Shouldn’t Congress Tell Us How We’ll Pay for Tax Cuts?

New York Times

The long-endangered Republican Deficit Hawk is now extinct. In December, the Republican Congress passed into law a huge permanent package of tax measures as part of the tax and spending deal. However, Republicans refused to pay for the legislation, thereby adding a thunderous $2 trillion to the deficit over the next two decades, according to an estimate from the nonpartisan Committee for a Responsible Federal Budget. As House Republicans prepare to leave for two weeks of recess without passing a budget for next year, the cost of this tax package is casting a long shadow over America’s future, threatening to crowd out essential investments for hard-working American families.

Accounting’s 21st Century Challenge: How to Value Intangible Assets

Wall Street Journal

When RadioShack Corp. filed for bankruptcy protection last year, it raised more than $170 million by selling such holdings as real estate, leases and inventories of smartphones, computer cables and cameras. But the retailer’s books didn’t acknowledge two of its most valuable assets: its brand and its customer data. How do you attach a price tag to something you can’t see or touch? The question is increasingly significant for investors as more companies collect information about their customers and use it to develop products and services. Some companies rely on the hipness of their brands to propel sales. Assigning a value to a physical asset like a store or equipment is relatively easy. But, in the murky world of intangible assets, the calculations are squishy. The problem of how to value such assets has vexed accountants for decades.

Rules For Earnings Per Share Stand The Test Of Time

Bloomberg BNA

There’s something to be said for anything standing the test of time.  Recently a 19-year old accounting standard did just that. A post-implementation review (PIR) team gave good marks to FASB Statement No. 128 (ASC 260), Earnings per Share (EPS), which was issued by the Financial Accounting Standards Board in 1997. The standard is especially important since EPS, particularly diluted EPS is an important measure that is prominently used by financial statement users’ analysis of a company’s financial performance. Since the standard predates the 2001 formation of the International Accounting Standards Board, it’s particularly interesting that the review found it compatible with international standards.

The Fed Gives Inflation a Hall Pass

Wall Street Journal

The economic surprise of 2016 may be inflation picking up more than most economists expect. The policy surprise of 2016 may be that the Federal Reserve won’t lean against higher prices. Just last month, investors were deeply worried that another cold blast from overseas was about to push inflation further below the Fed’s 2% target. Expectations embedded in Treasury inflation-protected securities suggested inflation would average 1.18% over the next decade.

IRS Releases Practice Unit on Allocation of Interest Expense

The National Law Review

On February 19, 2016, the Internal Revenue Service (IRS) released a 30-plus-page practice unit regarding interest expense of a foreign corporation engaged in a U.S. trade or business. As is the case with all practice units, the IRS cautions that practice units are not official pronouncements of law or directives and cannot be used, cited or relied upon as such.  Even so, the IRS generally acknowledges that practice units provide a general discussion of a concept, process or transaction. This can be helpful from a taxpayer’s perspective. This is especially true for interest expense allocation calculations under Treasury Regulation § 1.882-5, one of the more complicated calculations for taxpayers to make.

It Pays to Volunteer, Come Tax Time

Wall Street Journal

Volunteering has its costs. But it also has its deductions. And being smart about those deductions can make the act of giving back all the more rewarding. Internal Revenue Service Publication 526, available at irs.gov, lists expenses that volunteers doing work for charities can deduct, such as travel (including lodging and meals), supplies like stationery and stamps, any necessary training materials, and charity-related entertainment—taking a prospective donor out to dinner, for example. (In that case, though, only the potential donor’s dinner is deductible.)