News Notes.EXPECTED IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. GUIDANCE * ROTH IRAs * INTERNET TAX FREEDOM ACT The 1998 Internet Tax Freedom Act was a United States law authored by Representative Chris Cox and Senator Ron Wyden, and signed into law on October 21 1998 by President Bill Clinton in an effort to promote and preserve the commercial, educational, and informational potential of * SOCIAL SECURITY LIMITS * AICPA AICPA See American Institute of Certified Public Accountants (AICPA). BROCHURES (CHART) FROM THE IRS Expected Guidance By year-end, the IRS expects to finish a host of guidance projects, including regulations on the following: * Sec. 197 amortization of intangibles. * Capitalization of certain acquisition costs. * Accounting for rental agreements under Sec. 467. * Reporting for S corporations acquired by consolidated groups. * When costs associated with investigating an acquisition would be eligible for favorable treatment under Sec. 195. * The tax treatment of gain realized under Sec. 337(d) when a taxable corporation transfers assets to an exempt organization. * Reconciling the interest differential between tax overpayments and underpayments. * Joint and several liability for innocent spouses. * The new appeal rights given to taxpayers if the IRS places a lien or levy on their property. Some of the above projects may be pushed back to the 1999 business plan, but the last three items have high priority, under the IRS Restructuring and Reform Act of 1998. Roth IRA Reconversions Notice 98-50 explains whether and how taxpayers can reconvert re·con·vert intr. & tr.v. re·con·vert·ed, re·con·vert·ing, re·con·verts To undergo or cause to undergo conversion to a previous state or condition. amounts that have been transferred back and forth between regular and Roth Roth , Philip Milton Born 1933. American writer whose witty and ironic fiction, including the novel Portnoy's Complaint (1969), concerns middle-class Jewish life. Noun 1. individual retirement accounts (IRAs). The notice stems from questions regarding whether a taxpayer who has converted an amount from a regular to a Roth IRA may transfer the amount back to the former in a "recharacterization," then subsequently "reconvert" that amount from the regular to the Roth IRA. A taxpayer would do this, for example, if the value of the Roth IRA decreased after the initial conversion due to stock market volatility. Generally, a taxpayer who converts an amount from a traditional to a Roth IRA during 1998, then transfers that amount back via a recharacterization can reconvert that amount to a Roth IRA once, on or after Nov. 1, 1998, and on or before Dec. 31, 1998. The taxpayer is also eligible to reconvert that amount once during 1999. A taxpayer who converts an amount from a traditional to a Roth IRA during 1999 that has not been converted previously and then transfers that amount back via a recharacterization can reconvert that amount to a Roth IRA once, on or before Dec. 31, 1999. Any excess reconversion Reconversion A method used by individuals to minimize the tax burden of converting by recharacterizing Roth IRA-converted amounts back to a Traditional IRA and then converting these assets back to a Roth IRA again. of an amount during 1998 or 1999 will not change the taxpayer's taxable conversion amount; instead, the excess reconversion and the last preceding recharacterization will not be taken into account in determining the taxpayer's taxable conversion amount (which is based on the last reconversion that was hot an excess reconversion). For this purpose, an "excess reconversion" is any amount reconverted in a transaction the taxpayer was ineligible to conduct under Notice 98-50. Any conversion, recharacterization or reconversion of an amount under Notice 98-50 must satisfy Sec. 408A and the proposed regulations (REG-115393-98, 9/3/98). Practitioners should, review the notice's seven examples for more precise guidance. LEGISLATION Internet Tax Freedom Act Congress is expected to pass the Senate's version (S. 442) of the Internet Tax Freedom Act, the tax provisions of which would impose a three-year moratorium on state and local taxes on Internet access See how to access the Internet. , and on multiple or discriminatory taxes on electronic commerce. In addition, the bill establishes a 19-member commission composed of the Commerce and Treasury Secretaries, a U.S. trade representative, eight representatives each from business and industry and state and local governments, and one representative from a state without a sales tax sales tax, levy on the sale of goods or services, generally calculated as a percentage of the selling price, and sometimes called a purchase tax. It is usually collected in the form of an extra charge by the retailer, who remits the tax to the government. . The commission will prepare a report to Congress on electronic commerce tax issues. The bill also directs the president to work with international bodies to establish the Internet as a global tariff-free zone. MISCELLANEOUS Social Security Limits For 1999, the maximum earnings subject to Social Security taxes will increase from $68,400 to $72,600; the maximum Social Security tax paid by employees will rise from $4,240.80 to $4,501.20. For the self-employed, the maximum will rise to $9,002.40 from $8,481.60. Retirees under age 65 will be able to earn up to $9,600 in 1999 before losing $1 in benefits for every $2 earned over that limit. Retirees age 65-69 can earn up to $15,500 in 1999 before losing $1 in benefits for every $3 in earnings above that limit. RELATED ARTICLE: Brochures Available from the AICPA Website Tax Information Series * The New Tax Laws and You: Planning for 1997 and 1998--A CPA's Guide for Taxpayers * Now and Later: Tax Planning Tax planning Devising strategies throughout the year in order to minimize tax liability, for example, by choosing a tax filing status that is most beneficial to the taxpayer. for 1997 and 1998--A CPA's Guide for Small Business Business Advice from CPAs Series * Budgeting: A Tool for Business Success * Improving Business Performance: Restructuring Your Organization for Results * Business Loans: Securing a Loan for Your Company * Computer Services Data processing (timesharing, batch processing), software development and consulting services. See service bureau, SaaS and ASP. : Connecting Your Business With the Right Computer System * Cash Management: Managing Your Business Dollars * Business Planning: Planning Your Company's Growth * Purchasing a Business: Making the Acquisition Work for You * Business Succession: Planning for a Change in Ownership * Business Entities: Understanding Different Forms of Organization for Your Business Consumer Guides Series * Personal Finances: Managing Through an Economic Downturn * Planning for the Future: Your Social Security Benefits * Retirement Planning: Achieving Financial Security for Your Future * Managing Credit: Avoiding the Debt Trap * Saving for College: Easing the Financial Burden * Estate Planning Estate Planning The overall planning of a person's wealth, including the preparation of a will and the planning of taxes after the individual's death. Notes: Contrary to popular belief, estate planning involves much more than preparing a will, and it is not only for the : Protecting Your Family * Good News for Good Samaritans: A Guide to Deducting Charitable Contributions * Keeping Financial Records * Getting Started Financially * Minimizing Homeowner Expenses: Cost-Cutting Tips General Materials Series * Public Relations public relations, activities and policies used to create public interest in a person, idea, product, institution, or business establishment. By its nature, public relations is devoted to serving particular interests by presenting them to the public in the most Guide for CPAs * Savings Guide * How to Use and Choose a CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. * PCPS PCPS Primary Care and Population Sciences PCPS Partners for Child Passenger Safety PCPS Pleasant Corners Public School (Canada) PCPS Plymouth Counselling and Psychotherapy Service (UK) Membership: Your CPA Firm's Commitment to Quality * Recommending a CPA Firm: How to Pick a Leader * 101 Questions to Ask Your CPA * Understanding and Using CPA Services--Questions and Answers for Business Owners and Individuals The CPA As Series * The CPA as Tax Advisor * The CPA as Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Advisor * The CPA as Personal Financial Planner Financial Planner A qualified investment professional who assists individuals and corporations meet their long-term financial objectives by analyzing the client's status and setting a program to achieve these goals. * The CPA as Management Consultant * The CPA as Auditor * The CPA as Advisor to Small Businesses * The CPA as Estate Planner Auditing Series * What Else Can Financial Statements Tell You? * Understanding Compilations, Reviews and Audits * The New Auditor's Report Auditor's Report Recorded in the annual report, the auditor's report tests to see that a corporation's financial statements comply with GAAP. This is sometimes referred to as the clean opinion. Notes: Most auditor's reports consist of three paragraphs. : What it Means to You * Communication With Audit Committees (or others with similar responsibilities) * The Representation Letter in a SSARS SSARS Statements on Standards for Accounting and Review Services Review Engagement * Understanding Audits and the Auditor's Report: A Guide for Financial Statement Users * The Engagement Letter: An Agreement Between the Client and the CPA Personal Financial Planning Financial planning Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against Series * Do I Need Personal Financial Planning? * Guide to Finding a Personal Financial Planner * Settling an Estate: Understanding Probate and Estate Administration * Personal Financial Planning Questionnaire * Accumulating Wealth: An Investing Primer To download any of these, go to http://www.aicpa.org, click on "Members," click on "Practice Development Tools Brochures and Speeches," click on "View the Brochures," then "List of Brochures Section." |
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