Bramwell's Lunch Beat: Financial Instruments, Inversion Deal, Tax Reform Pushby
FASB to issue final standard on financial instruments in early January 2016
The Financial Accounting Standards Board (FASB) said on Monday that it plans to issue its final standard on the recognition and measurement of financial instruments during the first week of January 2016. The final Accounting Standards Update will take effect for public companies for fiscal years beginning after Dec. 15, 2017, including interim periods within those fiscal years. For private companies, the standard goes into effect for fiscal years beginning after Dec. 15, 2018, and for interim periods within fiscal years beginning after Dec. 15, 2019. Companies will be allowed to adopt the guidance on presentation of liability's credit risk upon issuance of the standard in financial statements of annual or interim reporting periods that have not yet been issued or, for private companies, have not yet been made available for issuance.
CF, OCI amend merger agreement to keep inversion tax benefit
Fertilizer maker CF Industries and Dutch rival OCI NV, which agreed to merge in August, said they would move the tax residency of the combined company to the Netherlands from the United Kingdom in a move to satisfy new inversion rules put in place by the US Treasury, wrote Lisa Beilfuss of the Wall Street Journal. The $8 billion tie up would create a global nitrogen-fertilizer giant with a significantly lower tax bill. When the deal was signed, Illinois-based CF said it would lower its overall tax rate to 20 percent from 34 percent by moving its address abroad. In November, the US Treasury unveiled new rules that make it harder for companies to do what the Treasury calls âcherry-picking,â which is finding an address in a country with a favorable tax code. By being a tax resident of the Netherlands, where OCI is incorporated, the new holding company would satisfy the Treasury's requirements.
Congressional leaders gear up for broad tax reform push
Alexander Bolton of The Hill wrote that lawmakers say the passage of a major tax deal has increased the chances that Congress will tackle tax reform in 2017. The $680 billion tax bill approved last week gives hopes for reform a major boost, supporters say, by altering the budget baseline in a way that could make it easier to lower the 35 percent corporate tax rate â one of the highest in the world. Reducing that rate has long been a goal for Republicans, who argue it makes the United States less competitive on the global stage. The new deal locks in a number of expensive tax breaks that could be traded as part of future legislation that lowers the corporate rate. âThis is the big boost for tax reform going forward,â said Sen. Rob Portman (R-OH), a member of the Senate Finance Committee. âSpecifically, I think it makes about a three-point difference on the business rate, if you want to lower the business rate.â
SEC appeals process on the slow track
The US Securities and Exchange Commission's (SEC) use of its own tribunal has coincided with longer delays in the agency's handling of appeals, wrote Jean Eaglesham of the Wall Street Journal. Since Mary Jo White became SEC chairman in April 2013, the median time for the agency to decide appeals of its in-house judges' decisions has increased to 19 months, a Wall Street Journal analysis found. That is almost double the median times under her two main predecessors, Christopher Cox and Mary Schapiro. Critics say the SEC's approach means defendants often lose both ways. The trial portion of the civil case moves much more quickly than such matters typically would in federal court, giving limited time to prepare for trial, and defendants then can wait years for the SEC to decide appeals. The frustrations with the wait time on appeal are among several criticisms of the agency's use of its own judges to try cases.
- Power of the Protecting Americans from Tax Hikes (PATH) Act of 2015 (The Hill)
- The problem with Tim Cook's claim that Apple âpays every tax dollar we owe' (ThinkProgress)
- What Apple's Tim Cook gets wrong about its tax avoidance (Tax Justice Blog)
- Tim Cook is backed in his salvo against taxes (CNBC)
- Tax reform makes bad TV but good public policy (Daily Caller)
- Why Bernie Sanders' tax pledge matters (TIME)
- The TaxVox Lump of Coal Awards for the 10 worst tax ideas of 2015 (TaxVox)
- Calculate your Christmas cheer with Form 1225 (Tax Foundation)
- Fact-checking Hillary Clinton on millionaires' taxes (Tax Foundation)
- The opening salvo of 2016's soda tax battle (Tax Foundation)