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Auditing
Catch the Deception if you Can! Preventive & Detective Controls
Sunish Mehta, CPA, CGMA
Webcast
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Auditing
Catch the Deception if you Can! Audits & SSARS
Sunish Mehta, CPA, CGMA Webcast
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Auditing
Catch the Deception if you Can! Technology
Sunish Mehta, CPA, CGMA Webcast
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Auditing
Catch the Deception if you Can! Stories & the ACFE Study
Sunish Mehta, CPA, CGMA Webcast
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Accounting
SSARS Top Tips: Preparation Services
Sunish Mehta, CPA, CGMA Webcast
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Accounting
SSARS Top Tips: Reviews
Sunish Mehta, CPA, CGMA Webcast
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Accounting
SSARS Top Tips: Compilations
Sunish Mehta, CPA, CGMA Webcast
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Personnel/Human Resources
The Mindful CPA
Sunish Mehta, CPA, CGMA Webcast
Credits: 2 $98.00$98.00
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Accounting
The Art of Controlling: A Controller’s Handbook
Sunish Mehta, CPA, CGMA Webcast
Credits: 4 $196.00$196.00
Andrew Redleaf v. Comm., CA-8, 21-2209, 21-2224
Alimony Requirement #6: Millions in Payments by Hedge Fund Partner to Ex-wife Did Not Meet Alimony’s Survival Criterion (Andrew Redleaf v. Comm., CA-8, 21-2209, 21-2224, Aug. 5, 2022) Andrew Redleaf is the majority partner at Whitebox Advisors, LLC, a hedge fund asset management firm. The Redleaf’s marriage termination agreement (MTA) required Mr. Redleaf to pay his ex-spouse $140 million including $1,500,000 per month for sixty months. Mr. Redleaf deducted $51 million in payments he made to his ex-spouse in 2012 and 2013 as spousal maintenance (alimony). The issue in the case was whether the alimony payments would stop after payee …
Jerry Vanderhal v. Comm., TCS 2018-411
Alimony Requirement #4: Payment of Sallie Mae Loan of Ex-Spouse Not Alimony Jerry Vanderhal divorced in 2011. The divorce agreement included a reference to a Sallie Mae student loan account that related to his former spouse. That reference was found in the “Division of Community Debts” section of the agreement and obligated Mr. Vanderhal to “assume and hold his former spouse harmless” from that debt. The agreement also included a section titled “Tax Free Transfers” that stated the parties believe and agree that the transfers of property between them required by the agreement were tax-free transfers of property between them …
Cynthia Hailstone and John Linford v. Comm., TCS 2023-17
Disability Payments Taxable if Premiums Paid by Employer (Cynthia Hailstone and John Linford v. Comm., TCS 2023-17) John Linford was provided disability insurance by his employer. Under the terms of the policy, employees were not required to contribute to the policy premiums. Rather, the company was required to pay 100% of the premiums. During 2017, Mr. Linford was approved and he received $105,000 of disability payments and a 2017 Form W-2 reporting the payments. He did not report the payments. Under §105(a) if the amounts of the disability payments were paid under a policy for which the contributions (premiums) were …
Ernesto and Marilyn Patacsil v. Comm., TCM 2023-8
Proof of Insolvency Lacking for Exclusion of Cancelation of Debt Income (Ernesto and Marilyn Patacsil v. Comm., TCM 2023-8) The discharge of indebtedness is income (§61(a)(12)). Section 108(a) provides an exclusion to the extent of the taxpayer’s insolvency (§§108(a)(1)(B) & (3)) and defines an insolvent taxpayer as one who has an “excess of liabilities over the fair market value of assets” (§108(d)(3)). The burden to prove insolvency is on the taxpayer. Because Ernesto and Marilyn Patacsil couldn’t prove the FMV of their assets and the extent of their liabilities, the cancellation of debt due to the foreclosure of their properties …
James H. Kim v. Comm., TCM 2023-91
IRS Summons Nets More than $4 Million of Unreported Cryptocurrency Gains(James H. Kim v. Comm., TCM 2023-91) In response to a summons, the IRS received information reports from Coinbase, Inc. a virtual currency exchange, reporting the proceeds of James Kim’s transactions in Bitcoin and Litecoin (during 2013–2016), and Ethereum (during 2017). For 2013–2016, Mr. Kim reported no cryptocurrency gains or losses. For 2017, he received an information return from Coinbase that reported $18,557,230 of proceeds from virtual currency transactions. On the 2017 Schedule D, Mr. Kim reported gross proceeds in that amount but offset against those proceeds a claimed basis …
Denine and Bryan Kerns, pro sese v. Comm., TCM 2019-14
Failed to Reconcile Advance Premium Tax Credit on Form 8962 (Denine and Bryan Kerns, pro se v. Comm., TCM 2019-14) Denine and Bryan Kerns purchased their health insurance through Covered California. They received an advanced premium tax credit (APTC) of $8,420 in 2014. They timely filed their 2014 return, reporting AGI of $97,061. They claimed personal exemptions for themselves and no exemptions for dependents. The IRS determined that the Kerns were not eligible for any credit because their household income exceeded the maximum allowable under §36B(b) and (c)(1)(A). For 2014, 400% of the FPL was $62,040. The Kerns’ household income …
Chalaundra Sneed v. Comm., TCS 2023-11
Advance Premium Tax Credits Require Taxpayer Attach Form 8962 to Tax Return (Chalaundra Sneed v. Comm., TCS 2023-11) Chalaundra Sneed enrolled in health insurance for herself and her two dependents through the Oklahoma insurance Marketplace. She received Advance Premium Tax Credits (APTC) on the basis of the information she provided in her application. Ms. Sneed did not attach a copy of Form 8962, Premium Tax Credit (PTC), to her income tax return, but later mailed it separately. The notice of deficiency determined that Ms. Sneed was ineligible for the PTC because her MAGI for year at issue exceeded 400% of …
Alice Kimble v. US, (CA-FC), 2021-1 USTC 50,110
FBAR Violation Recklessness and, Thus, Willful (Alice Kimble v. US, (CA-FC), 2021-1 USTC 50,110; (Mar. 25, 2021)) Because the penalty for willfully failing to file FBAR is a maximum penalty of the greater of $100,000 (inflation adjusted to $136,399 for 2021) or 50% of the balance in the account or the amount of the transaction, the determination of willful versus non-willful is meaningful. What’s willfulness? The US Supreme Court in Safeco Ins. Co. of Am. v. Burr, 551 US 47, 57 (2007), defined “recklessness” as “violating an objective standard: action entailing an unjustifiably high risk of harm that is either …
Lindsey Jones v. Comm., CA-9, 2022-1 USTC §50,111
Unsigned Return Was Still a Valid Married Filing Joint Return (Lindsey Jones v. Comm., CA-9, 2022-1 USTC §50,111 (Feb. 3, 2022)) The Ninth Circuit Court of Appeals found that the Tax Court did not err by concluding that Lindsey Jones tacitly consented to the filing of a joint return. A joint tax return signed by one spouse on behalf of the other is valid so long as the non-signing spouse tacitly consented to filing the joint return. See Hennen v. Comm., [CCH Dec. 24,658], 35 T.C. 747, 748–49 (1961). The key question is whether both spouses intended at the time …
Sam Bankman-Fried Sentenced to 25 Years
Sam Bankman-Fried, the former wunderkind of the cryptocurrency world, was sentenced to 25 years in prison on Thursday, March 28th, 2024, for his role in defrauding FTX customers of $8 billion. He was facing a maximum sentence of 110 years, and prosecutors were hoping for 40-50 years. For a deep-dive into the background of the Sam Bankman-Fried fraud case from an accounting point of view, see Jeff Sailor, CPA’s on-demand video course, Focus on Fraud: FTX! What Happened? (1 CPE Credit, Accounting) In a statement from the Department of Justice, U.S. Attorney General Merrick Garland said: “There are serious consequences for …
The 90-Day Clock is Ticking for Beneficial Ownership Reporting
An Alabama Federal District Court found the Corporate Transparency Act and its Beneficial Ownership Interest (BOI) reporting to be unconstitutional (National Small Business United et al v. Yellen et al). The Justice Department on behalf of Treasury filed a Notice of Appeal on March 11, 2024. What happens now? While the litigation is ongoing, FinCEN will continue to implement the Corporate Transparency Act as required by Congress, while complying with the court’s order. Other than the particular individuals and entities subject to the court’s injunction, reporting companies are still required to file beneficial ownership reports as provided in FinCEN’s regulations. …
Bipartisan “Stop Subsidizing Giant Mergers Act” Takes Aim at Tax-Free Reorganizations
Few proposals have been made to change tax-free reorganizations in the past century, but today, a Democrat and a Republican have combined forces to attempt exactly that. This morning (3/21), Sen. Sheldon Whitehouse (D., R.I) and Sen. J.D. Vance (R., OH) introduced new legislation aimed at transforming the tax implications of big mergers by revising the corporate tax code. The Stop Subsidizing Giant Mergers Act is described in a statement from the senators as “ending a wasteful subsidy for mergers where combined average annual revenues exceed $500 million.”The bipartisan bill sets its sights on companies’ ability to complete tax-free mergers. …
New IRS Memo Answers Questions Related to Form 8300 and Cannabis
Once a business receives cash exceeding $10,000 (in either a transaction or related transactions), a Form 8300 must be filed. Cannabis businesses are cash intensive businesses and therefore are subject to the reporting requirement.A March 1, 2024 Chief Council Memorandum 202409016 addresses a series of questions related to the filing of Form 8300 that have arisen in examinations of cannabis businesses. The memorandum provides guidance on many of these issues in a 16 question-and-answer format. Additional guidance on questions related to cash couriers/armored cars who transport cash between growers/manufacturers and dispensaries/sellers is in process.Example from Q and A #2. What …
President Biden Proposes 2025 Budget
President Biden has proposed a 2025 budget, and it’s a pie-in-the-sky plan that has no chance of getting through Congress. It is instead a political statement of what might be, not what will be. So, why read about the proposals? Because some well-read client will ask about a provision that particularly irritates them. (Think real estate investor and the Section 1031 proposed limit.)The proposed budget includes tax increases of $5.1 trillion over the next ten years, and it assumes that the Tax Cut and Jobs Act will not be extended past 2025.Here are a few items from President Biden’s proposed budget.The …
Student Loan Discharge for Small Loans Has Started
The Department of Education has announced that it will automatically discharge $1.2 billion in loans for nearly 153,000 borrowers who are eligible for the shortened time to forgiveness benefit under the Saving on a Valuable Education (SAVE) Plan. For a borrower to be eligible for this forgiveness, they must be enrolled in the SAVE Plan, have been making at least 10 years of payments, and have originally taken out $12,000 or less for college. For every $1,000 borrowed above $12,000, a borrower can receive forgiveness after an additional year of payments. All borrowers on SAVE receive forgiveness after 20 years …
California Board of Accountancy: Everything You Need to Know
By: In the world of accounting, the Golden State is a beacon of professionalism and integrity thanks to its regulatory body, the California Board of Accountancy (CBA). Understanding the ins and outs of this organization is the first step every aspiring California CPA should take in their CPA journey. Let’s explore everything you need to know about the California Board of Accountancy.Ensuring Professional Standards and Public Trust The California Board of Accountancy plays a crucial role in regulating the accounting profession in the state. Established under the California Accountancy Act, the CBA’s primary mission is to protect consumers by ensuring that …
California Corner: Calling the Practitioner Hotline
By: The FTB continues to request (actually beg) practitioners to utilize the self-service options available on its website using “MyFTB Account.” Accessing information on the website frees up hotline agents to handle cases that cannot be resolved without live contact.Tax Practitioner Hotline(916) 845-7057Tax practitioner hotline implements virtual hold technology. As a result of practitioner feedback, the Tax Practitioner Hotline successfully implemented Virtual Hold technology. Virtual Hold allows callers to save their place in the phone queue and receive a call back instead of waiting on hold for a potentially extended period of time.In March 2023 alone, over 24,000 tax practitioners utilized …
Federal District Court Rules that the Corporate Transparency Act is Unconstitutional (National Small Business United et al v. Yellen et al)
An Alabama Federal District Court has found the Corporate Transparency Act and its Beneficial Ownership Interest (BOI) reporting to be unconstitutional. Judge Liles C. Burke concluded that “The Corporate Transparency Act is unconstitutional because it cannot be justified as an exercise of Congress’ enumerated powers.”What now? This will be a wait-and-see situation as the government appeals the decision and FinCEN decides how to address the decision. But what do we tell our clients?There will be no hurry in filing BOI reports for existing entities, as the reports are not due to FinCEN until Dec. 31, 2024. Wait for a FinCEN …
Should More of Our Clients Have IP PINS?
By: An Identity Protection PIN (IP PIN), a unique six-digit number known only to the taxpayer and the IRS, helps prevent the misuse of a taxpayer’s Social Security number on fraudulent federal income tax returns, according to a recent blog by National Taxpayer Advocate Erin M. Collins. In calendar year 2022, about 525,000 taxpayers opted in to the IRS’s IP PIN program.“When the taxpayer files their return, they include their IRS-provided IP PIN, signaling to the IRS that the return is authentic,” Collins wrote. “If a taxpayer has an IP PIN but does not include it on their return at filing, this …
Robert Doggart V. Comm., TCS 2023-25
Failure to Pay Premiums on Life Insurance Securing Loans Resulted In Taxable Income (Robert Doggart V. Comm., TCS 2023-25) Before 2017, Robert Doggart took out a series of loans against two life insurance policies that he held with Prudential Insurance Co. The cash value of his policies served as collateral for the loans. While incarcerated, Mr. Doggart stopped paying premiums on the two policies. As a result, each policy lapsed and Prudential used the cash values of the policies to repay the loans plus interest due. Prudential subsequently issued Mr. Doggart Form 1099–R for 2017 with respect to each policy …