February 7, 2012

From the CPA Letter Daily

February 7, 2012 Sign up Forward Archive Advertise Brought to you by the American Institute of CPAs Top Story § U.S. unemployment data exclude millions who stopped job search The drop in the U.S. unemployment rate, now at its lowest in three years, masks the fact that millions of unemployed people aren’t counted because they’ve given up the search for work. The unemployment rate would be 9.9%, not 8.3%, if official statistics counted the 2.8 million people who stopped looking for jobs. The Washington Post (2/6)      Financial Focus § Some banks return SBA lending to level before boom The Small Business Administration reported that the pace of new loans backed by the agency has returned to pre-boom levels in the Washington, D.C., area. "We are seeing numbers back to the pre-recession pace; we’re off to a start that can lead us to project a really great year for 2012," said Bridget Bean, who oversees the Washington region for the SBA. "It’s a great sign that we have the infrastructure and the economic ecosystem here to support this kind of lending to our small businesses." The Washington Post (1/30)      § Index shows housing markets continuing to improve More metropolitan areas show improvement in their housing markets, according to the National Association of Home Builders/First America Improving Markets Index. The number of metro areas with measurable improvement in February rose by 29, to 98. The Hill (2/6)      A&A Report § Union, pension fund get no response on auditor rotation The United Brotherhood of Carpenters Pension Fund and the Sheet Metal Workers’ National Pension Fund filed proxy proposals asking companies to allow shareholder votes to adopt auditor rotation policies. However, none of the companies agreed and the Securities and Exchange Commission said the companies would not be penalized for their positions. The Wall Street Journal/CFO Journal/Compliance Week (tiered subscription model) (2/7)      Tax Season Watch 71 days left to file tax returns § Separate IRS power of attorney forms required from married couples The Internal Revenue Service’s new power of attorney form has one major difference from the prior version: Married couples who file joint tax returns can no longer file a joint Form 2848 to designate a representative. The new form also requires the representative’s PTIN. The IRS has indicated it will soon stop accepting old versions of the power of attorney form. JournalofAccountancy.com (2/6)      § Survey finds taxpayers worried about security, privacy with online tax filing Accounting Today (2/6)      Policy & Regulatory § SEC prepares to reveal plan to stabilize money market funds The Securities and Exchange Commission soon will outline its plan to stabilize the $2.7 trillion money market fund industry, sources said. The goal is to minimize investor losses in the event of another financial crisis. However, insiders warn that the new rules could hinder returns and hurt confidence in the industry. "Money market funds remain susceptible to runs and to a sudden deterioration in quality of holdings, and we need to move forward with some concrete ideas for proposals to address these structural risks," said SEC Chairman Mary Schapiro. The Wall Street Journal (2/7)      § U.S. lawmakers steer $300M to projects near their properties Thirty-three members of Congress have steered more than $300 million in U.S. government money to projects near, and sometimes right next to, their own properties. For example, Sen. Richard Shelby, R-Ala., directed more than $100 million to an urban renovation project adjacent to an office building he owns in Tuscaloosa. The Washington Post (2/6)      International View § Greece works on final details of reform to receive bailout Leaders of Greece’s coalition government agreed to meet Tuesday to put final touches on structural economic reform demanded by the European Commission, the International Monetary Fund and the European Central Bank before the nation’s next round of bailout funds are released. The party leaders need to approve an additional $1.1 billion in cuts to reduce government spending by 1.5% of gross domestic product. Kathimerini (Greece) (2/6), Spiegel Online (Germany) (2/6), The Guardian (London) (2/6)      § Corruption could thwart Indonesia’s economic rise Indonesia is one of the world’s fastest-growing economies, but corruption threatens growth. "Corruption [in particular] puts us at a disadvantage. The trajectory is good, but Indonesia can’t be complaisant," says Indonesian Minister of Trade Gita Wirjawan. Bloomberg Businessweek (2/2)      Leadership & Trends § Good analysis will unlock the potential of Big Data, CEB says Companies increasingly are producing huge amounts of data, but they don’t know how to use it, Corporate Executive Board’s Tom Monahan and Michael Griffin write. Chief financial officers should focus on training staff to use information to drive better decision-making. Success will come to those companies that combine smart processes with analytic talent, Monahan and Griffin write. The Wall Street Journal/CFO Journal (tiered subscription model) (2/6)      SmartQuote A determined soul will do more with a rusty monkey wrench than a loafer will accomplish with all the tools in a machine shop." –Robert Hughes, Australian-American art critic, filmmaker and writer      © 1999-2012 SmartBrief, Inc.® Legal Information

From CCH Tracker News

© CCH INCORPORATED, a Wolters Kluwer Business. All Rights Reserved. Reprinted with permission from (Federal or State Tax Tracker News)

Conservation easements on land that were contributed by a corporation and several individuals were revalued downward but accuracy-related penalties were not imposed.

The taxpayers donated the conservation easements to an environmental preservation organization, yielding limited deductions under Code Sec. 170. The IRS denied the bulk of the deductions, arguing that the easements were almost valueless. The before-and-after FMV method of valuation was used by the court, but the parties disagreed as to whether the "before highest and best use" of the property was gravel mining or agricultural use, with the value of the property dependent on this determination.

The court concluded that a high demand for gravel from the property was unlikely at the time of the donation, and that agriculture was the before highest and best use of the land. The court reduced the before value of the land, and, with the after value stipulated, also reduced the value of the conservation easements to an amount that was higher than that arrived at by the IRS, but lower than that claimed by the taxpayers. As a result, the taxpayers’ deductions were significantly reduced.

The parties were assessed 20-percent accuracy-related penalties by the IRS under Code Sec. 6662(a), based on substantial understatement of income tax and substantial valuation misstatement. The taxpayers, however, sought advice from a competent expert; they provided the expert with accurate information; and they relied in good faith on the expert’s judgment. The penalties were therefore not imposed.

Segar Corp., TC Memo. 2012-35, Dec. 58,940(M)