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CalCPA Acquires New Headquarters

November 17th, 2014

As of Nov. 7, CalCPA is fully recorded, funded and officially closed on a new headquarters building in Burlingame—a giant step for CalCPA.

There has been much work over many years on this effort, including the creation of a building fund and building task force; the hard work of the task force; and the work of other CalCPA leaders. This purchase will help ensure that CalCPA facilities and services continue to meet and exceed the business needs of the members and customers, and further ensure the future success of the organization as well as the profession in California.

Look for periodic updates on progress with the new headquarters in future issues of California CPA and other CalCPA publications.

New IRC Sec. 1031 Filing Requirements for California

November 17th, 2014

For taxable years beginning on or after Jan. 1, 2014, California Revenue and Taxation Code secs. 18032 and 24953 requires taxpayers who exchange properties located in California for like-kind properties located outside of California under IRC Sec. 1031 to file an annual information return. New California Form FTB 3840, California Like-kind Exchanges, will be used to report these exchanges. A separate Form FTB 3840 is required for each exchange completed.

Learn more.

IRS Clarifies Application of One-per-year Limit on IRA Rollovers

November 17th, 2014

The IRS issued Announcement 2014-32 clarifying the impact a 2014 IRA rollover has on the one-per-year limit imposed by the IRC on tax-free rollovers between IRAs.

The IRS made clear that the new interpretation will apply beginning Jan. 1, 2015, and said that a distribution from an IRA received during 2014 and properly rolled over (normally within 60 days) to another IRA, will have no impact on any distributions and rollovers during 2015 involving any other IRAs owned by the same individual. This will give IRA owners a fresh start in 2015 when applying the one-per-year rollover limit to multiple IRAs.

Tax Abatement Disclosures Proposal

November 17th, 2014

The Governmental Accounting Standards Board issued for public comment an exposure draft of the statement Tax Abatement Disclosures, which would require state and local governments for the first time to disclose information about property and other tax abatement agreements. The proposed guidance addresses tax abatements resulting from agreements entered into by the reporting government, as well as those initiated by other governments that reduce the reporting government’s tax revenues.

CPA Firms Show Increase in Fee Revenue

November 17th, 2014

Most CPA firms reported modest increases in revenue in 2013, with a stable or brightening profit picture, according to the National Management of an Accounting Practice Survey. Growth rates for fees have not rebounded to the pre-recession levels in the 2008 survey, but there has been steady if uneven improvement during the past four years.

Professional salaries—the largest category of expense for CPA firms—increased 6.9 percent from 2012 for the smallest practices, and stand at a little more than 16 percent of net client fees. Firms with revenues between $200,000 and $750,000 recognized smaller increases in this category, while professional salaries expense remained flat for firms with revenues of $750,000 and up.

Upcoming Foundation Events: Tax Update and Planning Conference Nov. 24-25

November 17th, 2014

IRS Announces 2015 Pension Plan Limitations

November 3rd, 2014

The IRS announced cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2015. Many of the pension plan limitations will change for 2015 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged because the increase in the index did not meet the statutory thresholds that trigger their adjustment. Some highlights include the following:

  • The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans and the federal government’s thrift savings plan is increased from $17,500 to $18,000.
  • The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s thrift savings plan is increased from $5,500 to $6,000.
  • The limit on annual contributions to an individual retirement arrangement remains unchanged at $5,500. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

CAMICO Insurance Tip of the Month: Avoiding Estate Tax Planning Disputes

November 3rd, 2014

Tax issues involving estate tax planning are frequently prone to disputes and claims. This is due in part to the long period of time that generally falls between the time when estate planning decisions are made, and the time when the results of the decisions are known.

Memories of the CPA’s advice and the client’s decisions fade over time, making documentation of the advice and decisions all the more important. Making matters worse, heirs typically aren’t involved in the planning and may allege that the deceased didn’t understand the decisions.

If the CPA is dealing with disappointed, litigious beneficiaries after a client dies, documentation of the original planning and decision-making process becomes the CPA’s primary line of defense. To ensure that he or she has some protection from and during litigation, a CPA should implement a policy to detail all planning advice in informed-consent letters that outline the pros, cons and options in terms the client will understand.

Always obtain client consent. Effective informed-consent letters clarify that the CPA advised and informed and the client decided. With this letter, it is difficult for claimants to make a case that the CPA made the decisions rather than the client.

Tax professionals must be certain of their competency in this area and must be sure to document reliance upon the attorney drafting the estate plan. Also be sure to document which professionals are responsible for each aspect of the plan.

For more information about CPA firm insurance issues, call CAMICO at (800) 652-1772 or go online.

Dec. 22 Free Webcast: Understanding Recent Revisions to the Rules of Ethics

November 3rd, 2014

The regulations governing practice before the IRS (Circular 230) impact every individual who prepares income and estate tax returns, gives tax advice, writes tax opinions and represents taxpayers in controversies arising from these activities. Without practice rights, an individual may not represent a client in any manner before the IRS. During this webcast, the director of the IRS Office of Professional Responsibility will discuss revisions made to Circular 230 that became effective June 12, 2014.

Register or learn more.

Revised AICPA Code of Professional Conduct Is Effective Dec. 15

November 3rd, 2014

The AICPA has updated the Code of Professional Conduct to allow for quick, easy navigation. The new code, which is effective Dec. 15, now lives on an online platform. The AICPA Ethics Division also has created implementation tools, including a mapping document, to help you transition to the new Code by the approaching, effective date.


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