FASB revises definition of a business

With its first Accounting Standards Update of 2017 (ASU 2017-01), the FASB revised the definition of a business under U.S. GAAP. This update was issued to provide more clarity to entities in determining whether transactions should be classified as an acquisition (or disposal) of assets or businesses. Stakeholders had communicated to the FASB that the …

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IRS looking for U.S. virtual currency users

The Financial Crimes Enforcement Network (FinCEN), a bureau of the United States Treasury, defines virtual currency as “a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency.” In other words, virtual currency does not have legal tender status in any jurisdiction. While this …

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IRS says no to front-loaded alimony

Going through a divorce is an education in many ways. One thing most learn at some point in the process is that property settlements are not a taxable event in the eyes of the IRS, but alimony is. In other words, dividing up your bank account and other assets as part of the property settlement …

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Guidance on FDAP withholding penalties

In an International Practice Unit released in May 2016, the IRS provides guidance to IRS examiners on the appropriate penalties associated with fixed or determinable annual or periodical (FDAP) withholding. Unless there is a treaty or other exception, payments of U.S. source FDAP income to foreign persons are generally subject to 30% withholding tax. Withholding …

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New guidance on sourcing FDAP income

In June 2016, the IRS released a new International Practice Unit to help IRS examiners determine the source of fixed or determinable annual or periodical income – also known as FDAP income. Withholding agents especially need to pay close attention to these rules, because if payments to foreigners aren’t confirmed as foreign source, they will …

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Form 8938 now required for entities

The IRS introduced Form 8938, Statement of Specified Foreign Financial Assets, for filing along with individual tax returns beginning in tax year 2011. Form 8938 is an informational reporting form that is used to report interest in certain foreign financial assets. Until now, filing has only been required for individuals. Beginning with tax year 2016, …

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Delayed refunds on Form 1120-F

Some taxpayers filing Form 1120-F, U.S. Income Tax Return of a Foreign Corporation, have experienced a delay in receiving their refund. The delay is due to the issuing of Internal Revenue Manual code 21.8.2.12.2.3, which became effective for all 1120-F returns filed after January 1, 2015. The IRM states that all refunds based on withholding …

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Lack of succession plans in family owned businesses

According to a recent PricewaterhouseCoopers (PwC) report, only 23% of family owned businesses have succession plans in place that include a documented plan, not just thoughts in the owner’s head. In PwC’s 2012 survey, 52% of family run businesses planned to pass the business to the next generation, with only 12% planning to sell the …

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U.S. company’s big payout to the SEC

Why is a U.S.-based wire and cable making company paying out $6.5 million in penalties to settle accounting violations with the Securities and Exchange Commission (SEC), in addition to more than $75 million to resolve allegations? General Cable Corporation has been in violation of the Foreign Corrupt Practices Act. The company’s overseas subsidiaries had been …

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Statement of cash flows: restricted cash presentation

The Financial Accounting Standards Board (FASB) recently released Accounting Standards Update (ASU) 2016-18 regarding specific guidance on the presentation and classification of restricted cash in the statement of cash flows. The ASU notes the following items: The statement of cash flows is required to explain the change during the period in the total of cash, …

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