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Bramwell's Lunch Beat: Tax Bill Clears House, Cadillac Stalls, 2016 GAAP Taxonomy

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Dec 18th 2015
Staff Writer and Editor AccountingWEB
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House passes $622 billion tax measure
The House passed a $622 billion package of tax cuts on Thursday, breaking out of a routine of temporary policy-making and allowing Republicans to focus on a revamp of the tax code in 2016 and beyond, wrote Richard Rubin of the Wall Street Journal. The legislation advanced on a 318-109 vote, with nearly all Republicans in favor and Democrats divided. The tax package is expected to be combined with a second measure – which has $1.15 trillion in spending and an additional $58 billion in tax cuts – on Friday and then sent to the Senate. President Obama supports the tax-and-spending agreement. The bill would make permanent the research and development tax credit, faster capital-equipment write-offs for small businesses, and a rule that lets multinational banks defer US taxes on their foreign income. The legislation also would continue indefinitely expanded tax credits for low-income families, children, and college students.

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[Note: Laura Saunders of the WSJ wrote in a Dec. 18 article that the Protecting Americans from Tax Hikes Act of 2015 is expected to pass in current form by the middle of next week.]

Solar will slow on US tax credit extension and that's good
Chris Martin of Bloomberg wrote that a US tax break for solar energy set for congressional approval on Friday will slow growth next year by about 24 percent – and that's great for the industry. Developers were expected to install about 11.9 gigawatts of solar panels in the United States next year as they raced to qualify for the investment tax credit that was set to expire at the end of 2016. The five-year extension announced late Tuesday will ease the pressure, and installations will now be about 9.1 gigawatts, according to a revised forecast from Bloomberg New Energy Finance. The extension came as a surprise to the industry and drew cheers from companies that were expecting higher costs in 2016 as they rushed to complete projects. Extending the tax credit “is a great thing. It gives us long-term visibility. Financing will be more economic. Rates will have a lower risk-premium,” said Tom Werner, CEO of SunPower Corp.

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House approves bill to end tax-free real-estate spinoffs
The House on Thursday approved legislation including provisions that would remove the tax advantages of spinning off corporate real estate into a separate, publicly traded real-estate investment trust (REIT), wrote Liz Moyer and Michael J. de la Merced of the New York Times. The end of such tax-free spinoffs will generate $1.9 billion in additional tax revenue in the coming years, the Joint Committee on Taxation has estimated. Hilton Worldwide may end up being the last big company to reap the benefits of this type of deal. The company, which the Blackstone Group took public about two years ago, is working on a plan to spin off its hotels into an REIT. The hotel operator has requested that the IRS deem the transaction tax-free. These spinoffs have been a popular tactic of activist investors who have pushed companies to unlock cash by separating themselves from their real-estate holdings.

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Employers applaud ‘Cadillac tax' delay but still seek repeal
Congress delivered an early holiday present to employers this week when it proposed a two-year delay for the “Cadillac tax,” which would have started in 2018. But businesses hope Santa will eventually leave something better under the tree, wrote Tom Murphy of the Associated Press. The delay, which was reached as part of a budget deal, means companies that offer employees expensive health insurance will not have to pay the Cadillac tax for those plans until 2020. But employers want the tax, which amounts to a 40 percent levy on the cost of benefits plans above a certain amount, repealed altogether. “A delay is great, repeal is even better,” said Steve Wojcik, vice president of public policy for the National Business Group on Health. “It's a pretty onerous tax.”

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Swiss-banking lawsuit against IRS could have wide impact
Bernhard Gubser, who was among thousands of clients outed five years ago by Swiss bank UBS Group AG to US officials on the hunt for tax evaders, is suing the IRS in a case that could shine a light on US rules designed to determine if a failure to declare an offshore bank account is willful wrongdoing or a simple mistake, wrote John Letzing of the Wall Street Journal. Gubser – a Swiss citizen who moved to the United States decades ago, picked up an American passport, and nonetheless continued sending money back to Switzerland – says his failure to declare assets that were in his UBS account for US tax purposes in 2008 was an innocent error. The IRS disagrees and deems it to be willful. The stakes are significant: a penalty of $10,000 versus a requirement to pay $1.35 million. Gubser says IRS rules for determining if his mistake was willful – or done with the knowledge that an omission would violate the law – are unclear.

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2016 GAAP Financial Reporting Taxonomy now available
The Financial Accounting Standards Board said on Thursday that the 2016 GAAP Financial Reporting Taxonomy is now available, pending final approval by the US Securities and Exchange Commission (SEC). The GAAP taxonomy is a list of computer-readable tags in XBRL format that allows companies to tag precisely the thousands of pieces of financial data that are included in typical long-form financial statements and related footnote disclosures. The tags allow computers to automatically search for, assemble, and process data so it can be readily accessed and analyzed by investors, analysts, journalists, and regulators. The 2016 taxonomy contains updates for accounting standards changes and other improvements to the taxonomy SEC issuers have used previously.

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Quick Links:

  • Big 4 firms still getting used to this whole regulation thing (Going Concern)
  • How marketing for CPA firms is different (CPA Trendlines)
  • What we learned in 2015: 3 accounting lessons from Greece financial crisis (CPA Trendlines)
  • To maximize your exit value, get a grip on your data (CFO)
  • Why deficit hawks are missing in action on budget, tax deals (Christian Science Monitor)
  • This tax legislation is terrible, but it might be worth passing (Huffington Post)
  • The 12 most important provisions in the latest tax bill (Tax Foundation)
  • Why everyone wants to kill Obamacare's ‘Cadillac tax' (CNN)
  • Auto industry pegs ‘Cadillac tax' as a lemon (Modern Healthcare)
  • Death is certain. Taxes, less so (Bloomberg)
  • Tax Wars: 3 lessons about tax policy from the Star Wars universe (Tax Justice Blog)
  • It's time to raise the gas tax by $1 a gallon (Yahoo Autos)
  • Australian tax office names names in multinational avoidance row (Reuters)

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