staff Q&A regarding whether private entities and nonprofits can apply Staff Accounting Bulletin (“SAB”) No. 118 (Topic 5.EE, Income Tax Accounting Implications of the Tax Cuts and Jobs Act). In its Staff Q&A, the FASB says it does not oppose private entities and nonprofits applying the Securities and Exchange Commission’s interpretive guidance for tax reform . The document also notes that such companies and organizations that employ SAB No. 118 would comply with GAAP. SAB No. 118 was issued in response to the Tax Cuts and Jobs Act. The guidance allows an entity, in certain situations, to include in its financial statements. Read More.

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New SEC Interpretive Guidance Addresses Tax Reform

In response to the passing of the Tax Cuts and Jobs Act, the Securities and Exchange Commission (“SEC”) has released interpretive guidance to help public companies and auditors adapt to the tax changes and comply with accounting for income taxes. The first guidance is in the form of Staff Accounting Bulletin (“SAB”) No. 118 (Topic 5.EE, Income Tax Accounting Implications of the Tax Cuts and Jobs Act). Under SAB No. 118, companies preparing their 2017 fourth-quarter and end-of-year financial statements and regulatory filings will be allowed to provide what the SEC calls “reasonable estimates” and “provisional amounts” for tax-related line items.. Read More.

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AICPA Offers Advice to Nonprofit Accounting Staff

The American Institute of Certified Public Accountants (“AICPA”) is offering nonprofit accounting staff members tips on how it should approach the latest accounting standards updates and newly signed tax reform. The tips are aimed to help how nonprofits select new board members, manage significant projects, prepare for the annual audit, and address tax compliance. Check out the AICPA’s four tips for nonprofit accounting staff on its AICPA Insights blog.

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Tax Reform Could Impact Colleges’ Unrelated Business Income

If the proposed tax reform passes the Senate, colleges could lose their exemption from tax on certain income not connected to their academic mission. The proposal calls for expanding the unrelated business income tax and would include licensing royalties generated from the use of an institution’s name or logo. Colleges and universities with more than one unrelated business activity would also have to calculate the net income or loss from each activity separately and would not be able to offset income from one activity with loss from another. Several higher education groups believe the tax reporting changes could be burdensome. Read More.

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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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