Weinberg & Company

              Certified Public Accountants




XBRL – A small business burden
Since 2009, the SEC has required companies to submit financial statements and other periodic filings in XBRL format. XBRL is short for Extensible Business Markup Language, a computer language that applies searchable data-tags to financial information making information searchable, sortable, and a really convenient tool for regulatory agencies. However, the costs of compliance can be onerous, particularly for small businesses which typically spend thousands of dollars each year to comply. There is significant debate as to how useful the XBRL information really is to anyone other than regulators.

Relief may be on the way. Having run out of time in last year’s Congressional session, the Promoting Job Creation and Reducing Small Business Burdens Act was re-introduced in January. After a near-death experience, it passed the House in mid-January and is now before the Senate Committee on Banking, Housing and Urban Affairs. Among the bill’s many provisions intended to help small businesses, Section 701 exempts Emerging Growth Companies (EGC), smaller companies with total annual gross revenues of less than $250 million, from XBRL requirements.

Simply Stated: With a very different Senate now in place, this bill could go all the way. The President might even use his executive pen to sign it into law…presuming, of course, there’s any ink left in his pen. 
SEC launches XBRL pilot program
The SEC has launched a pilot program it says is aimed at simplifying investor analysis and comparisons of public company financial statement data using XBRL.

Under the new program, data that companies provide in structured formats will be combined and organized into structured data sets and posted for bulk downloads on the SEC’s Website. The data sets initially will contain financial statement data from XBRL exhibits as filed with the SEC and will be expanded in 2015 to include data in footnotes to the financial statements.

The SEC requires U.S. public companies to structure the data in their quarterly and annual financial reports using XBRL, which is machine-readable. The structured data files are available in the SEC’s EDGAR database as exhibits to company filings. To facilitate the use of this information, the SEC’s Division of Economic and Risk Analysis will organize it into combined data sets on the SEC’s Web site in formats other than XBRL.

Simply Stated: Good to see the SEC trying to increase the usefulness of XBRLs…but it is still a costly duplication of financial information reporting from which EGRs/small businesses should be exempt.

An inconvenient truth at Davos
Former Vice President, Nobel Peace Prize and Oscar winner, Al Gore may best be known for saying: “The internal combustion engine is the greatest enemy of mankind.” Now, Mr. Gore has teamed up with Mexico’s former president Felipe Calderon and the duo is proposing to redesign and rebuild every city on the planet into cities without cars. They floated the $90 trillion proposal at the World Economic Forum in Davos where some say it received respectful attention. 

Simply Stated: The World Economic Forum is best known for its annual winter meeting in Davos, a remote mountain resort in the Swiss Alps. It’s where world leaders and influencers flew in on 1,700 private jets, then boarded exclusive helicopter shuttles to the resort where they spent the week commiserating over carbon footprints and global warming.

Big Banks: Your money’s no good here

Big banks are waving off some big institutional depositors because new government imposed rules have made those accounts less profitable. Reuters reports that J.P. Morgan Chase, Citigroup, HSBC, Deutsche Bank, and Bank of America are some of the banks that are telling some large companies, hedge funds, and insurers to go elsewhere or be charged a fee. Under the Federal Reserve’s liquidity coverage ratios, banks must maintain enough high quality assets that could be converted into cash during a crisis to cover projected flight of deposits over 30 days. The new regs differentiate deposit types based on how likely those deposits might be withdrawn. For example: retail customers with FDIC insured deposits (under $250,000) require banks to hold as little as 3% in reserves, but banks would need to hold 40% for certain uninsured  corporate deposits, and hold as much as 100% reserves for hedge funds. The higher the reserves, the less deposits a bank can put to work in profitable activities such as loans.

Simply Stated: Where to put all that money? Expect to see the spreading of large deposits among several banks. Smaller banks, less affected by the new rules, may benefit most. Asset managers will invent new financial products, while big banks implement big monthly fees for those who stay.        

Millennials: What money?

While many banks are rejecting large cash corporate depositors, many individuals, especially Millennials, are rejecting putting their cash in a bank. According to a recent American Express survey, 29% of consumers say they keep some savings in cash and 53% of them say they hide that cash in a secret place. The survey found that 67% of Millennials were hiding cash savings.

Simply Stated: According to a 2012 Marist College survey the most popular places to hide money are: 27% in the freezer, about 20% in a sock drawer, 11% under the mattress, and 10% in a cookie jar.  Darn, now we’ve got to find a new place.

Ultra Wealthy: Keep money close

The most recent Wealth-X and UBS World Ultra Wealth Report notes that the number of individuals who hold more that $30 million in assets has hit a new record. By the end of 2014, 12,040 individuals have joined the club, representing a 6% increase from the previous year and pushing the global population of these millionaires to a record 211,275. The report also found: that UHNW individuals hold nearly 25% of their net worth in cash; have over two thirds of their wealth in their core businesses; that the majority are self-made and involved in founder-owned private businesses; and the value of these private company holdings represents almost twice the amount that they hold in public company stakes.


Props for NetJets

NetJets Inc., the private-plane company owned by Warren Buffet’s Berkshire Hathaway Inc. won a U.S. District Court decision preventing the IRS from collecting $366 million in taxes and penalties. NetJets offers fractional jet ownership and aircraft maintenance. In 2011, it sued the IRS claiming the agency had wrongly assessed a ticket tax, an excise tax on payments made in exchange for air transportation upon private aircraft owners and demanded refunds and abatements. Four months later, the IRS countersued. Ruling for NetJets, the judge barred the IRS from disregarding guidance it gave a NetJets predecessor in 1992 which the company relied upon as to what parts of its fractional jet ownership businesses were subject to federal excise tax. [NetJets Large Aircraft Inc. v. U.S., 11- cv-01023, U.S. District Court, Southern District of Ohio]


Nichelle Perez received $20,000 for two donations of eggs she made under a contract with California-based Donor Source, a private agency that matches egg donors with women struggling to conceive on their own. The contract in part stated: “This fee is for donor’s good faith and full compliance with the donor egg procedure, not in exchange for or purchase of eggs and the quantity or quality of eggs retrieved will not affect the donor fee.” The contract also said the payment is “in consideration for all of her pain, suffering, time, inconvenience, and efforts.”

Ms. Perez concluded that the money was not taxable because it compensated her for pain and suffering. The IRS disagreed. The court said the only issue was under Tax Code section 104(a)(2) — whether a taxpayer who suffers physical pain or injury while performing a contract for personal services may exclude the amounts paid under that service contract as “damages received on account of personal physical injuries or physical sickness.” The court held that the compensation was not “damages” and must be included in Perez’s income.

The court stated: “A professional boxer could argue that some part of the payments he received for his latest fight is excludable because they are payments for his bruises, cuts and nosebleeds. A hockey player could argue that a portion of his million-dollar salary is allocable to the chipped teeth he invariably suffers during his career. We don’t doubt that some portion of the compensation paid all these people reflects the risk that they will feel pain and suffering, but it’s a risk of pain and suffering that they agree to before they begin their work. And that makes it taxable compensation and not excludable damages.” [Perez v. Commissioner, 144 T.C. No. 4, 1/22/2015]

“The market is saying, ‘We can throw our own party, we can buy our own beer, we don’t need the Fed’s punch bowl anymore.’ “  — Erik Davidson, Chief Investment Officer for Wells Fargo Private Bank, saying he believes the equity markets are strong and will not suffer even if a strong jobs report bolsters the Fed’s intent to raise interest rates.Simply Stated: We like his optimism…but wonder, why is he drinking beer out of a punch bowl?   



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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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.
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Corey Fischer
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Bruce Weinberg
Florida Managing Partner


Jeffrey B. Engler

Director of Tax,
Los Angeles 




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