Are you baffled by Schedule A?

Schedule A of the Form 990 is required to be completed by all public charities. This schedule shows the IRS how the Organization is a public charity (versus a private foundation) and also proves that the Organization is receiving enough support from the general public, in order to maintain its status as a public charity. …

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Estate & Gift Tax Valuations: Can the IRS Disregard an Agreed Upon Value for Shares in a Buy-Sell Agreement?

Section 2703 of the Internal Revenue Code enacted in 1990 states that buy-sell agreements are disregarded for valuation purposes, unless the agreement satisfies the following tests. Test One: The Agreement Must Constitute a Bona Fide Business Arrangement The buy-sell agreement (Agreement) cannot be a ploy to transfer shares to members of the family at a …

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Using current and quick ratios to help determine a company’s liquidity

There are many ratios that a company’s lenders use to gauge the strength of the company’s ability to pay its current bills as well as its long-term debts; and still have enough cash left in the bank to use for expanding the company’s operations. One concern of lenders, for example, is: How quickly can a …

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Expense Reimbursement Schemes – Are Your Employees Stealing from You?

Expense reimbursement schemes are extremely common in companies. Employers may underestimate the costs of this type of fraud. Perpetrators of these schemes range from administrative employees buying company supplies to highly compensated executives with million dollar travel budgets. One of my first assignments in the beginning of my career was to audit the expense reports …

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Camaraderie or collusion: encourage one, but not both

Management teams across the nation are encouraging team building among staff to encourage and promote employee friendships and to boost morale. I commend these organizations for promoting a healthy work environment which provides a social support network at both a personal and a professional level. Positive employee morale can lead to reduced employee turnover, reduced …

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The DOL Comes Down Hard on ESOP Trustee

On June 2, 2014 the U.S. Department of Labor (DOL) reached a $5.25 million settlement with GreatBanc Trust Company (GreatBanc). It was alleged that GreatBanc, as trustee to the Sierra Aluminum Company Employee Stock Ownership Plan (ESOP), allowed the plan to purchase stock from Sierra Aluminum’s co-founders and top executives for more than fair market …

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Employee fraud: how to spot a fictitious vendor billing scheme

Billing schemes are a type of asset misappropriation employee fraud. According to the 2018 Report to the Nations published by the Association of Certified Fraud Examiners, billing schemes typically account for 20% of all employee fraud and cost employers $100,000 per incident. One type of billing scheme we have seen is the “Shell Company” or …

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Considerations in valuing a non-compete agreement

A non-compete agreement is often implemented when a business is purchased to prevent the seller from competing with the purchaser. These agreements, referred to as Covenants Not to Compete, contain restrictions which often include a specified length of time and geographic area in which the seller is prohibited from competing with the purchaser. These agreements …

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Converting a C Corporation to an S Corporation: Potential Tax Implications

In recent years, the number of companies converting from C corporation status to S corporation status has increased dramatically. One of the main reasons is to avoid double taxation. C corporations are taxed at the corporate level for federal income tax purposes. Additionally, the C corporation shareholders are also taxed on any capital gains realized …

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What is the Difference Between Donor-Advised Funds and Restricted Donations?

Donors advising on the use of their donation sounds relatively the same as donors restricting the use of their donation, doesn’t it? These are actually very different concepts. Donor advised funds are separately identified accounts that are maintained by a public charity. After the donor makes an unrestricted donation to the donor advised fund/account, the …

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