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WEATHERING THE STORM OF THE DECADE: APRIL 15, 2015
By Fabian Gammo, CPA
After hearing IRS predictions for months of what could possibly be the worst tax filing season in nearly a decade, the storm has finally passed. This year brought about changes and challenges that many of our clients have never encountered.
This tax season was full of complications due to the arrival of the tangible property regulations (TPR) and other ever-changing IRS directives. TPR can affect every taxpayer that uses tangible property in its business. The rules are complex and implementation required careful consideration of each taxpayer's facts and circumstances. In addition, some taxpayers needed to develop new data collection procedures to capture the required information to comply with these regulations. Our professionals constantly stay in front of the changes in tax legislation. We've been preparing for TPR since early 2013 and after countless hours of research, documentation, strategy and implementation, our clients were well positioned to take full advantage of this tax savings opportunity.
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ACCOUNTING STANDARDS UPDATE 2015-02: CONSOLIDATION
By Michael Baum, CPA
In February, the Financial Accounting Standards Board (FASB) issued an accounting standards update to "Consolidation," Topic 810 of the FASB Codification. According to FASB, many stakeholders expressed concerns that current GAAP might require a reporting entity to consolidate another legal entity, such as a limited partnership or limited liability corporation, in situations where contractually binding provisions may not allow consolidation. For example, if a contractual agreement states that the reporting entity does not hold a legal entity's voting rights or the reporting entity is not exposed to many of the legal entity's economic assets or liabilities, consolidation in practice may not make sense. Thus, in order to make the consolidated financial statements more relevant to its users, FASB issued Accounting Standards Update ("ASU") No. 2015-02 to amend Topic 810: "Consolidation."
According to the ASU, the amendments have three main provisions that impact limited partnerships, limited liability corporations, and other legal entities:
- In order to qualify as voting interest entities for consolidation, legal entities must provide limited partners with either substantive kick-out rights or substantive participating rights over the general partner. Kick-out rights provide the partner with authority to dissolve or liquidate the entity without cause.
- There is no longer a presumption that a general partner should consolidate a limited partnership.
- For legal entities that qualify as voting interest entities, a limited partner with a controlling financial interest should consolidate a limited partnership. A controlling financial interest may be achieved through holding a limited partner interest that provides substantive kick-out rights.
In addition, the ASU reduces the number of consolidation models from four to two and changes current GAAP by:
- Eliminating three of the six conditions for evaluating whether fees paid by a legal entity to a decision-making individual or service provider represents a variable interest in the legal entity. A variable interest that is also a controlling financial interest in a variable interest entity (VIE) would result in consolidation.
- Reducing the frequency of the application of related party guidance when determining a controlling financial interest in a VIE.
- Changing consolidation conclusions for companies in several industries that typically utilize limited partnerships or VIEs.
The amendments in this ASU are effective for public companies for periods beginning after Dec. 15, 2015. For private companies and not-for-profit organizations, the amendments take effect for fiscal years beginning after Dec.15, 2016. Early adoption is permitted, including adoption in an interim period. A reporting entity can apply the amendments in this ASU by recording a cumulative effect adjustment to beginning equity for the fiscal year of adoption. An entity also may apply the amendments retrospectively.
For more information or questions on this topic, please contact your professional at UHY LLP in Detroit 313 964 1040, Farmington Hills 248 355 1040 or Sterling Heights 586 254 1040, or visit us on the web at www.uhy-us.com.
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UHY VIDEO ARCHIVE
Even though the IRS is expected to conduct fewer audits this year, it's never a bad idea to be prepared for an IRS tax dispute.
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BUDGET CUTS CAUSE IRS TO DROP MORE THAN 8M CALLS
By Chris Clark
During one of the most hectic tax seasons to date, the IRS' overloaded phone system disconnected more than eight million callers due to budget cuts to taxpayer services. A new staff report by Republicans on the House Ways and Means Committee claims that the IRS diverted millions of dollars from taxpayer services and other areas. The diversion of those funds caused customer service both in person and on the phone to be the worst it has been in years. IRS Commissioner John Koskinen said the agency is required by law to implement the new health care law, leaving him with few places to cut, and that the user fees were used to pay for computer upgrades to deal with the health law as well as a new requirement for foreign banks to report information about US account holders.
The decreased funding in taxpayer assistance came at the least opportune time, with taxpayers having to deal with several changes in legislation this filing season.
Congress has cut the agency's budget by over a billion dollars since 2010.
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REQUIRED BENEFITS REPORTING UNDER THE AFFORDABLE CARE ACT
By Anthony McCree, CPA
Currently to comply with the Affordable Care Act (ACA), all group health plans must provide consumers with an easy to understand summary about a health plan's benefits and coverage. This summary of benefits and coverage document helps consumers understand the coverage they have and allows them to compare different coverage options. Most employers sponsoring group health plans should have already provided this document to their current employees and also include the summary as part of their new hire package.
Changes to benefits reporting under the ACA
On Dec. 22, 2014, the departments of Treasury, Labor, and Health and Human Services released a joint notice to amend the Summary of Benefits and Coverage (SBC) and Uniform Glossary rule as well as a proposed update to the regulations and disclosure requirements under section 2715 of the Public Health Service Act. These changes, designed to help individuals better understand their health coverage, would include an updated template for the SBC with instructions, a guide for coverage example calculations and updates to the uniform glossary. The changes proposed are to be effective as of the first open enrollment period or plan year beginning on or after Sept. 1, 2015.
But there may be good news on the way...
According to some sources, the new SBC templates and documents are not expected to be finalized until January 2016. As a result, the new forms are expected to apply to coverage that starts or renews on or after Jan. 1, 2017, thus giving businesses an extension of time before they will have to apply the new changes.
For more information on the Affordable Care Act, please contact your professional at UHY LLP in Detroit 313 964 1040, Farmington Hills 248 355 1040 or Sterling Heights 586 254 1040, or visit us on the web at www.uhy-us.com.
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SIMPLIFYING THE PRESENTATION OF DEBT ISSUANCE COSTS By Brian Kegley, CPA On April 7, FASB issued an Accounting Standards Update that is intended to simplify the presentation of debt issuance costs. Previously, entities were required to present debt issuance costs as a deferred charge on the asset side of the balance sheet. Under the new standard, debt issuance costs related to a recognized debt liability are required to be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability. Entities will be required to apply the guidance retroactively; the balance sheet of each period presented should be adjusted to reflect the effects of applying the new guidance.
The standard takes effect for public companies for financial statements issued for fiscal years beginning after Dec. 15, 2015, and interim periods within those fiscal years. For private companies, the standard takes effect for fiscal years beginning after Dec. 15, 2015, and interim periods within fiscal years beginning after Dec. 15, 2016. Early adoption is permitted. For more information or questions on this topic, please contact your professional at UHY LLP in Detroit 313 964 1040, Farmington Hills 248 355 1040 or Sterling Heights 586 254 1040, or visit us on the web at www.uhy-us.com. Back to top |
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SPECIAL ANNOUNCEMENTS
UHY Corporate Finance Advises on Crain's Deal of the Year
As reported in Crain's Detroit Business in late March, UHY Advisors' Corporate Finance team presented private equity firm O2 Investment Partners LLC with the potential acquisition of a technology client, PC Treasures, Inc. At first Jay Hansen, managing partner of O2, had a hard time grasping PC's business. PC Treasures is a multi-channel distributor of licensed multimedia bundles and cutting-edge computer, tablet and smartphone accessories, and other specialty products. It took a while for Hansen and his staff to understand PC's niche, causing the deal to take longer, but the light finally went on.
Due diligence taught Hansen and Todd Fink, another O2 managing partner, that there was a profit to be made in bundling. They also learned that they were compatible with the co-founders of PC Treasures. The deal was especially complex because PC has a unique business model. They were launching a new major product and it was the middle of their busiest season. It was also imperative that the "family" culture remained intact to maintain great customer relationships built on mutual trust and quickly capitalize on new market opportunities.
The unique nature of the transaction forced the advisors on the deal to come up with creative solutions that would meet the needs of all parties. Despite the complications, the deal went smoothly and PC's co-founders Brian Austin and Les Thomas agreed to invest some of the proceeds from the sale back into the company.
The deal closed in November 2014, PC Treasures busiest season, and was awarded "Deal of the Year: Best Deal under $100 Million" by Crain's Detroit Business. UHY's team played a crucial role in facilitating the transaction. Operating under Steve McCarty; Aaron Witalec, Bob Kendall and Alex Conti acted as sell side advisors on the deal.
Employees, their friends and associates of UHY LLP, certified public accountants, in conjunction with UHY Cares, the firm's independent 501c(3)organization, celebrated their eighth annual Texas Hold 'Em tournament on February 19. The charity poker event was held at Star Lanes at Emagine Royal Oak and was packed with players, sponsors and donors who helped raise funds for Make-A-Wish� Michigan, a statewide nonprofit that grants the wishes of Michigan children with life-threatening medical conditions to enrich the human experience with hope, strength and joy.
With over $25,000 of generous contributions, UHY Cares was able to use a portion of the money to adopt the wish of Jayden A., 11, from White Lake. Jayden has progressive muscle disease that causes severe muscle weakness, inhibiting his ability to take part in certain activities. His wish was to go to Walt Disney World with his family. Thanks to successful fundraising efforts from UHY, Jayden and his family were able to take their trip in mid-April.
"We had a record turnout at this year's poker event. It's through this direct support that we were able to raise the funds needed to adopt Jayden's wish, as well as give back to several other local charities", said Scott Miller, MAW board member and partner at UHY LLP. "Although Make-A-Wish Michigan grants approximately one wish a day, each wish experience is unique and frequently a source of inspiration and optimism helping to strengthen and empower children undergoing difficult medical treatments. Imagine how a child's spirit will be lifted from planning, sharing and treating his or her family to a wish experience of their choosing."
Careers at UHY
Are you ready to take charge of your career path? Be sure to visit our careers page for the most up to date career listings or contact Amanda Sheets at asheets@uhy-us.com or 248 204 9482. Check out some of the current opportunities in our Michigan offices:
- Audit manager, 7+ years of experience, manufacturing experience is highly preferred
- Audit accountant, 2-10 years of experience working with municipalities
- Audit senior staff accountant, 2-4 years of experience
- Tax manager, 7-10 years of experience
- Tax senior accountant, 5-7 years of experience, CPA required
- Director of litigation, testifying experience required
- Senior associate (Corporate Finance), 2-4 years of Big 4 experience highly preferred
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Published by UHY LLP News.
Copyright � 2013 UHY LLP. All rights reserved.
Our firm provides the information in this newsletter as tax information and general business or economic information or analysis for educational purposes, and none of the information contained herein is intended to serve as a solicitation of any service or product. This information 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 advisors. Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this 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.
UHY Advisors, Inc. provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of "UHY Advisors." UHY Advisors, Inc. and its subsidiary entities are not licensed CPA firms. UHY LLP is a licensed independent CPA firm that performs attest services in an alternative practice structure with UHY Advisors, Inc. and its subsidiary entities. UHY Advisors, Inc. and UHY LLP are U.S. members of Urbach Hacker Young International Limited, a UK company, and form part of the international UHY network of legally independent accounting and consulting firms. "UHY" is the brand name for the UHY international network. Any services described herein are provided by UHY Advisors and/or UHY LLP (as the case may be) and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members.
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