Blog Archives: 2019

Washington B&O Tax Alert – Annual B&O Tax Apportionment Reconciliation Due October 31st

For business and occupation (“B&O”) tax purposes, taxpayers earning apportionable revenue calculate their taxable Washington revenue by applying a “receipts factor” apportionment methodology. Taxpayers computing B&O tax in this manner are required to complete and file an Annual Reconciliation of Apportionable Income form with the Department of Revenue.

When is the Annual Reconciliation of Apportionable Income Form Due?

The form must be submitted to the Department of Revenue by October 31st of each year. Failure to timely file the reconciliation form may result in penalties.

Who Must File?

In-state taxpayers that earn income from apportionable business activities performed for customers located inside and outside of Washington may apportion such revenue to Washington for B&O tax purposes.

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FASB Proposes Delay to Effective Date of Leases Standard

April 21, 2020 update: To provide accounting relief and clarity during the COVID-19 crisis, the FASB published an exposure draft with proposals to delay the effective dates for Leases (Topic 842). Find more information here.

The FASB has taken the next step in formally delaying the effective date of the Leases standard.  They are also delaying the effective date for two other new ASUs that impact credit loss accounting and the accounting for derivatives/hedges.

A recent FASB News Alert was issued, noting that the FASB has issued an ASU exposure draft to change the effective dates of these ASUs. 

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Qualified Business Income (QBI) Deduction Update

For tax years 2018 through 2025, individuals, trusts and estates can get a 20% deduction of Qualified Business Income (QBI) from sole proprietorships, S corporations and partnerships subject to certain limitations.

In general, all business income/loss qualifies for the deduction with the following exceptions and limitations:

  • It does not include employee wages, capital gains/losses, interest, dividends or partner guaranteed payments.
  • The QBI deduction is limited to 20% of taxable income less capital gain/qualified dividends.
  • Specified Service Trades/Businesses (SSTB) income qualifies for the 20% deduction if the taxpayer’s taxable income is less than $321,400 for 2019 married filing joint ($160,700 single) and is fully phased out at $421,400 ($210,700 single). 

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Is Your Monthly Close Practice Working for You?

As an executive, if you don’t receive accurate and timely end-of-month financial reports, your business could suffer in a multitude of ways:

  • You’ll be unable to identify errors in a timely manner, allowing the inaccuracies to balloon.
  • Year-end reporting will take longer than necessary.
  • Fraud is more difficult to detect.
  • And, you’ll lose the ability to capitalize on key performance indicators.

The ABCs of the Monthly Close Process

At the end of each month, the accounting department must reconcile the books with supporting documentation. Management then uses these statements to make decisions.

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Quality of Earnings Report – Three Frequently Asked Questions

Last year, I wrote an article about the activity around quality of earnings (QoE) reports for M&A activity. To recap, a QoE report is a detailed analysis of all the components of a company’s earnings and the degree to which both cash and non-cash earnings, based on measurement and estimates, are subject to change. They are often prepared by independent third-party firms, such as a CPA firm, as part of due diligence in an acquisition. The one thing a QoE report is not, is an audit. There are no definitive criteria by which to guide the performance of, or reporting on, quality of earnings.

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