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The Daily

NEWS HIGHLIGHTS FOR WEDNESDAY - 2.24.16

By:
Maya Lindsay
Published Date:
Feb 24, 2016

NYSSCPA Members in the News

David Lifson (Manhattan/Bronx)

IRS is focusing on people making more than $1 million

MSN.com

The sum of $1 million doesn’t go as far as it used to. But increasingly, it is enough to get you special attention from Uncle Sam. The Internal Revenue Service continued to ramp up its focus on high earners in fiscal 2015, according to data released by the agency Monday. The IRS audited nearly 10% of returns with income of more than $1 million, compared with 7.5% the year before, in the fiscal year ended Sept. 30. Overall, the agency audited less than 1% of nearly 147 million individual returns in 2015, the lowest rate in a decade. The agency collected $54.2 billion in revenue from audits and related enforcement efforts for the year, down from about $57 billion the year before.


Other Accounting and Finance News


Why Valeant's Stock Surged After CEO Admitted 'Mistakes'

Fortune

It’s not quite the “pharmaceutical Enron” after all—at least not yet. Ever since a stock research report called Valeant “the pharmaceutical Enron” back in October, investors have been awaiting—maybe dreading—the news that came last night, when the company announced it would have to restate its earnings. After all, back in 2001 when Enron was in the midst of an accounting scandal, the infamous energy company was forced to restate nearly five years worth of its earnings, which cut about $600 million from the profits it had originally reported. A Wall Street Journal report after the market closed Monday afternoon was reminiscent of those problems, warning that Valeant Pharmaceuticals VRX 2.08%  also planned to revise its earnings; the stock fell nearly 7% in after-hours trading, following losses of more than 10% during the day.


Corporate Directors’ Pay Ratchets Higher as Risks Grow

Wall Street Journal

Director pay has received scant attention over the years as investors, regulators and the public have focused on soaring executive compensation. Yet an examination of pay for the nonexecutive directors of S&P 500 companies—about 4,300 men and women—shows that pay has climbed nearly 50% between 2006 and 2014. The figures exclude chief executives and other senior managers who sit on their own company’s board. The median pay of an S&P 500 board member is $255,000 a year, according to a Wall Street Journal analysis of data as of Oct. 30 from MyLogIQ and regulatory filings. Some directors receive four or five times as much. The total annual pay for all those directors: $1.4 billion.


Expanding Basis Consistency Reporting under the President’s Revenue Proposals for 2017

JDSupra Business Advisor

The Obama Administration recently released its budget proposals covering the 2017 fiscal year.  Along with the Administration’s proposals, the Department of Treasury issued its General Explanations of the Administration’s Fiscal Year 2017 Revenue Proposals.  As in the past, included in the Administration’s budget proposals and Treasury’s explanations are a number of measures specifically impacting estate, gift, and generation-skipping transfer (“GST”) taxes.  Such proposals include: Restoring the estate, gift, and GST tax parameters from 2009, including a 45 percent top tax rate, an applicable exclusion amount of $3.5 million for estate and GST tax and $1 million for gifts; Expanding the requirements for consistent basis reporting as discussed in more detail below; and Modifying transfer tax rules for GRATS and other Grantor trusts by, among other things, setting the minimum term for GRATS at 10 years.


America’s Un-American Resistance to the Estate Tax

The Atlantic

Though Americans argue over whether income taxes should be higher or lower, there is consensus that they are a part of life. Inheritance and estate taxes, though, enjoy no such acceptance. Americans simply don’t like the concept of taxing inheritances, but the estate tax actually meshes well with the cherished American ideal of fairness—in fact, its vilification is partially the result of a calculated campaign on the part of those whom it benefits most. An estimated $1 trillion is predicted to be passed down from estates annually in the coming decades, but the tax aimed at that money applies extremely infrequently: The left-of-center Center on Budget and Policy Priorities estimates that only two out of every 1,000 estates pay any taxes on what’s handed down to the next generation. And that number represents a significant decline from what laws required a decade ago. In 2014, the IRS reported there were only 11,931 estate tax returns filed for the entire year, down 74 percent from 2005.


Nonprofits Grow Wary of Financial Squeeze

Wall Street Journal

It was just over a year ago when David Rivel, chief executive of the Jewish Board of Family & Children’s Services, got a call that would shape the future of his organization. An official with New York state’s office of mental health reached him at home on a Sunday with an urgent request: Could the Jewish Board immediately take on $75 million in social-services programs serving thousands of the state’s neediest? The call was followed up the next day by an identical one from the New York City Department of Health & Mental Hygiene. What led to the phone calls—and the Jewish Board’s decision to say yes—was the sudden closure of another New York nonprofit, Federation Employment & Guidance Service. Better known as FEGS, it was one of the largest social-services agencies in the state, providing everything from substance-abuse treatment to mental-health clinics and job training.


Accountants Need to Do More to Deter Cybercrime

Accounting Today

Cybercrime is becoming too pervasive for accountants to ignore, according to a new report from the Institute of Management Accountants and the Association of Chartered Certified Accountants. The joint IMA and ACCA study, “Cybersecurity – Fighting Crime’s Enfant Terrible,” assesses the global cyber-threat landscape, tracks current and future cybersecurity trends and focuses on areas that are most likely to have a direct impact on the future of the accounting profession. “Accountants and finance professionals should always be mindful of the old saying: ‘a fool and his money are soon parted’. Now, and for as long as the profession heavily relies on computers, no one can afford to be a cyber-fool,” said the report.