IRS Releases 2015 Inflation Adjustments

IR-2014-104, Oct. 30, 2014

For tax year 2015, the Internal Revenue Service announced today annual inflation adjustments for more than 40 tax provisions, including the tax rate schedules, and other tax changes. Revenue Procedure 2014-61 provides details about these annual adjustments.

The tax items for tax year 2015 of greatest interest to most taxpayers include the following dollar amounts –

  • The tax rate of 39.6 percent affects singles whose income exceeds $413,200 ($464,850 for married taxpayers filing a joint return), up from $406,750 and $457,600, respectively. The other marginal rates – 10, 15, 25, 28, 33 and 35 percent – and the related income tax thresholds are described in the revenue procedure.
  • The standard deduction rises to $6,300 for singles and married persons filing separate returns and $12,600 for married couples filing jointly, up from $6,200 and $12,400, respectively, for tax year 2014. The standard deduction for heads of household rises to $9,250, up from $9,100.
  • The limitation for itemized deductions to be claimed on tax year 2015 returns of individuals begins with incomes of $258,250 or more ($309,900 for married couples filing jointly).
  • The personal exemption for tax year 2015 rises to $4,000, up from the 2014 exemption of $3,950. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $258,250 ($309,900 for married couples filing jointly). It phases out completely at $380,750 ($432,400 for married couples filing jointly.)
  • The Alternative Minimum Tax exemption amount for tax year 2015 is $53,600 ($83,400, for married couples filing jointly). The 2014 exemption amount was $52,800 ($82,100 for married couples filing jointly).
  • The 2015 maximum Earned Income Credit amount is $6,242 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,143 for tax year 2014. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phaseouts.
  • Estates of decedents who die during 2015 have a basic exclusion amount of $5,430,000, up from a total of $5,340,000 for estates of decedents who died in 2014.
  • For 2015, the exclusion from tax on a gift to a spouse who is not a U.S. citizen is $147,000, up from $145,000 for 2014.
  • For 2015, the foreign earned income exclusion breaks the six-figure mark, rising to $100,800, up from $99,200 for 2014.
  • The annual exclusion for gifts remains at $14,000 for 2015.
  • The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) rises to $2,550, up $50 dollars from the amount for 2014.
  • Under the small business health care tax credit, the maximum credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 and the employer’s average annual wages in excess of $25,800 for tax year 2015, up from $25,400 for 2014.,-Various-Tax-Benefits-Increase-Due-to-Inflation-Adjustments

How to Avoid Money Laundering Scams

CPA CPE Courses Can Help You Avoid Fraud

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Q: What is money laundering?

A: Money laundering is the process of concealing where illegally obtained money originated from, which usually includes the use of foreign banks or legitimate businesses. Below are some examples:

1)    Offshore Trusts

a.    These personal investment companies belong to the citizens of the United States or companies that are incorporated in the U.S. and are held in overseas bank accounts. There is no federal law in place prohibiting these accounts per se; however, they can be a red flag warning for a scam. This method is mainly used for tax benefits. We recommend documenting and verifying all beneficiaries and principals related to the account.

2)    Financial Intermediator

a.    These individuals are accountants or bookkeepers who handle funds for private individuals. They typically have power of attorney for investing and other financial transactions. Do your research: although there are legitimate reasons for financial intermediators, they can be a disguise as well for money launderers. It would be in your best interest to determine whom they actually represent before doing business with a financial intermediary.

3)    Fake Companies or Shell Companies

a.    If you are concerned with the source of the funds for a company, you may want to take a look further into their internal billing, invoices, and also their vendors to see if they are legitimate or if there are any inconsistencies.

Please note: These could be warnings and are not definite proof of a scam. We recommend doing thorough research before entering any business negotiation, and always verify and document.

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New Affordable Care Act Videos from IRS

New YouTube Videos Provide Tips on Health Care, Tax Returns

The Internal Revenue Service announced the availability of several new YouTube videos to help taxpayers get important information about the Affordable Care Act and tax return filing.

The new videos, which are part of a series on the IRS YouTube channel, feature IRS Commissioner John Koskinen discussing the premium tax credit and the individual shared responsibility provision. These provisions of the Affordable Care Act will affect people’s tax returns next year when they file their 2014 returns.

IRS videos explaining the premium tax credit, the individual shared responsibility provision, and the small business health care tax credit are on the IRS Health Care video playlist. Additional videos about the Affordable Care Act will be available soon.

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Must Have Apps for CPAs

Smartphones and tablets have made it possible for many of us to all but leave the laptop behind when we’re on the go. Both the Apple App store and Google Play store currently boast over 1 million unique available apps. From mobile file sharing with clients and coworkers, to reading all the latest news from a single source, to even catching up on your CPA CPE credits with the help of PDF readers, there’s an app—or several—for that.

Apps for News Content

No matter how busy you get, it’s valuable for any CPA to stay connected to the outside world. That being said, having to hop from news website to news website wastes needless time and energy. To that end, there are now apps called “news aggregators” that compile and streamline worldwide news content in a way that is easy to navigate from your smart device. Check out Flipboard, Feedly, Google News/Reader, Pulse, Fark, or News 360.

 Apps for File Management

The advent of electronic documents has made file sharing easier and faster than ever before, but with so many different types of documents that CPAs have to wrangle on a regular basis, it’s helpful to find ways of managing them from a mobile device.

Dropbox is one particularly useful app for this task. After uploading the files to your account, Dropbox sends them up to the cloud and automatically synchronizes them, making them accessible to any other device logged in to your account. In other words, you can upload a file from your iPad and immediately retrieve it via your desktop computer, or vice versa. You can also share specific Dropbox files with others if you so choose.

Apps for PDFs

The majority of e-Documents come in PDF format these days. PDF readers often come pre-installed on smart devices, but many users choose to download additional apps that help format their PDF files in ways that are more convenient for them. Some app examples include:

  • PDF Reader Pro
  • SmartQ Reader
  • PDF Forms
  • Adobe Reader
  • Foxit Mobile PDF

With these apps, it’s easier than ever to catch up on your online CPE courses with the touch of a button. To learn more about online CPA CPE options, feel free to contact us.

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New Guidance Proposes 12 Principles for Internal Auditing

Proposed changes to guidance followed by internal auditors include a new mission statement and a set of 12 core principles that highlight what effective internal auditing looks like in practice.

The Institute of Internal Auditors (IIA) on Monday announced the proposed changes to the International Professional Practices Framework, which is promulgated by the IIA. The framework essentially is a blueprint supporting effective internal auditing.

The proposed new mission statement states that in each respective organization, internal audit strives “to enhance and protect organizational value by providing stakeholders with risk-based, objective and reliable assurance, advice and insight.”

Adding the proposed principles would give the framework an element that has not existed previously. Although the IIA’s standards always have been considered principles-based, those principles have not previously been articulated in the framework.

The task force that proposed the update concluded that the 12 principles, taken as a whole, articulate internal audit effectiveness. For an internal audit function to be considered effective, all 12 principles must be present and operating effectively, according to the task force.

Under the proposed core principles, an internal auditor or internal audit function would:

  1. Demonstrate uncompromised integrity.
  2. Display objectivity in mindset and approach.
  3. Demonstrate commitment to competence.
  4. Be appropriately positioned within the organization with sufficient organizational authority.
  5. Align strategically with the aims and goals of the enterprise.
  6. Have adequate resources to effectively address significant risks.
  7. Demonstrate quality and continuous improvement.
  8. Achieve efficiency and effectiveness in delivery.
  9. Communicate effectively.
  10. Provide reliable assurance to those charged with governance.
  11. Be insightful, proactive, and future-focused.
  12. Promote positive change.

“I truly believe the proposed enhancements, especially the new principles, will be of significant value to practitioners worldwide,” Robert Hirth, CPA (inactive), chair of the task force that created the proposal, said in a news release.

The proposed changes would not affect the content of existing elements of the framework, such as the definition of internal auditing, the Code of Ethics, or the Standards for the Professional Practice of Internal Auditing. But the standards are constantly under evaluation and could be revised to support the proposed framework revisions.

The task force also proposes creating an emerging issues guidance category to assist practitioners to quickly address emerging trends, changing stakeholder expectations, identified regulatory or legislative concerns, and new topical issues. This guidance would be developed and issued with minimal delay.

In addition, the task force that produced the proposed update recommends restructuring guidance elements of “practice advisories” and “practice guides” to better reflect their intent. This would include renaming them, respectively, as “implementation guidance” and “supplemental guidance.”

Under this new structure, the content of existing practice guides and practice advisories would not be eliminated, but the IIA envisions revising, reissuing, or replacing them over time.

The proposal is available on the IIA’s website. The organization is seeking comments by Nov. 3. If approved by the IIA Executive Committee and Global Board following the exposure period, elements of the new framework could be available in the first quarter of 2015, and a new framework could be available in 2016.

Source: Journal of Accountancy

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New Revenue Guidance: Six Things to Consider

The release of a long-awaited new revenue recognition standard had financial statement preparers settling in to read hundreds of pages of text, as standard setters celebrated the achievement of producing that text.

Members of FASB and the International Accounting Standards Board (IASB) have a good sense of the most important things to consider as a result of the new standard, beyond the obvious takeaway of greater comparability across industries and jurisdictions.

Here are six things to keep in mind, as communicated by board members during interviews with the media:

1. Disclosures are a big key. Much of the value for investors in the new guidance, according to board members, will come from the additional disclosures that are required.

Disclosures around models used to estimate stand-alone selling prices for various performance obligations—and information on the future pipeline of revenue—will help investors, FASB Chairman Russell Golden said.

Investors also will benefit from the new disclosures on contract assets, contract liabilities, and remaining performance obligations, FASB member Marc Siegel said. “You’ll get a much more multidimensional picture about revenue recognition at a company in the footnotes than you have in the past,” Siegel said.

2. Software, telecom, and real estate will be most affected. Golden and IASB Vice Chairman Ian Mackintosh both listed software, telecommunications, and real estate among the industries that will see the most change among their constituents as a result of the new standard.

Some companies in the asset management industry also will see a significant change in U.S. GAAP, according to Golden. Mackintosh said construction, which currently is subject to certain industry-specific rules, also will see major changes in IFRS.

From a U.S. perspective, companies in the real estate, software, and telecommunications industries are likely to recognize revenue earlier under the new model, Golden said, while some asset managers will recognize revenue later.

3. IFRS will become more rigorous. Much has been made of how the replacement of more than 200 pieces of revenue recognition literature with one comprehensive standard will result in substantial improvement in U.S. GAAP.

But Mackintosh said there will be significant improvements in IFRS, too, beyond simply creating more worldwide comparability.

“We actually felt that our guidance was a bit insufficient,” Mackintosh said. “… We’ve had some practices that have grown that perhaps we wouldn’t regard as ideal. We hope that this new standard, with its focus on performance obligations and when you deliver performance to your customer, will clear up some of the practices that have built up over the years.”

4. The transition resource group will provide some direction. A transition resource group, being created by FASB and the IASB, will provide some answers for preparers in interpreting the standard. But don’t look for the group to lay down prescriptive accounting guidance.

The group will field questions from preparers with the intent of directing them to answers that already can be found within the standard, Mackintosh said. Questions that are not covered by the standard will be referred by the transition resource group back to FASB and the IASB.

Meetings will be held in public and available on the web to maximize the boards’ ability to educate the public. The boards expect the meetings to begin in July, and the members of the resource group are expected to be announced next week, according to Golden.

5. Sales of nonfinancial assets may be represented better. Information provided on the sales of nonfinancial assets to noncustomers will better reflect the economics of transactions under the new guidance in U.S. GAAP, Siegel said.

Take, for example, the sale by a manufacturer of its headquarters building and the land associated with it. Siegel said today’s guidance for that transaction, under FAS 66, requires a very prescriptive, constraining FAS 66 analysis that may not reflect the economics of a transaction.

“Under the new standard, everybody would look at that the same way, and you would recognize and measure the gain on the sale of that real estate in the same way, as this standard would require,” Siegel said. “I think that’s a significant enhancement to a very industry-specific FAS 66 that we have in place today.”

6. The transition date is firm—for now. Some preparers who plan to use the full retrospective transition method are concerned that the effective date won’t give them enough time to install systems needed to capture the information they need.

The standard will take effect for U.S. public companies for annual reporting periods beginning after Dec. 15, 2016, including interim reporting periods. Companies using IFRS will be required to apply the standard for reporting periods beginning on or after Jan. 1, 2017.

That means preparers who are performing full retrospective transition rather than the alternate method may want to have systems in place to capture data for dual reporting by Jan. 1, 2015. Some are concerned that this won’t be enough time, but for now, board members seem intent on keeping the current effective date.

Golden said the boards look forward to understanding preparers’ questions, “but right now, this is the effective date that the boards have put out.”

Mackintosh agreed. “There’s always a balance between giving people plenty of time and getting something done,” Mackintosh said. “I think January 1 of 2017, I think that’s the right balance, and I don’t think we’d be looking to change the date unless something really, really major comes up.”

Source:  Journal of Accountancy

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Did You Know They Studied Accounting

The team at MasterCPE is focused on helping CPAs with their continuing education by offering CPE courses that help them stay current and advance in their field. We provide these courses in a very cost-effective and accelerated manner, which is something we know people truly appreciate. While we are serious about what we do, there’s always time to relax a bit and have some fun.

The field of accounting has an undeserved reputation for being rather dull and uncreative. However, by the looks of it, some of the most influential people in the world studied to become accountants and it seems as though inspiration can sometimes be key. What may come, as a surprise to many is that many famous individuals from jazz saxophonist Kenny G to TV sitcom star Bob Newhart, studied to become accountants over the years.

Even the British comedian, Eddie Izzard studied accounting at the University of Sheffield. While his career in accounting didn’t seem to look to bright, it was during this time that he was inspired to become a comedian. And Bob Newhart, the famous TV star and comedian once had dreams of accounting before heading off to his career in Hollywood. While he did have big accounting dreams early on, nowadays he says that getting “close enough” when balancing his own books is good enough for him. Lastly, Rolling Stones front man Mick Jagger tried his hand at accounting when he was younger which comes as a surprise to many. Although only lasting a year, Jagger studied accounting and finance at the London School of Economics. Soon after his studies in London ended, Jagger headed off to become a rock ‘n’ roll legend.

Learn More!

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Substantial new disclosures required by revenue standard

A wide assortment of new disclosures is expected to be one of the biggest challenges for financial statement preparers as they implement the new revenue recognition guidance issued last month by FASB and the International Accounting Standards Board (IASB).

Public companies today voluntarily provide investors with many disclosures about revenue in their news releases and earnings calls. Monthly reports prepared by private companies often give a lot of detail about revenue that is not required by accounting standards.

But FASB member Marc Siegel said that, remarkably, GAAP in the past has prescribed few disclosures related to revenue recognition.

“So this will standardize a set of disclosures for companies to provide, including an objective for how to disaggregate or break out the revenue in the footnotes,” he said.

During a recent webcast, Deloitte LLP Partner Kristin Bauer, CPA, provided an overview of the disclosures that the new standard requires.

Companies are required to disclose revenue and impairment losses from contracts with customers separately from other sources of revenue or impairment, she said. Qualitative and quantitative disclosures are required, including:

  • Disaggregation of revenue. Companies are required to disclose disaggregated revenue to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors, Bauer said. The guidance also requires companies to disclose the relationship between the disaggregated amounts they are disclosing and revenue information that is disclosed for each reportable segment in accordance with segment reporting standards, she said.
  • Contract balances. Companies will be required to disclose both the opening and closing balances of receivables, contract assets, and contract liabilities from contracts with customers, Bauer said. Revenue recognized in the reporting period that was included in the contract liability balance also is required to be disclosed. Disclosure also is required for revenue recognized in the reporting period for performance obligations satisfied or partly satisfied during previous periods, she said.
  • Performance obligations. Companies are required to describe when they typically satisfy performance obligations, the significant payment terms, the nature of the goods or services the company is transferring, obligations for returns and refunds, and types of warranties and related obligations.
  • Remaining performance obligations. Disclosures will require companies to provide information about the amount of the transaction price allocated to remaining performance obligations, and when the company expects to recognize the remaining contract revenue, Bauer said.
  • Significant judgments and estimates. For many companies, the standard will require new judgments such as whether revenue is recognized at a point in time or over time. Estimates with regard to transaction price and allocation to separate performance obligations also are required. The standard requires these judgments and estimates to be disclosed.
  • Policy decisions. Companies will be required to disclose policy decisions such as whether the company used practical expedients to avoid capitalizing the incremental costs of obtaining a contract or to ignore the effects of a significant financing component because the time from the transfer of goods or services to payment is less than one year.

A minor difference between the substantially converged FASB and IASB standards involves disclosures on an interim basis. Both boards will require the disaggregated revenue to be disclosed on an interim and annual basis. FASB also will require contract balance and remaining performance obligation disclosures on an interim and annual basis, but the IASB will require those disclosures on an annual basis only.

The rest of the disclosures will be required annually by both boards.

“The FASB did vote to have a requirement that certain disclosures be required for interim,” FASB Chairman Russell Golden explained, “and that’s because in the U.S. capital markets there is oftentimes more interim financial reporting than in other capital markets around the world.”

Experts say companies will need to study these disclosure requirements to make sure they are capturing the information the standard demands. While companies will need to adjust to these requirements, board members say they will provide useful information about an extremely important metric.

“You’ll get a much more multidimensional picture about revenue recognition at a company in the footnotes than you have in the past,” Siegel said.

Source:  Journal of Accountancy

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Answers to Your Questions about Online CPE

The team of professionals working at MasterCPE are dedicated to helping you complete your CPE requirements in the fastest, most cost effective manner possible. We aim to provide the latest topics relevant to your profession and hope that you find our courses both educational and interesting.

We know that many of you struggle to find the time necessary to attend classes in person as most CPAs have busy client schedules, long working hours and strict deadlines to meet. Even though CPAs understand the importance of CPE for their careers and professional growth, most do consider CPE a challenge they must meet and overcome every year. These are some of the reasons why MasterCPE was created, as our program is convenient and easy for CPAs to fit into their busy schedules.

Here are some answers to the most frequently asked questions we receive about our online CPE program.

What does a subscription cost and what do I get for my money?

A subscription costs $149 and includes every CPE course on our website (expect ethics courses). Once you’ve purchased a subscription, you have the freedom to take all the courses as many times as you’d like. You’ll receive all course material, grading and certificates. Your subscription will be valid for 1 year or 365 days from the date of your purchase. You can print the course material or review it on your computer. You can re-take course exams as many times as needed in order to pass.

Do I have to purchase a subscription?

No. You may purchase individual courses. You can choose your CPE courses by subject, price or hours and you’re allowed to buy as few or as many courses as you like.

Do I have to complete a lesson in a single session?

No. Our courses are designed to be convenient wherein you can study when you have time to do so. You’re allowed to save your answers at any time and return at your convenience to complete the lesson or final exam. You simply save the lesson you are working on and then return to your My Account page at any time to select and complete the course.

Do you provide any guarantee?

Absolutely! If for any reason you are not happy with our products, simply contact our customer service and we’ll give you 100% of your money back for all the courses you purchased within 90 days. We cannot however, provide refunds for courses you’ve already complete and for which you’ve received the course certificate. If you purchased a subscription, we will provide you with the difference between the original subscription price and the individual price for any courses you’ve completed.

What if I don’t pass an exam on my first attempt?

If you don’t successfully meet the minimum passing score on any exam, you can re-take the exam as many times as necessary or as you’d like.

There are several CPAs in my company. Do you provide any company or group discounts?

Of course! Companies and CPA groups receive volume discounts for taking courses or for subscribing to MasterCPE. To qualify for a group discount, you must have at least 5 members. The discounts range from 10% to 25+% and we will gladly meet or beat most competitive prices. If you’d like to purchase a group plan, simply use the ‘Contact Us’ form to let us know.

Contact Us Today!

We are always available to answer any questions you may have about our online program. Our customer support is available Monday – Friday 9am to 4pm Pacific Time. You can reach us via the Contact Us form that’s on our website.

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CPE Courses Online At Master CPE

If you’re a CPA who works independently, for a small business, or for your own accounting firm, you’ll want to find what CPE online courses MasterCPE has to offer. You can sign up to take all the necessary continuing education courses for your licensing (excluding Ethics) for a 12-month period for just $149! If you run your own accounting firm and want to make sure your team is up to date with certifications, you’ll also receive group discounts from MasterCPE.

There are hundreds of accounting classes for you to choose from that will further inform you about current economic and business trends. The courses even include details about the latest tax regulations and tax-related concerns that your clients may have. A summary of the American Taxpayer Relief Act of 2012 is available on the MasterCPE website, which will help you with many of the latest updates and give you the information you need to explain changes in taxation to clients. MasterCPE offers IRS-approved taxation courses for accountants and enrolled agents, so that you will be well qualified to share accurate information regarding taxes with your customers while assisting them in successfully organizing their business or professional finances.

CPE Online Courses at MasterCPE Are Fast and Affordable

Taking your CPE online classes can also prove to be convenient for you, since you can log on whenever you have the time to complete coursework. This way, you can still maintain your client load and offer assistance to your accounting team and still have time to complete your continuing education courses so that your license will remain valid.

When you enroll in classes and complete assignments, your work is graded right away. As soon as you’re done taking your exams and find out that you’ve passed with a stellar grade, you can print out a certificate for verification.

MasterCPE is registered with the National State Boards of Accountancy. The classes and exams offered by MasterCPE are accredited in most states, including those that require approval from most State Boards of Accountancy. However, you can check the MasterCPE website to make sure your state will accept your credits before you begin your courses.