Article Archives: 2018

Charitable contribution substantiation is a team sport — everyone involved is critical to ensuring the donor’s tax deduction is valid. Although this is not a new area of tax law, it is an arena of continued tax litigation, with the IRS winning most cases on technicalities. The government is generally successful in the courtroom because the requirements allowing a donor a charitable contribution deduction are spelled out in detail in the Internal Revenue Code and supporting Treasury Regulations. Omitting any component leaves the door open for the IRS to disallow a charitable tax deduction based on a technical deficiency.

The Tax Cuts and Jobs Act of 2017 increased the value of charitable contributions in several ways.

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When it comes to privacy and accountability, people always demand the former for themselves and the latter for everyone else.” – David Brin

Overview of Revenue Procedure 2018-38

Recently, the Treasury issued Revenue Procedure 2018-38, correcting what some considered an overreaching and controversial regulation requiring organizations exempt under code sections other than 501(c)(3) or 527 to report the names and addresses of their contributors on Form 990, Schedule B. The new reporting rules apply to returns filed for taxable years on or after December 31, 2018 and only provide partial relief. Under the new rules, the affected organizations must still collect and retain contributor information and make it available to the IRS upon request for examination.

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Congratulations! Your grant application for a federal award was successful, and you have received your signed Notice of Award (NOA). Now the real work begins as you start to navigate the grant process through the initial steps all the way to a successful and fully functioning program. Although it can be tempting to jump right into the excitement of program development, there are some administrative tasks that must be addressed first to build a solid foundation for the overall program.

The six steps to grant success are discussed below:

Step 1:  Carefully Read and Review the NOA

The NOA is required by 2 Code of Federal Regulations (CFR) Part 200 “Uniform Administrative Requirements,

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Over the past several years, you may have read articles about the revised revenue recognition standards. Now, the time for implementation is nearly here.

As a quick recap, the new revenue recognition standard (ASU 2014-09, also known as ASC 606) provides new requirements for recognition of revenue arising from contracts with customers, except in cases where contracts are within the scope of other U.S. GAAP requirements (such as the leasing standards). The standard impacts businesses in all industries and will become effective January 1, 2019 for non-public companies.

Companies may elect one of two methods for implementation: (1) the modified retrospective approach or (2) a full restatement.

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When the new revenue recognition standard came out, Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), it specifically excluded contribution revenue and investment returns. Therefore, it appeared that unless the organization had significant earned revenue, the standard would have little effect on many not-for-profit organizations. However, a consequence of ASU 2014-09 was renewed focus on certain revenue streams of NFPs, which resulted in a second revenue recognition update.

Under current accounting principles generally accepted in the United States (U.S. GAAP), aspects of revenue recognition for NFPs are subjective. The updated guidance,

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Now is a good time to update employee expense reimbursement plans, given changes brought about by the Tax Cuts and Jobs Act (TCJA), effective beginning in 2018. The new law disallows tax deductions for some commonly reimbursed business expenses.

Why is this important if your organization does not pay taxes? It is important because now many of these reimbursements may be taxable to your employees. Even if your organization has no unrelated business income and is unconcerned about the disallowed income tax deductions, these items no longer meet the accountable plan requirements and, as such, they do not qualify as tax-free reimbursements to the employees.

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Posted by: Bob Heller in Wayfair.

In a momentous decision that is likely to have far-reaching effects on retail commerce, the Supreme Court ruled 5-4 that states may require remote sellers (those without any physical presence) to collect and remit sales tax on sales to in-state residents and businesses.

Although the Court’s choice to overturn 51 years of precedent was not altogether unexpected, it will nonetheless require businesses that sell on a multistate basis to make some impactful and immediate decisions on how to operate in the post-Quill world.

A few thoughts on the Court’s June 21, 2018 decision in South Dakota v.

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Posted by: Karen Dunn in UBTI.

Beginning in 2018, unrelated business taxable income (UBTI) must be computed separately for each unrelated trade or business. Net operating losses (NOL) from one unrelated trade or business may not be used to offset income from another unrelated trade or business. The unused NOL may be carried forward to future years but may only reduce income from the same trade or business that generated it.

This is a radical departure from previous law, where unrelated businesses, except for advertising or exploited exempt activities, were commingled in computing (UBIT). The new subsection was created in response to concerns that net operating losses from activities in which there is no profit motive were offsetting the income from other unrelated business activities.

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Those who were using the Qualified Improvement Property (QIP) classification for bonus depreciation should take note of changes brought by the Tax Cut and Jobs Act (TCJA).

Where We Were…

Qualified Improvement Property (QIP) isn’t entirely new. The 2015 PATH Act created qualified improvement property, which is “any improvement to an interior portion of a building that is nonresidential real property if the improvement is placed in service after the date the building was first placed in service.” Excluded from QIP is any enlargement to the building, improvements to escalators or elevators and internal structural framework.  Under the 2015 PATH Act, QIP was eligible for bonus depreciation and depreciated over 39 years.

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Small to medium nonprofits often struggle to balance the fine line between having sufficient internal controls to protect the organization and having too many internal controls that become burdensome to their small accounting department. The following article covers ten easy-to-adopt internal controls that any small to medium sized nonprofit can begin implementing today.

Overarching Controls

The suggested internal control procedures over transactions, which this article focuses on, assume the organization has an adequate foundation of entity-level and information technology controls. Here is a quick refresher on these controls:

  • Entity-level Controls
    These include the organization’s control environment, risk assessment process,

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