|
Congrats to Tracey Martin, CPA, Partner in our Winston-Salem office for being selected by the Triad Business Journal as one of this year's honorees at the 17th Annual Outstanding Women in Business awards program, a yearly event that recognizes remarkable women in the Triad area for their leadership in business and philanthropy. Read Tracey's profile in the Triad Business Journal and learn more about her work at the firm and in the community on our website.
|
BRC Financial Symposiums
Presented by Bernard Robinson & Company, L.L.P.
Join other financial executives and professionals for a day of CPE delivered by engaging presenters.
Three dates and locations for your convenience!
Winston-Salem Symposium-October 25, 2016
Greensboro Symposium- October 27, 2016
Raleigh Symposium-
November 3, 2016
|
|
 |
|
 By Casey Patterson, CPA, Senior Manager
Each year owners of interests in entities that are taxed as partnerships, find themselves asking "Where is my K-1?" In our March newsletter, Ron Kuyath discussed the coming changes in filing deadlines for C corporations. The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 also changed future filing deadlines for partnerships.
For tax years beginning after December 31, 2015, partnership income tax returns have an initial filing deadline of the 15th day of the third month after year end (calendar and fiscal). Thus, for a 2016 calendar year end partnership, Form 1065 will be due by March 15, 2017, without extension.
Even though no tax is normally due with a federal partnership return, an extension, Form 7004 - Automatic Extension of Time to File, must be filed by the new deadline to obtain a valid extension and avoid late filing penalties which are assessed based on the number of owners of the entity. The maximum extension period for all partnerships filing Form 7004 will be six months, i.e., September 15, 2017 for partnerships with a 12/31/2016 year end.
The goal of this change in due dates is to facilitate the flow of information, since individual income tax returns are due the 15th date of the fourth month after year end, or April 15th, with a possible six-month extension, to October 15. In other words, hopefully this was the last year you had to call and ask, "Where is my K-1?"
|
|
Change in the Presentation of Debt Issuance Costs
|
By Jamie Parsons, CPA, Manager
In April 2015, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (No. 2015-03) to simplify the presentation of debt issuance costs. This update requires that debt issuance costs, such as legal and accounting fees, be presented on the balance sheet as a direct deduction from the carrying amount of the related debt liability, rather than as an asset. This new guidance is specific to the presentation of debt issuance costs and does not change the guidance for its recognition and measurement.
Benefits of the new guidance include eliminating the differences in presentation requirements under accounting principles generally accepted in the United States of America for debt issuance costs and debt discounts/premiums, as well as improving consistencies with International Financial Reporting Standards (IFRS). Furthermore, it aligns with the FASB Concepts Statement 6, which states that debt issuance costs should not be presented as an asset because they do not provide any future economic benefit.
The new guidance is effective for public business entities for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the guidance is effective for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. At implementation, the entity is required to apply the new guidance retrospectively for all periods being presented. The entity is also required to disclose the change in accounting principle, including the nature of and reason for the change, the transition method, a description of the prior period information that was retrospectively adjusted, and the effect of the change on the financial statement line items (that is, the debt issuance cost asset and the debt liability).
Example of balance sheet presentation:
|
20XX
| | Long-Term Debt |
| | Principal Amount |
$24,200,00
| | Less: Unamortized debt issuance costs |
$2,680,000
| | Long-term debt less unamortized debt issuance costs |
$21,520,000
|
Please consult a CPA to determine the effect, if any, this update will have on your company's financial statements.
|
|
What is a Revocable Living Trust?
|
 By Amanda Patty, JD, CPA, CVA, Consultant
The term "living trust" is generally used to describe a trust created by an individual (the "Settlor") during the individual's lifetime. The Settlor executes a written trust agreement and names an individual or a corporation to administer the trust (the "Trustee"). In many jurisdictions (including North Carolina), the Settlor and the Trustee can be the same person. In such case, the Settlor should designate a Co-Trustee or a Successor Trustee in order to ensure continuity of management of assets in the event of the Settlor's death or disability.
To derive the greatest benefit, the Settlor should transfer all assets to the living trust upon creation. Funding the living trust creates continuity in management of the assets and provides for the distribution (or application) of the assets for the Settlor's personal benefit in the event of illness, disability, or challenges posed by the symptoms of aging.
Most living trusts are revocable to enable the Settlor to revoke or amend the trust agreement in whole or in part. The Settlor may transfer additional assets to or withdraw assets from the revocable living trust for any purpose without gift or income tax consequences. All income and deductions of the revocable living trust will be reported on the Settlor's individual income tax return.
The assets owned by a living trust at the Settlor's death will not be included in the probate estate of the Settlor or be a matter of public record, unlike any assets owned by the Settlor at death.
The revocable living trust does not help avoid the estate tax. All assets held by a revocable living trust will be included in the gross estate for estate tax purposes. Under current tax law, each asset in a revocable living trust will receive an adjustment of tax basis to the fair market value on the Settlor's date of death.
Upon the Settlor's death, the revocable living trust will become an irrevocable trust. The provisions of the trust agreement will direct the Trustee to distribute the trust assets to the Settlor's beneficiaries, or to continue to hold, manage, and administer the assets for the benefit of the beneficiaries of the trust.
|
|
Retirement Plans and Money Market Mutual Funds Reforms
|
By Daniel Hayes, CPA, Partner
In July 2014, the Securities and Exchange Commission adopted structural and operational reforms to the rules governing money market mutual funds. Historically, money market mutual funds have been valued using a constant $1 net asset value (NAV) and imposed no penalties for withdrawing funds. The new rules require some funds to establish a floating NAV and allow other funds to establish liquidity fees and redemption gates. While these changes affect all money market mutual fund holders, the latter of the two will affect investments held in many retirement plans.
The effective date for the reforms is October 14, 2016. The delayed date was to allow funds and investors sufficient time to adjust their systems, operations and investing practices. However, many retirement plan sponsors and participants are unaware of the changes.
The reform rules require institutional prime money market funds, which are often found in endowments and pension plans, to use a floating NAV based on the market value of the fund assets. Retail prime and government money market funds will continue to maintain a constant $1 NAV. However, assets held in retail funds, which are often found in 401(k) and other defined contribution plans, can still depreciate. To reduce investor runs during times of stress, the rules allow retail funds to impose redemption gates or penalties for withdrawing funds.
It is estimated that nearly two-thirds of all currently active retirement plans offer money market mutual funds. The need to adapt record-keeping systems to accommodate the liquidity fees and redemption gates for participant withdrawals, plus recent lawsuits alleging breach of fiduciary duty through offering low-yielding money market funds, may result in many plans replacing money market funds with alternatives such as stable value funds.
Please consult a CPA with retirement plan reporting experience to see how these changes might affect you and your company's plan.
|
|
|
Bernard Robinson & Company, L.L.P. | (336) 294-4494 | [email protected] |
1501 Highwoods Blvd, Ste 300
Greensboro, NC 27410 |
|
BRC Strategy is designed to provide information of a general nature and is not intended as a substitute for professional consultation and advice. The opinions and interpretations expressed should not be construed or used as legal or tax advice, written or otherwise, and cannot be used for the purpose of avoiding any penalties that may be imposed under federal, state or local law.
|
|
|
|
|
Copyright � 2015. All Rights Reserved.
|
|
|
|
