This item highlights certain issues raised by a recent IRS Large and Mid-Size Business Division directive dated October 3, 2008, about the treatment of revenue from the sale of gift cards
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Tax Accounting
Private Companies and FIN 48
On October 15, 2008, the Financial Accounting Standards Board (FASB) deferred the effective date of FIN 48 (FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ) for all nonpublic companies for one year.
Casting Doubt on the Accrual of Interest
Due to the recent turmoil in the credit markets, creditors and borrowers alike are evaluating the tax treatment of interest accruals related to troubled loans. Generally, interest is taken into account by a taxpayer according to the taxpayer’s regular method of accounting.
IRS Issues Guidance on Electing Out of 50% Additional First-Year Depreciation
The IRS has provided guidance on new Sec. 168(k)(4), added by Section 3081 of the Housing and Economic Recovery Act of 2008.
Retailer Could Not Accelerate Rebate Liability via Recurring-Item Exception
The IRS released CCA 200834019, addressing whether a retailer could use the recurring-item exception of Sec. 461(h)(3) to treat its cash rebate liability as incurred in the year of the sale of the rebate-eligible product.
Correcting Accounting for Deferred Revenue
This item analyzes changing a method of accounting for deferred revenue from an impermissible method to a permissible method.
SEC Approves Early IFRS Adoption
On August 27, 2008, the Securities and Exchange Commission (SEC) unanimously agreed on a series of steps that could lead to the required use of international financial reporting standards (IFRS) by U.S. issuers by 2014.
Hot Topics in FAS 109
As the financial statement year-end tax provision planning process begins, it is a good time to review some areas of Statement of Financial Accounting Standards No. 109 (FAS 109), Accounting for Income Taxes, that could require more analysis in preparing year-end tax provisions for companies.
Tax Court Denies an Impermissible Accounting Method Change
Editor: Frank J. O’Connell Jr., CPA, Esq. Taxpayers often want to change either their overall method of accounting (e.g., cash versus accrual) or their method of accounting for a specific item (e.g., inventory). There are varied reasons a taxpayer may request a change. However, as demonstrated by the Tax Court
Installment Sales: Allocation of Installment Payments
Editor: Frank J. O’Connell Jr., CPA, Esq. In certain circumstances the installment sale method permits a sale of property without the seller being required to report the gain until the actual receipt of payment. The rules governing installment sales are well defined, and the gain deferral achieved through installment sale
Benefiting from a Fiscal Tax Year
The use of a 52-53-week year can provide significant tax planning opportunities for a C corporation and its shareholders.
Dollar-Value LIFO Pooling for Automobile Resellers
The IRS has provided automobile resellers the option to use an alternative dollar-value last-in, first-out (LIFO) pooling method.
Erroneous LIFO Methodology
A mistake made in a taxpayer’s LIFO computation may repeat in later year returns if staff preparing the computation take a “same as last year” approach. When the mistake ultimately is detected, there is a question of whether the mistake represents a method of accounting or an error.
Issues Under Proposed De Minimis Rule for Expensing Tangible Property
The IRS recently re-proposed regulations under Sec. 263(a) regarding the treatment of amounts paid to acquire, produce, or improve tangible property.
IFRS Is Coming: What Does This Mean for Tax?
Many companies are in the early stages of considering what impact the transition to International Financial Reporting Standards (IFRS) from U.S. generally accepted accounting principles (GAAP) will have on financial reporting. However, are they also thinking about the impact it will have on tax reporting?
When Is Income Recognized Under Cost-Plus Contracts?
The IRS recently issued taxpayer-favorable guidance, ruling that an accrual-method taxpayer recognizes income from the reimbursement of allowable costs under cost-plus contracts when the amounts are billed and due, not when the taxpayer incurs the reimbursable costs.
Defining a Method of Accounting
An accounting method can be described as a regular practice for determining when to recognize items of income or expense in taxable income.
IRS Issues Prop. Regs. on Capitalization of Improvements to Property
Proposed regulations under Sec. 263(a) clarify the treatment of expenditures incurred in selling, acquiring, producing, or improving tangible assets.
Prop. Regs. Address Carryover of Accounting Methods Under Sec. 381
In order to resolve confusion with respect to accounting and inventory methods to be used after corporate reorganizations or liquidations, the IRS issued proposed regulations in November 2007 (REG-151884-03).
IRS Provides Procedures to Request Revision to Year of Change for Form 3115
The IRS provided procedures for taxpayers, under certain conditions, to request to revise the year of change for a pending Form 3115, Application for Change in Accounting Method.
TAX PRACTICE MANAGEMENT
2025 tax software survey
AICPA members in tax practice assess how their return preparation software performed during tax season and offer insights into their procedures.
