Once entities allocate the transaction price, they can then move to the fifth and final step of the new revenue recognition standard: recognizing revenue. Step 5 requires entities to recognize the consideration given for an asset when or as the performance obligation has been satisfied. This point occurs when the customer receives control of the good or service.
Topics: Revenue Recognition Standard, Revenue recognition, David Lewin, Performance obligations
Corporations operating at a loss can utilize these losses in the future to offset taxable income – the net operating loss (NOL) carryover. But there may be limits to the tax benefits of these losses when a loss corporation is acquired by another entity. The limitations are outlined in Internal Revenue Code Section 382 (Section 382). For loss corporations, calculating the limitations of Section 382 seems relatively simple at first, but over the years this analysis has become somewhat complicated, as a recent Chief Counsel Advice demonstrates.
Topics: tax planning, tax, NOL, deferred revenue, NUBIG, NOLs, section 382, loss corporations, NUBIL
The IRS recently issued proposed regulations eliminating important valuation discounts commonly used in gift and estate tax planning. If finalized as currently proposed, these changes could increase an individual’s gift and estate tax liabilities by more than 60 percent. The Obama administration has attempted to limit valuation discounts on family-owned businesses for several years but has been unable to impose these restrictions through legislation. Now the Treasury Department has decided to achieve this goal through the regulatory route. Taxpayers have a small window of opportunity to take action before these regulations are finalized and become effective, which we anticipate to be sometime in 2017.
Topics: IRS, estate planning, Stephen Houlihan, valuation discounts, gift tax, estate tax
Comprehensive tax reform changes are commonly heard as presidential campaign promises, but the ideas put forth by the nominees provide some approaches to tax reform with which you should be familiar. What we know of Donald Trump’s and Hillary Clinton’s plans for the federal tax code may indicate future areas of IRS focus or updates.
Topics: individual tax, election year, Bob Smith, Taxes, Hilary Clinton, Donald Trump, Election, Corporate Taxes, Campaign
Topics: Larry Kaplan, lease accounting changes, Lease Standards, Leasing
The economy has continued to improve over the past few years and that has meant more transactions involving businesses being bought and sold. With that comes the need to properly account for those transactions. The rules under U.S. generally accepted accounting principles (GAAP) can sometimes be complex and application of those rules can often be a challenge. CEOs, CFOs and business owners are well advised to have adequate familiarity with the requirements under the applicable standards because proper application of such standards is critical to achieve correct reporting for acquired businesses.
Topics: accounting, GAAP, Business Combinations, acquisition, acquisition method, ASC 805
The purchase price doesn’t tell the full story of acquiring a business. Sales tax is generally imposed on the sale of tangible personal property, including the acquisition of a business enterprise. When sales tax isn’t properly addressed on the front end, it can result in liability issues that trigger unexpected expenses for the purchaser. Purchasers that do not address successor liability on the front end may be on the hook for sales and use tax not paid by the seller for the transaction.
Topics: Tarra Curran, Sales Tax, merger & acquisition, Buying a Business