Weinberg & Company

              Certified Public Accountants

SIMPLY STATED

AUGUST 2016

ACCOUNTING NEWS
 
Customized Financials
  
Although the Securities and Exchange Commission (SEC) allows companies to supplement their financial filings with non-GAAP profit figures, it is concerned that some less sophisticated investors may not be able to distinguish between those adjusted numbers and GAAP results, especially when reported on websites or other venues not covered by SEC rules.Of the listed companies on the DJIA index that reported non-GAAP earnings per share last year, the adjusted metric was on average 30% above earnings per share reported under GAAP, according to data from FactSet and reported by the WSJ. It was even more pronounced for companies in the S&P 500 where fourth quarter pro forma earnings were 59% higher than under GAAP.In his bylined article in the current issue of MicroCap Magazine, Weinberg Managing Partner Corey Fischer notes that financial accounting standards, as well as SEC rules, are mostly written for big companies, but can cause oversized implications for microcap companies.“Though there may be an appropriate regulatory path that reels in the more outlandish reporting techniques utilized by Big Board companies, we hope that the SEC appreciates that microcap companies live, and struggle, in a very different world. The same regulation that might necessitate an adjustment in practice for a large cap company, can have serious punitive impact for its microcap brethren and their investors,” he continued.
{Read Full Story}

Estate tax strategy dies 

The Treasury Department and IRS are proposing new regulations targeted at wealthy business owners that have been using a common tax planning strategy to transfer interest in family businesses in a way that substantially reduces future estate taxes.

A typical example of the tax saving strategy involves placing assets into a closely held company so structured that some of the owners are restricted from selling their interest. Those very restrictions are then used to reflect a diminished value of those minority interests and therefore subject to less tax bite. The proposed rules would affect certain transferors of interests in corporations and partnerships to prevent the undervaluation of the transferred interests.

The proposed regulations are subject to a 90-day public comment period and will not take effect until the Treasury considers all the comments it receives, and then it will take 30 days after the regulations are finalized for them to take effect.

According to IRS data, only .2% of those who die are affected by the estate and gift tax. The Congressional Budget Office expects the U.S. will collect a total of $20 billion in estate and gift taxes in 2016, which amounts to less than 1% of federal revenue.

FASB: Income tax disclosureLast month, the Financial Accounting Standards Board (FASB) issued a proposed Accounting Standards update (ASU) intended to enhance disclosure requirements on business income taxes and require public and private companies to change the way they report income taxes on their financial statements.The changes include distinguishing certain foreign and domestic income tax information, such as income or loss from continuing operations before an income tax or benefit, and the amount of income paid to any country that is a significant part of total income taxes paid by the company.

Other changes and additions include explaining the reason behind a change in assertion about the indefinite reinvestment of undistributed foreign earnings, and discussing the likely impact of recently enacted tax laws on the organization’s future performance. The proposed changes also would require organizations to disclose the aggregate of cash, cash equivalents and marketable securities held by their foreign subsidiaries.
{FASB proposed standard}  {FASB Summary Document}

Source: Accounting Today

MONEY TALKS
 
M&As: No record year 

2015 was a record year for announced M&A deals, so it was expected that 2016 would be a record year for M&A deal closures. But, it now looks as though 2007 may hold onto the record.  Calculated on the total dollar value of M&A deals, Dealogic is reporting that over 900 announced deals, representing $782 billion, have been withdrawn. Another two large deals are currently in trouble thanks to U.S. antitrust regulators who have challenged the $55 billion Cigna/Aetna deal as well as the $35 billion Aetna/Humana combination.Notable failures this year include Pfizer’s $148 billion deal for Allergan PLC and Monsanto Co.’s $48 billion bid for Syngenta AG, reports the WSJ.

Mahalo A new study finds the United States has one of the lowest real estate property taxes in the world, with the state of Hawaii collecting the least and Illinois the most among the 50 states.A property valued at $1 million in the U.S. is subject to an average 0.6% in taxes, or $6,000, compared with a global average of 3.3%, or $33,038, according to a study by UHY LLP, a London-based network of independent certified accountants and reported by Mansion Global.

By region, the study found that average taxes on properties worth $1 million vary from 2.3% for BRIC countries (Brazil, Russia, India and China) and 3% for the Group of Seven (the U.S., Canada, France, Germany, Italy, Japan and the U.K.) to 3.8% for Europe as a whole.

A top 26 sampling of country rankings reported in the study, include: #1 Belgium (11.3%), #4 France (5.1%), #11 U.K. (3.5%), #15 China (2.1%), #20 Canada (1.8%), #23 U.S. (.06%). Coming in lowest, because it imposes no federal or local taxes on real estate, is #26 New Zealand (0.0%).

Riding highRide-sharing apps have surpassed traditional taxi and car rental services on corporate expense reports, according to Certify, an expense management software vendor.Uber and Lyft now account for 48.7% of the overall ground transportation nationwide, up 3% from last quarter. Car rental receipts account for 37% of the total, while taxi receipts account for 14% — a drop of 51% since 2014.

To see other business travel expenses tracked by Certify, including surveys on Restaurant, Lodging, and Airlines, click {Certify Q2 SpendSmart Report}.

Pay equity Massachusetts has become the first state to prevent employers from asking an applicant’s salary history before offering a job, thanks to a new law. The regulation is intended to narrow the pay gap between men and women.

QUOTABLE

One of the problems with being a pessimist is that you can never celebrate when you are proven right.  – Thomas Sowell, American economist, political philosopherIf a politician found he had cannibals among his constituents, he would promise them missionaries for dinner. – H.L. Mencken (1880-1956) German-American Journalist, satiristWhen more and more people are thrown out of work, unemployment results. – Calvin Coolidge, 30th U.S. PresidentEveryone is in favor of free speech. Hardly a day passes without its being extolled, but some people’s idea of it is that they are free to say what they like, but if anyone else says anything back, that is an outrage. – Winston Churchill (1874-1965) Prime Minister of U.K., First person to be made an honorary citizen of the U.S.
WEINBERG & COMPANY

Simply the right choice

 

Weinberg & Company is a leading, international, full service, multi-office CPA firm serving clients throughout the United States and the Pacific Rim. Founded over two decades ago, the practice groups include: Assurance and Audit, Tax and Accounting, and Advisory Services. Weinberg has a depth of knowledge and experience to meet the needs of both public and privately held companies, high net worth individuals, entrepreneurs, family offices, and can provide customized business management services. www.weinbergla.com

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(310) 601-2200

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Boca Raton, FL 33434

(561) 487-5765  

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DISCLAIMER:
Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
Quick Links

Corey Fischer
Firm Managing Partner

310-601-2200

CoreyF@weinbergla.com

Jeffrey B. Engler
Director of Tax,
Los Angeles 

310-601-2200
JeffreyE@weinbergla.com

Bruce Weinberg
Florida Managing Partner

561-487-5765

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