Training and technology.

In 1991, the AICPA Tax Division published "Automation of a Tax Practice in the 90s," a section of which covered training. While the effects of technology were addressed in depth, the dramatic effect of the Internet was not mentioned.

The basic principles of training still remain in place. For training to be effective:

* It is necessary to allow the user to become familiar with software and hardware before specific training tasks are undertaken.

* A competent mentoring (teaching) system must be in place, to provide assistance to those trying to learn.

* There needs to be a sufficient amount of on-the-job training to take place to reinforce the formal training experience.

As technology advances, the training methods will change. There will be less emphasis on existing formal training techniques (i.e., group classrooms, print manuals and outside training programs). Replacing these techniques will be on-line tax training through the Internet and Intranet, supplemented with interactive training that makes use of multi-media training manuals. These new methods of training will have a profound effect on how tax practitioners learn.

Look for the following areas to play a key role in how training will be delivered in the future.

Technology Skills

Along with competence in technical tax knowledge, there will be a need for greater understanding of the technology tools that will be available. Knowledge of the computer hardware and software in and of itself will have to be instilled in the user. For example, search techniques will have to be honed as databases of information grow and research is conducted online. Attention to training techniques will need to be addressed as the rate of technology absorption increases in organizations. The ability to implement new technologies will challenge organizations to find ways to help them master the skills of the tools they have under their control.

Interactive Learning

Users demand higher levels of interaction and stimulation. Static course content will be rejected for a more interactive approach to a given subject matter. A good example was an overview of the Taxpayer Relief Act of 1997, appearing on the Wall Street Journal Interactive Website. The content of some of the most important provisions of the new law was addressed and reinforced with a series of quizzes on the areas covered. In one practice group it was possible to use the content to provide a good basic foundation of some key points in the new law. The visit to the Website not only acted as a refresher to tax professionals, but also served to introduce nontax professionals to the new tax law.

Distance Learning

Learning will no longer have to be done in a central place. With the advances in technology, providers will be able to deliver training outside the classroom. In fact, classrooms will move to remote users through the use of such technologies as video conferencing.

Uses of Coaches Rather Than Teachers

Users will seek training assistance from personnel that have both proficiency in tax disciplines and a good working knowledge of technology.

In the Future

Learning techniques will allow more personal self-development. It will be up to firm managers to keep in touch with the technology changes that will affect future learning methods. Knowledge of the past can be a base for the future, but reliance on past experiences alone is not relevant to today's rapidly changing technology environment.

Update on Capital Gains Treatment of Installment Sales 

In the February 1998 Tax Clinic, "Treatment of Capital Gains on Installment Sales Under the TRA '97," p. 85, discussed the treatment of long-term capital gains recognized after May 6, 1997, from an installment sale occurring before that date, in which the installment sale gain included an element of straight-line depreciation recapture. As was mentioned, the item was based on informal discussions with the IRS National Office.

As of Feb. 27, 1998, the Service had yet to provide any formal guidance on this issue. However, based on more recent informal discussions, it appears that the IRS will accept either of two different approaches: (1) reporting all of the depreciation recapture income first, before reporting any of the "20% gain" or (2) reporting the appropriate portion of each installment as part 20% and part 25% gain. Whichever choice was made, it was indicated unofficially that the taxpayer would have to treat all installment sales consistently.

Generally, a taxpayer would want to use the proportional method; that would defer the recognition of the 25% recapture income in most cases. However, for installment sales made prior to May 7, 1997, if significant income was recognized at the "old" 28% rate, the taxpayer might be better off using the "recapture first" method, so that all (or most) of the gain recognized after May 6, 1997, would be eligible for the 20% rate.

If the later informal discussions are correct, some taxpayers could be making an irrevocable election with the filing of their 1997 returns. As such, the Service should be concerned with providing clear guidance on this issue before 1997 returns are due.