| Brought to you by the American Institute of CPAs |
  |
|
§ Initial unemployment claims point to slowdown in U.S. job growth
First-time unemployment claims fell by 2,000 last week, the U.S. Labor Department said, fewer than most economists expected, suggesting that job creation is slowing. The four-week rolling average of initial claims, seen as a more accurate indicator of labor-market conditions, increased to a 2½-month high. Reuters (4/19), The Hill/On The Money blog (4/19)     
§ Weakening indicators raise doubts about the economic recovery
Economists and Christine Lagarde, managing director of the International Monetary Fund, warn world leaders not to become complacent about the shaky global economic recovery. Many of the challenges that tripped up the recovery in 2010 and 2011 are back, such as rising layoffs, falling home sales and slowing manufacturing activity in the U.S. and debt woes in Europe. The New York Times (tiered subscription model) (4/19), Bloomberg (4/20), The Wall Street Journal (4/19)
§ Existing-home sales post a surprise drop for March
Most economists predicted an increase in sales of previously owned homes last month in the U.S., but figures fell instead. Sales of existing homes dropped 2.6%, from a 4.6 million annual rate in February to 4.48 million in March, the National Association of Realtors said. Bloomberg (4/19)
§ Investors warm up to climate-change concerns, surveys show
Surveys show investors are putting pressure on companies to disclose more about workplace safety, human and labor rights, and environmental practices. But businesses struggle with how to track the impact of sustainability activities. CGMA Magazine (4/20)
§ Cross-border banking starts to unravel
Before the global financial crisis, cross-border banking was growing rapidly, with European banks taking the lead during an era of internationalization. Now, lenders are retreating from cross-border business as their willingness and ability to compete falter. The Economist (4/21)
§ Microsoft’s Laux: IASB/FASB converged standards will bring changes
Robert Laux, senior director of financial accounting and reporting at Microsoft, believes U.S. companies face a big challenge with regard to convergence projects underway between Financial Accounting Standards Boards and International Accounting Standards Board. "These are like legacy accounting issues that we have in U.S. GAAP that may be in IFRS but the answers are slightly different, or there’s just not IFRS guidance applicable or on point," Laux says. Learn more about the FASB/IASB convergence project. Bloomberg BNA (free content) (4/18)
| Tax Spotlight |
 |
 |
|
§ Tax-cut legislation for small business gains House approval
The House voted largely by party line to approve Majority Leader Eric Cantor’s plan to cut small-business taxes by 20%. Democrats objected to the measure’s $46 billion cost and said it would help primarily wealthy taxpayers. Both parties are staking out tax-policy positions ahead of the fall election. The Hill/Floor Action Blog (4/19)
| Advisory Services |
|
|
|
§ Don’t let fraud sneak up on your company
A proactive approach to fraud prevention can help companies minimize the cost of employee misconduct before it hurts the bottom line, forensic accountant Tracy Coenen writes. Fraud can take several forms, whether misappropriation or outright corruption. Executives should design processes that eliminate opportunities for fraud while keeping an eye out for signs of wrongdoing. Launching an investigation after the fact is rarely effective at recovering losses. Discover how to identify the red flags associated with the most costly and common fraud schemes in this indispensable guide, Common Fraud: A Guide to Thwarting the Top Ten Schemes. CFO.com (4/19)
§
| International View |
|
|
|
§ Emerging nations approve billions for IMF crisis fund
Major emerging nations agreed to give billions of dollars to the International Monetary Fund to rescue countries in serious financial trouble. Russia’s deputy finance minister said the Group of 20 will commit enough money to satisfy IMF chief Christine Lagarde’s request for an additional $400 billion. Reuters (4/20), Bloomberg (4/20), Nasdaq.com/Dow Jones Newswires (4/19)
| SmartQuote |
|
|
|
|
|
From CCH Tracker News
© CCH INCORPORATED, a Wolters Kluwer Business. All Rights Reserved. Reprinted with permission from (Federal or State Tax Tracker News)
Filers of Form 990, Return of Organization Exempt from Income Tax, should not enter Social Security numbers (SSNs) anywhere on the form, Lois Lerner, director, Exempt Organizations (EO), IRS,
cautioned on April 19 at the Representing and Managing Tax-Exempt Organizations Conference in Washington, D.C. The IRS has discovered some Forms 990 with SSNs and cannot redact them before public inspection.
An attorney who produced a documentary film during the two years at issue was engaged in a trade or business, was allowed deduction of expenses incurred in filmmaking, and was not subject to penalties.
The taxpayer discovered that, as a teenager, her husband had participated in a singing group that performed around the world, including half-time shows in four Superbowls. The taxpayer became interested in making a film about this group, which she did. The IRS disallowed the taxpayer’s deduction of expenses and assessed deficiencies and penalties against her.
The Tax Court found that the taxpayer had spent a large amount of time engaged in making the film, taking time off from her law practice to do so. The taxpayer’s film production activity was conducted with continuity and regularity during the years at issue. The court analyzed the nine factors set out in Reg. §1.183-2(b) to evaluate profit motive:
· First, the taxpayer’s efforts to make the film a financial success showed a profit objective, favoring the taxpayer.
· Second, the taxpayer sought to educate herself and received expert advice on filmmaking, favoring the taxpayer.
· Third, despite having a job as an attorney, the taxpayer devoted much time and effort to making the documentary, favoring the taxpayer.
· Fourth, the taxpayer had a reasonable expectation that the property used in the filmmaking activity (consisting largely of rights to historical footage) would appreciate in value, slightly favoring the taxpayer.
· Fifth, the taxpayer had success with other ventures, including her law practice, her direction of musical shows, and her creation of sculptures for which she was paid, favoring the taxpayer.
· Sixth and seventh, the history of income and losses was not given much weight, since the taxpayer was in the startup phase of filmmaking during the years at issue.
· Eighth, the taxpayer’s financial status was such that she had sufficient income from her legal career to offset her losses while maintaining her lifestyle, favoring the government.
· Ninth, while the taxpayer derived personal pleasure from making the film, her enjoyment was not sufficient to cause the activity to be classified as a hobby under Reg. §1.183-2(b).
As a result, the taxpayer demonstrated that she had the requisite profit motive for the activity to be considered a trade or business under Code Sec. 162(a).
The taxpayer elected under Code Sec. 181 to immediately deduct production costs, rather than capitalize them. The election was timely and, although the taxpayer omitted certain information in making the election, she was within substantial compliance with Code Sec. 181.
The court held that the IRS had not met its burden of establishing that the taxpayer had not adequately substantiated her deductions, since it relied on an appendix to its trial brief, which was not admissible as evidence under Tax Court Rule 143.
Finally, the taxpayer, having established her entitlement to the deductions at issue, was not subject to an accuracy-related penalty under Code Sec. 6662(a).
L. Storey, TC Memo. 2012-115, Dec. 59,031(M) |
MSNBC/Economy Watch blog
HBEG's Blog 