Monday, October 5, 2015

Liquidation FS Disclosure

  1. Statement that FS is prepared using the liquidation basis
  2. Plan for liquidation
  3. Significant assumptions & methods used to measure assets & liabilities
  4. Expected time frame for completing the liquidation process
  5. Type & amount of costs & income incurred 

Monday, August 31, 2015

Contingencies

Loss Contingencies
  • Remote
    • Do NOT disclose
    • Do NOT accrue 
  • Reasonably Possible 
    • Do disclose
    • Do NOT accrue
  • Probable
    • NOT Estimable:
      • Do disclose
      • Do NOT accrue 
    • Estimable:
      • Do disclose
      • Do accrue 


Gain Contingencies

DO NOT ACCRUE until realized (occurred)


Calculation of Impairment Loss

GAAP 
  • Step 1: (Undiscounted Future Net CF or Fair Value of Reporting Unit) less <Net Carrying Value>
    • Positive: ok 
    • Negative: IMPAIRMENT --> Step 2
  • Step 2: 
    • (FV/PV future net CF) less <Net Carrying Value>
    • FV of underlying assets less FV of the reporting unit (goodwill)

IFRS

(Recoverable Amount) less <Carrying Value> = OK/ <impairment>
  • Recoverable Amount is greater of: 
    • FV - Cost to sell = NRV
    • PV of future CF

Sunday, August 30, 2015

Statement of Cash Flows Overview

  1. Operating Cash Flows
    1. Transactions reported on the income statement
    2. CA
    3. CL
  2. Investing Cash Flows
    1. NCA (non-current assets)
  3. Financing Cash Flows 
    1. Debt (NCL)
    2. Equity

Wednesday, August 26, 2015

Convert Cash Basis to Accrual Basis

  1. Add increases in CA
  2. Subtract decreases in CA
  3. Add decreases in CL
  4. Subtract increases in CL

Monday, August 17, 2015

Fund Categories

  • Governmental (modified accrual) - current financial resources 
    • General - day to day operations
    • Special revenue
    • Capital projects
    • Debt service
    • Permanent - principal required to be retained & invested
  • Proprietary (accrual) - economic resources
    • Internal service - only serves other funds
    • Enterprise - serves public - user fee 
  • Fiduciary (accrual) - economic resources
    • Pension trust
    • Investment trust
    • Private purpose trust
    • Agency

NPO 3 Basic FS

  1. Statement of Financial Position
  2. Statement of Activities
  3. Statement of Cash Flows 

Saturday, August 15, 2015

Government Entity General Purpose FS

Comprehensive Annual Financial Report (CAFR)
  1. Management discussion & analysis (MD&A)
  2. Government-wide financial statements
    1. Statement of Net Position (BS)
    2. Statement of activities 
  3. Fund financial statements
    1. Governmental funds (modified accrual)
      1. BS
      2. Statement of revenues, expenditures, and changes in fund balances
    2. Proprietary funds (accrual)
      1. Statement of net position (BS)
      2. Statement of revenues, expenses, and changes in fund net position
      3. Statement of CF
    3. Fiduciary funds (accrual)
      1. Statement of fiduciary net position
      2. Statement of changes in fiduciary net position
  4. Notes to the financial statements
  5. Required supplementary information (RSI) other than MD&A
    1. Budgetary comparison schedules
    2. Information about infrastructure assets 
    3. Claims development information when the government sponsors a public entity risk pool
    4. Pension schedules 
If governmental merger > add merged carrying value.
If governmental acquisition > add acquired acquisition value (market-based entry price).


Capital Assets

Capital assets
- property held by tax payer
- NOT USED FOR BUSINESS

Non capital assets (used for business)
- inventory
- held for sale to customers
- depreciable personal property & real estate used in trade (section 1231, 1245, 1250)
- A/R and N/R from sales
- Treasury stock

Section 1231
- personal & real property
- buildings, machinery, land, timber and other natural resources, unharvested crops, cattle, livestock and leaseholds that are at least a year old.

Gains & losses are netted against each other in the same manner as capital gains and losses, except:
  • net section 1231 gain is considered a capital gain;
  • net section 1231 loss is classified as an ordinary loss
Section 1245
- personal property (i.e. machinery & equipment)

Section 1250
- real property (fixed property - i.e. land & everything permanently attached to it)

Section 179 deduction
2015 Deduction Limit = $25,000
This deduction is good on new and used equipment, as well as off-the-shelf software. This limit is only good for 2015, and the equipment must be financed/purchased and put into service by the end of the day, 12/31/2015.

2015 Spending Cap on equipment purchases = $200,000
This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis.
This spending cap makes Section 179 a true "small business tax incentive".

Friday, July 31, 2015

In-kind Exchange Property Basis

Realized gain/loss
= (FMV of property received - Boot paid + Boot received) LESS (Old cost - Depreciation)

Recognized gain/loss = LESSOR OF:
  • Realized gain (formula above);
  • Boot received
  • Net relief from liabilities
  • Realized LOSS is not recognized (recognized amount is $0)
New property basis
= Adjusted basis of old property + Boot paid + Gain recognized - Boot received

Thursday, July 30, 2015

Gift Property Basis

General Rule: Use Rollover (original cost) Basis

Dependent on the Selling Price (SP) value:
  • SP > RO: basis is RO ("gain" basis)
  • SP < FV: basis is FV ("loss" basis)
  • RO < SP < FV: NO BASIS - NO G/L RECOGNIZED ("middle selling price")
RO: $4K
FV: $3K

SP: $3.5K --> NO G/L RECOGNIZED

Sunday, July 26, 2015

MACRS Life & Convention

  • Computer:
    • 5 Years
    • Mid-year Convention
      • Unless > 40% assets purchased in 4th quarter --> mid-quarter convention
  • Office Furniture:
    • 7 Years
    • Mid-year convention
  • Non-residential Estate:
    • 39 Years
    • Mid-month convention
  • Residential Estate:
    • 27.5 Years
    • Mid-month convention

Wednesday, May 27, 2015

Adjustments to AGI

Interest on student loans & tuition
Employment tax (50% SE tax & 100% of medical premiums)
Moving expenses
Business expenses (1099)
Rent/Royalty & flow through entities
Alimony
Contributions to retirement
Early withdrawal penalty
Duty jury pay

Education
HSA
Farm income

Tax Schedules

A - Itemized deductions
B - Interest and dividend income
C - P&L from a business (1099)
D - Capital gains/losses
E - Supplementary income/loss (passive income)
F - P&L from farming

1040X - Amended return
1116 - Foreign tax credit
4562 - Depreciation and amortization
4797 - Sale of LT business property

Monday, May 18, 2015

Property Taxation

General formula:

Amount Realized
<Adjusted Basis of Asset Sold>
Gain/(Loss)

Amount Realized includes: 
  1. Cash received = boot (taxable if gain)
  2. Assumption of debt by buyer (Excess = boot; taxable if gain)
  3. Property received at FMV
  4. Services received at FMV
  5. <Amount realized reduced by any selling expenses (broker's commissions)>
Adjusted Basis of Asset Sold
  1. Purchased property basis = cost
    1. add basis: capital improvements
    2. <reduce basis: accumulated depreciation>
  2. Gift property basis = donor's rollover cost basis = rollover cost/NBV
    1. Exception: Lower FMV at date of gift --> Sell lower (future selling price will determine basis)
  3. Inherited property basis: Step up/down to FMV
    1. Date of death FMV = basis
    2. Alternative valuation date for FMV = earlier of distribution date of asset or 6 months after death/distribution
    3. Long term property 
Gains that are not recognized/taxable:
  1. Homeowners exclusion 
  2. Involuntary conversion 
  3. Divorce property settlement
  4. Exchange of like kind (business)
  5. Installment sale
  6. Treasury capital & stock
Losses that are not recognized/deducted:
  1. Wash sale losses
  2. Related party losses
  3. Personal losses 

Friday, May 15, 2015

C Corporation Corporate Distributions

Dividends = distribution of property by a corporation out of its earnings & profits (E&P):

Current E&P (by year-end): Taxable dividend

Accumulated E&P (as of distribution date): Taxable dividend

No E&P = Return of Capital: Tax free & reduces basis of common stock

No E&P/No basis = capital gain distribution: Taxable income as capital gain

S Corporation

Shareholder Basis in S Corp Stock:

Initial basis
+ Income items (separately & non-separately stated items - includes tax free income)
+ Additional shareholder investments in corp. stock
- Distribution to shareholders
- Loss or expense items
= Ending basis

Casualty and Theft Losses (Individual)

10% AGI Test

Smaller loss basis (lost cost or decreased FMV)
<Insurance Recovery>
Taxpayer's Loss
<$100> (IRS Tax)
Eligible Loss
<10% AGI>
Deductible Loss

Typically the smallest # in choices because:
  • Insurance recovery usually eliminates the majority of the loss basis
  • 10% AGI will also wipe out the majority of the loss #

Tuesday, May 5, 2015

Itemized Deductions

Schedule A

Charity: 50% AGI forward 5 years
Other misc: 100% gambling
Misc. expense: 2% [Business expenses, investment cost, tax prep/attorney]
Medical (not cosmetic): 10% AGI (65 yrs old + 7.5%); must exceed AGI %
Interest paid
Taxes: state
Theft/casualty: 10% AGI less $100

Items that will not phase out 
Gambling loss
Investment costs
Medical
Theft/Casualty

Tuesday, April 21, 2015

Exceptions to IRA Penalty Tax

Generally, premature IRA distribution is subject to a 10% penalty tax, EXCEPT if:

  • Home Buyer 1st time $10K max 
  • Insurance Medical
  • Medical expenses > 10% of AGI (OR 7.5% if 65 years old+)
  • Disability
  • Education
  • And
  • Death
HIM DEAD

Monday, April 20, 2015

Individual Taxation

Gross Income
<Adjustments>
AGI
<Standard OR Itemized Deductions>
<Exemptions>
Taxable Income

Federal Income Tax
<Tax Credits>
+ Other Taxes
<Payments>
Tax Due OR Refund



Tuesday, January 27, 2015

Enterprise Value - EV

Enterprise Value = market cap + debt + preferred shares - cash & cash equivalents
= equity value + net debt
= equity value + debt - cash

Equity Value = Enterprise Value - net debt
= Enterprise value - debt + cash