Sensiba San Filippo LLP - ssfllp.com · ASU 2016-10 - Identifying Performance Obligations and Licensing Improves the licensing guidance when determining whether an entity has granted

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Significant Accounting Standards Updates


Why so much change?

• Rate of recent changes:

– 18 standard updates in 2014

– 17 standard updates in 2015

– 13 standard updates so far in 2016

• Convergence with international standards (IFRS)

• Implementation of the Private Company Council (PCC)

• Two largest sweeping changes in decades:

– Revenue

– Leases


Revenue Recognition – What’s going on?

• The converged revenue recognition standards (ASU 2014-09), which the FASB and

IASB issued in May 2014 will supersede almost all revenue recognition guidance in

US GAAP and IFRS. Since the original issuance of the proposed convergence,

there have been hundreds of various amendments and proposed changes or

clarifications.

• The Boards intent is to jointly develop revenue standards that will remove

inconsistencies and weaknesses in current literature, provide a more robust

framework, improve comparability and reduce complexity of the guidance

• Overall, intent is to simplify the preparation of financial statements by reducing the

number of requirements to which an entity must refer

• Currently revenue recognition standards follow hundreds of transaction and industry

specific guidance under US GAAP literature on revenue recognition.


Revenue Recognition – Currently

• Core principal of current revenue recognition follow the general rule that revenue

is reported at the point of sale and the following 4 criteria have been met:

– Persuasive evidence of an arrangement exists

– Delivery has occurred or services have been rendered

– Seller’s price is fixed or determinable

– Collectability is reasonably assured

• Additionally, risks and reward of ownership have transferred and title has

transferred



• Persuasive evidence of an arrangement exists:

• Arrangement: a final understanding between parties as to the specific nature

and terms of an agreed upon transaction

• Typically met through a corporations standard business practices (executed

contract, PO, etc.)

• Side agreements could include cancellation, termination or other provisions that

affect revenue recognition



• Delivery has occurred or services rendered:

• Risk of ownership transferred to the buyer

• Fixed commitment by the buyer to purchase the goods

• Fixed delivery schedule that is reasonable and consistent with buyer’s business purpose

• Absence of performance obligation by the seller

• Goods segregated from seller’s inventory and not available to fill other orders and product is ready to ship

• Contractual customer acceptance provision are substantive, bargained-for terms

Indicators that revenue may not be able to be recognized:

• Seller has history of not completing remaining tasks in a timely manner or period of remaining obligations is very

lengthy

• Cost or time to complete has historically varied or requires specialized equipment or skills not readily available

• Item delivered for trial or evaluation period

• Right of return based on matters such as customer satisfaction

If remaining obligations under an arrangement are not essential to function of delivered product, and will not result in a

refund, they typically do not hinder revenue recognition



• Seller’s price is fixed or determinable:

• The sales price in arrangements that are cancellable by the customer are

neither fixed or determinable until the cancellation privileges lapse

• If the cancellation privileges expire ratably over a stated term, the sales price is

determined ratably over the term

• The ability of a customer to receive a full refund up to the last day of a

contractual term raises uncertainty as to whether the fee is fixed or

determinable at any point before the end of the term

• Collectability is reasonably assured


Revenue Recognition – ASU 2014-09

Why?

• Currently there is a significant amount of industry specific guidance

• New standard replaces industry specific guidance with core principles

• Effort to converge U.S. and international accounting standards

When?

• Released in 2014 and originally effective for calendar year 2017 for

public companies and 2018 for private companies

• ASU 2015-14 defers the effective date by one year (2018 public, 2019

private)

• No early adoption for public companies. Private companies can elect to

early adopt by one year



• Applies to all contracts to provide goods or services to customers

– Exception: Leasing transactions, insurance contracts, and

financial instruments

• Core principle: recognize revenue upon transfer of goods or

services to a customer in the amount of consideration expected

to be received from the customer

• Adds certain disclosure requirements and guidance to account for

costs to obtain or fulfill a contract (when not covered by other

standards)

• Emphasis on “judgement”



• New five-step process that replaces diverse industry specific guidance

1. Identify the contract(s) with a customer

2. Identify the performance obligations in the contract

3. Determine the transaction price

4. Allocate the transaction price to the performance obligations

5. Recognize revenue when (or as) the entity satisfies the

performance obligation


Step 1 – Identifying the contract(s) with a customer

• Each contract must meet the following criteria:

– Approval of both parties (written or verbal)

– Identify the rights of each party (must be enforceable)

– Identify the payment terms

– Have commercial substance (future cash flows of company will

change)

– It is probable that the customer will pay for the goods or services


Step 2 – Identify the performance obligations in the contract

• These are promises in a contract with a customer to transfer goods or services

• There can be more than one performance obligation, but each must be

“distinct”

• Distinct:

– Customer can benefit from the good or service either on its own or together

with other resources that are readily available, AND

– The promise to transfer the good or service is separately identifiable from

the other promises in the contract

NOT distinct if good or services are highly correlated and dependent on each

other, significantly integrated, or require significant customization of other

goods or services in the contract


Step 3 – Determine the transaction price

• This is the amount that is expected to be collected from the customer in

exchange for the goods or services.

• Other variables need to be considered:

– Returns and allowances. Incentives and penalties or other

contingencies

– Existence of significant financing components

– Noncash consideration

– Consideration payable to the customer


Step 4 – Allocate the transaction price to the performance obligations

• If more than one performance obligation the transaction

price must be allocated

– Standalone selling price would need to be determined

for each performance obligation at inception of the

contract

• If standalone selling price is not observable it must be

estimated


Step 5 – Recognize revenue when (or as) the entity satisfies the performance obligation

• The performance obligation is satisfied by an entity transferring

a good or service over a

Period of time, or

A point in time

• Separate criteria must be met for each

• If over a period of time, judgement must be used to determine

what inputs or outputs (hours incurred, units delivered, etc.)

best depict transfer of control


• ASU 2016-08 Revenue from Contracts with Customers (Topic 606): Principal

versus Agent Considerations (Reporting Revenue Gross versus Net)

• ASU2016-10 Revenue from Contracts with Customers (Topic 606): Identifying

Performance Obligations and Licensing

• ASU 2016-11 Revenue Recognition (Topic 605) and Derivatives and Hedging

(Topic 815): Rescission of SEC Guidance Because of ASU 2014-09 and 2014-

16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting (SEC

Update)

• ASU 2016-12 Revenue from Contracts with Customers (Topic 606): Narrow

Scope Improvements and Practical Expedients

None of the updates change the core principles of the new standard

Revenue Recognition – Updates to ASU 2014-09


Why do we need updates to an update?

The FASB and IASB formed the Joint Transition Resource Group to assist

organizations in understanding the new revenue recognition guidance. One

of their main objectives is also to inform the Boards of potential

implementation issues when organizations begin applying the new guidance.

These updates are the result of potential implementation issues they have

identified.

Revenue Recognition – Updates to ASU 2014-09


ASU 2016-08 - Principal versus Agent Considerations (Reporting Revenue Gross versus Net)

• The amendment mainly addresses whether an entity controls

the goods or services before they are transferred to the

customer.

• Provides indicators to assist in determining control. However

these indicators should not override the assessment of

control, be viewed in isolation, and should not be considered

a checklist of criteria to be met in all scenarios. Considering

one or more of the indicators will be helpful in determining

whether the entity has control before the goods or service is

transferred to the customer.


ASU 2016-08 - Principal versus Agent Considerations (Reporting Revenue Gross versus Net)

The amendments clarify the following:

• Entities must determine if they are a principal or agent for each distinct good or

service promised to the customer. It’s possible to be a principal for some and an

agent for others.

• Entities must determine the nature of each specified good or service - is it a good,

a service, or a right to a good or service?

• An entity is a principal if it obtains control of (a) a good from another party that it

then transfers to the customer; (b) a right to a service that will be provided by

another party, giving the entity the ability to direct the service provided on their

behalf; or (c) a good or service from another party that the entity combines with

other goods or services to make the distinct good or service.

• Some indicators may be more or less relevant and persuasive to the control

assessment, depending on the facts and circumstances.


ASU 2016-10 - Identifying Performance Obligations and Licensing

Expected to reduce the cost and complexity of applying the guidance by

adding the following:

• Entities are not required to assess whether promised goods or services

are performance obligations if they are immaterial in the context of the

contract.

• Entities are permitted, as an accounting policy election, to account for

shipping and handling activities that occur after the customer has

obtained control of a good as an activity to fulfill the promise to transfer

the good rather than as an additional promised service.



Improves the guidance for assessing whether promises to transfer goods or services

are distinct.

• Better articulates the principle for determining whether promises to transfer goods

or services to a customer are separately identifiable. Are promised goods merely

inputs to a combined item?



Improves the licensing guidance when determining whether an entity has granted a

right to use intellectual property or a right to access intellectual property.

• A promise to grant a license for intellectual property that has significant standalone

functionality (i.e. software, drug formulas, completed media, etc.) is satisfied at a

point in time.

• A promise to grant a license for intellectual property (IP) that DOES NOT have

significant standalone functionality (i.e. brands, trade names, franchise rights, etc.)

is satisfied over time as the promise includes supporting or maintaining the IP

during the license period.



Improves licensing implementation guidance on when to recognize revenue for a

sales-based or usage-based royalty promised in exchange for a license of intellectual

property.

• An entity should not split a sales-based or usage-based royalty into a portion

subject to the specific recognition guidance and a portion that is not subject to that

guidance. That requirement does not affect allocation of the transaction price to

performance obligations.

• The specific guidance applies to a sales-based or usage-based royalty whenever

the predominant item to which the royalty relates is a license of intellectual

property.


ASU 2016-11 - Rescission of SEC Guidance

The amendments rescind certain SEC Staff Observer Comments announced at the

March 3, 2016 Emerging Issues Task Force meeting. SEC Staff Observer Comments

about revenue and expense recognition for freight services in process, accounting for

shipping and handling fees and costs, accounting for consideration given by a vendor

to a customer, and accounting for gas-balancing arrangements should not be relied

upon


ASU 2016-12 - Narrow Scope Improvements and Practical Expedients

• Clarifies the objective of the collectability criterion in Step 1 by determining

whether the contract is valid and represents a substantive transaction based on

the customer’s ability and intention to pay the promised consideration for the

goods or services received.

• A new criterion is added to clarify recognition of revenue for a contract that fails to

meet the criterion in Step 1. The new criterion allows an entity to recognize

revenue in the amount of consideration received if an entity has transferred control

of goods or services, stopped transferring goods or services, has no obligation

under the contract to transfer additional goods or services, and consideration

received from the customer is nonrefundable.



• Permit an entity to elect an accounting policy to exclude amounts collected from

customers for all sales (and other similar) taxes from the transaction price.

• The amendments specify that the measurement date for noncash consideration is

contract inception.

• An entity should apply guidance on variable consideration only to the variability

resulting from reasons other than the form of the consideration.

• Provides a practical expedient to reflect the aggregate effect of all modifications

that occur before the beginning of the earliest period presented when identifying

the satisfied and unsatisfied performance obligations, determining the transaction

price, and allocating the transaction price to the satisfied and unsatisfied

performance obligations.



• The amendments clarify that a completed contract for purposes of transition is a

contract for which all (or substantially all) of the revenue was recognized under

legacy GAAP before the date of initial application.

• Accounting for elements of a contract that do not affect revenue under legacy

GAAP are irrelevant to the assessment of whether a contract is complete.

• Permits an entity to apply the modified retrospective transition method either to all

contracts or only to contracts that are not completed contracts.

• An entity that retrospectively applies the revenue recognition guidance to each

prior reporting period is not required to disclose the effect of the accounting

change for the period of adoption, however, is still required to disclose the effect of

the changes on any prior periods retrospectively adjusted.


• History of lease guidance

• Purpose of new lease guidance

• Overview of new lease guidance

• Impact to loan covenants

• Other business implications

• Effective dates

Lease Accounting - Objectives


• Existing Lease guidance was developed in 1976 (ASC 840)

– The guidance required lessees and lessors to classify leases as either capital or

operating

– The classification of the lease drives the initial recognition

• Capital leases are recorded on the balance sheet

• Operating leases expensed as incurred using the straight line method

• The existing guidance was criticized for failing to meet the needs of

financial statement users:

– Did not recognize assets and liabilities arising from long-term operating leases on the

balance sheet and

– Did not always provide a faithful representation of the leasing transaction

• The Financial Accounting Standards Board (FASB) issued ASU

2016-02, Leases, in February 2016 (ASC 842)

Lease Accounting - History


• Purpose of ASU:

– To increase transparency and comparability among organizations by recognizing long-

term lease assets and long-term lease liabilities on the balance sheet

– To disclose additional key information about leasing arrangements

• Core principle:

– Lease contracts give rise to assets (right of use) and liabilities (lease

payments) that should be reflected on the balance sheet.

• ASC 842 is effective for public companies for fiscal years beginning after December

15, 2018. For all other entities, effective for fiscal years beginning after December

15, 2019

Lease Accounting – ASU 2016-02 Purpose


Lease Accounting – Overview

• Lessor Accounting:

– Largely unchanged from ASC 840

– Leases are classified as:

• Sale-type leases

• Direct financing leases

• Operating leases

– A lessor is precluded from recognizing selling profit or sales revenue at lease commencement for a lease

that does not transfer control of the underlying asset to the lessee



• First a decision must be made as to whether a lease contract exists.

If a lease contract exists, the related asset/liability is recorded on the balance

sheet at initial recognition.

– A lease is a contract that conveys the right to control the use of identified property, plant, or equipment

for a period of time in exchange for considerations. Control means that the customer has the right to

obtain substantially all economic benefits from the use of the asset AND the right to direct the use of the

asset.



• Example #1

• A contract between Customer and a freight carrier (Supplier)

provides the following:

– The use of 10 rail cars of a particular type for 5 years. The contract specifies the rail cars; the cars are owned by Supplier.

– Customer determines when, where, and which goods are to be transported using the cars.

– When the cars are not in use, they are kept at Customer’s premises. The Customer can use the cars for another purpose (for

example, storage) if it so chooses. However, the contract specifies that Customer cannot transport particular types of cargo

(for example, explosives).

– If a particular car needs to be serviced or repaired, Supplier is required to substitute a car of the same type. Otherwise, and

other than on default by Customer, Supplier cannot retrieve the cars during the five-year period.

• This contract contains a lease since the Customer has the right to obtain substantially all economic

benefits from the use of the asset AND the right to direct the use of the asset.



• Example #2

• A contract between Customer and a freight carrier (Supplier)

provides the following:

– The contract between Customer and Supplier requires Supplier to transport a specified quantity of goods by using a specified

type of rail car in accordance with a stated timetable for a period of five years. The timetable and quantity of goods specified

are equivalent to Customer having the use of 10 rail cars for 5 years.

– Supplier provides the rail cars, driver, and engine as part of the contract. The contract states the nature and quantity of the

goods to be transported (and the type of rail car to be used to transport the goods).

– Supplier has a large pool of similar cars that can be used to fulfill the requirements of the contract. Similarly, Supplier can

choose to use any one of a number of engines to fulfill each of Customer’s requests, and one engine could be used to

transport not only Customer’s goods, but also the goods of other customers.

– The cars and engines are stored at Supplier’s premises when not being used to transport goods.

• This contract does not contain a lease of rail cars or of an engine since the customer does not have the

right to obtain substantially all economic benefits from the use of the asset or the right to direct

the use of the asset.



• Two Types of Leases:

– Finance Lease: Meets any of the following criteria

• The lease transfers ownership of the asset to the lessee by the end of the lease term

• The lease grants the lessee an option to purchase the underlying asset that the lessee is

reasonably certain (probable) to exercise

• The lease term is for the major part of the remaining economic life of the underlying asset (current

guidance is 75%)

• The present value of the sum of the lease payments and residual value guarantee equals or

exceeds substantially all of the fair value of the underlying asset (current guidance specifies 90%)

• The underlying asset is of such a specialized nature that it is expected to have no alternative use to

the lessor at the end of the lease term

– Operating Lease: Any lease that is not a finance lease



• Finance Lease:

– Similar to capital leases under ASC 840

– Recognize a right of use asset and a lease payment liability, initially measured at the present value (PV)

of the lease payments

– Recognize interest on the lease payment liability separately from right of use asset amortization in the

statement of comprehensive income

– Classify lease payment liability principal payments as financing activities in the Statement of Cash Flows

(SCF)

– Classify lease payment liability interest payments and variable lease payments as operating activities in

the SCF

• Operating Lease:

– Recognize a right of use asset and a lease payment liability, initially measured at the present value of the

lease payments

– Recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on

a straight line basis

– Classify all cash payments within operating activities in the SCF



• For leases with a term of 12 months or less

– Lessee can make a policy election not to recognize lease assets

and lease liabilities on the balance sheet

– Lease expense recognized on a straight line basis

– Must consider options to extend when considering this election

• Recognition and Measurement:

– Initial lease classification (operating vs finance) should not be reassessed unless the contract is modified

– Initial measurement of the lease payment liability is the same for both finance and operating leases

(present value of the remaining lease payments, including options to extend)

• The discount rate for the lease initially used to determine the PV of the lease payments is the rate

implicit in the lease

• Private companies are permitted an accounting policy election to use a risk free discount rate for

the lease (generally the federal funds rate)



• Recognition and Measurement, continued:

– Initial recognition of the right of use asset is the same for both

finance and operating leases

• At cost consisting of:

– Lease payment liability's initial measurement value

– Any lease payments made to the lessor at or before lease commencement date

– Less any lease incentives

– Plus any direct costs incurred

– When measuring the lease payments to be made in optional periods, the option(s) must by reasonably

certain to be exercised

» Reasonably certain is a high degree of confidence that a future event will take place

– Variable lease payments are excluded unless they depend on an index or rate




– Subsequent measurement

• Finance Lease:

– Lessee recognizes interest on the lease liability separately from amortization of the Right of

Use asset in the income statement

– Right of Use asset is amortized on a straight line basis

– Lease payment liability is amortized on an effective interest basis

– Results in a front loading of lease related expenses

• Operating Lease:

– Lease payment liability is reduced by recognizing the present value of the remaining lease

payments not yet paid

– Initial Right of Use Asset balance is reduced by periodically adjusting the amortization of the

asset by the effective interest on the lease payment liability to arrive at a constant straight-

line expense

– Lessee recognizes a single lease cost




– Subsequent measurement

• Liability over time:

– Classified as long-term with any short-term portion presented separately

– The lessee’s obligation to the lessor increases due to the assumed accrual of interest on the

liability

– The liability decreases as a result of payments that the lessee makes to the lessor

– The carrying value of the liability reflects the present value of the lessee’s remaining financial

obligation to the lessor

• Right of Use asset (RoU)over time:

– The lessee’s RoU asset is an inherently intangible asset- a right – that the lessee has

purchased and therefor owns

– Typically classified as long-term

– Systematically amortized over time



• Example:

– 3 year lease ($10,000 in yr.1, $15,000 in yr. 2, $20,000 in yr. 3)

– Initial measurement or right of use asset and liability determined to be $38,000 at a discount rate of 8%



• Disclosure Requirements for Lessees:

– Qualitative Disclosures

• Information about the nature of lease (terms, conditions, options that are recognized as part of RoU asset and

those that are not, restrictions or covenants, subleases)

• Information about leases that have not yet commenced but create significant assets/liabilities

• Information about significant assumptions and judgements made in applying the requirements of ASU 2016-02

– Determination of whether a contract contains a lease

– Allocation of consideration

– Determination of the discount rate

– Quantitative Disclosures

• Total lease cost

• Maturity analysis of lease liabilities

• Undiscounted cash flows on an annual basis for minimum of five years and total amounts for remaining years


• Impact to loan covenants:

– Financial risk metrics will change:

• Debt to equity will increase

• Interest coverage will decrease

– Financial performance metrics will change:

• EBITDA will increase

• Return on assets will decrease

• Current ratio will decrease

– Loan covenants and other long term contractual credit arrangements may be violated based on the

addition of RoU assets and lease payment liabilities on the balance sheet

Lease Accounting – Impact to Loan Covenants


• Other Business Implications:

– Accounting policies and business implications will

need to be addressed for lease activity. Some areas of

consideration include:

• Budgeting and planning processes

• Lease vs. buy decisions

• Internal controls over lease transactions

Lease Accounting – Other Business Implications


Lease Accounting – Effective Dates

• ASC 842 is effective for public companies for fiscal years beginning after

December 15, 2018. For all other entities, effective for fiscal years beginning after

December 15, 2019

• Early application is permitted for all entities

• In transition, lessees and lessors are required to recognize, measure, and present

leases at the beginning of the earliest period presented using a modified

retrospective approach

– Requires an entity to apply the new guidance to all periods presented in the financial statements. Also

requires the adjustment of previously issued financial statements.


Questions?


Mid-Year Tax Considerations


Domestic Production Activities Deduction (DPAD)

Incentives for keeping production inside the U.S.

• A deduction up to 9% of net income

• Qualified activities include: manufacturing,

production, growth or extraction of tangible personal

property, computer software, real estate (MPGE)

• Court cases and proposed regulations may affect

how IRS will handle issues surrounding DPAD.


Accelerated Depreciation

Section 179

• IRC §179 allows the immediate expensing of certain

depreciable assets

• $500,000 expense limitation and $2M beginning of

phase-out

• Includes

o Most computer software

o Leasehold improvements

o Retail building

o Restaurant property

o Heating & air conditioning units


Accelerated Depreciation (cont’d)

Bonus Depreciation

• 50% depreciation

• Must be new property

• Includes

o Tangible depreciable property with a recovery period of 20 years or

less

o Computer software

o Certain qualified leasehold improvements

If the year is profitable, you may want to consider replacing old

equipment or acquiring new equipment to take advantage of

accelerated deprecation and lowering taxable income.


IRS Repair Regulations - REMINDER

• Effective for tax years beginning on or after January 1, 2016,

the deminimus safe harbor threshold increased from $500 to

$2,500 per invoice or per item without Applicable Financial

Statements (AFS)*

• Annual election to be made with the tax return

• Capitalization policy:

• Not required without AFS, but recommended

• If AFS applies, the policy must be written

*”Applicable financial statements” defined as Reviewed or Audited financial statements


Research & Development Credit

Qualified small businesses can elect to apply a portion

of the Credit against their employer FICA tax liability.

• Gross receipts for the taxable year do not exceed $5M

AND

• No gross receipts for any taxable year preceding the 5-

taxable-year period ending with the year in which the credit

is allowed

• Credit used in this manner limited to $250,000 per year


Research & Development Credit (cont’d)

• Credit is allowed for the 1st calendar quarter which begins

after the date on which the return is filed

• First available use will be the 2017 Q2 Payroll Tax Return if

filed before the deadline

• Use of the R&D credit offset will not reduce the allowable

deductions for the underlying research expenses.

• Election is made to convert an amount of R&D credit to

payroll tax credit and can only be revoked by the IRS.


Work Opportunity Tax Credit (WOTC)

• Effective for individuals who begin work after

December 31, 2014 and before January 1, 2020

• Used for qualified first- and second-year wages of

targeted group employees

• Target group has been expanded to include long-

term unemployment recipients (defined as 27

consecutive weeks and includes a period in which

the individual was receiving unemployment

compensation)


Year-end Planning Considerations

Year-end Tax Projections to consider bonus payouts, shareholder

distributions, etc.

• Compensation – bonus, commissions, vacation, etc.:

o Accruals must be paid within 2 ½ months of year-end –

regardless of whether or not the tax return is extended

o For shareholders, accruals are not deductible until paid (direct &

indirect ownership)

o C Corporation – 50% shareholders

o S Corporation – 2% shareholders

• Employer retirement plan contribution:

o Accrual must be paid before the return is filed – inclusive of

extended return filing date


Nevada Commerce Tax REMINDER

• Applies to all business entities engaged in business activities within NV:

including partnerships, C corporations, S corporations, LLCs, sole

proprietorships (Sch C) and rental property (Sch E)

• All foreign & domestic businesses registered with NV need to file a

Commerce Tax return even if they have no income during the year

• Tax imposed on gross receipts exceeding $4M

• Tax rate varies by business category and ranges from 0.051% to 0.331%

• Tax year for the Commerce Tax is July 1 – June 30, regardless of the

business entity’s year-end

Initial tax reports are due August 15, 2016


New Due Dates for Business Returns in 2017 REMINDER • Partnership Returns (Form 1065): due March 15, 2017 (previously

due in April)

• S Corporation Returns (Form 1120S): due March 15, 2017 (this

remains unchanged)

• C Corporation Returns (Form 1120): due April 17, 2017 (previously

due in March)

• Foreign Bank Account Reporting (FBAR): due April 17, 2017

(previously due June 30th)

At present California does not conform to these new due

date changes, but stay tuned: discussion is taking place.


• Individual

• Divorce

• Estate/Trusts/Gifts

• Build your Personal team

– Tax

– Lawyer

– Financial Planner

• Protect your Identity

– Get an IRS IP-PIN

• Identity Protection Personal Identification Number

Personal Tax Planning


Individual

• Capital Gains Tax

– Sell loser stocks

– Can buy back, but must wait 30 days

• Estimated Tax

• Donations

– Appreciated stocks

• FMV – no Capital Gains


Individuals (cont’d)

• RMD (Required Minimum Distribution)

– Tax-free distributions for charity

• New 2016

– 1098 Mortgage Interest Statement

– FinCen Report 114 due on April 15

– NOL carryover requires documentation


Individual - California

• 1031 Exchanges

– Form 3840 Filed every year until sold

– Failure to file recognition of deferred gain

• NOL Carryback

• Nonconformity

– AGI limit on medical deductions

– Section 179 and bonus

– HSA


Divorce Tax Planning

• Hiring Advisers

• Conflict of Interest

• Community Property

• Pre- and Postnuptial Agreements

• Transfer of Marital Property

• Dividing the Family Business

• Dividing Pension Plan

• Dividing the carryover losses

– Capital loss

– Passive loss


Divorce Tax Planning

• Filing Status

– Who claims the child/children

– Married Filing Joint vs Separate

• Support

– Alimony and Separate Maintenance

– Family Support

– Child Support


Questions?


Contact Information

Justin Scripps

Audit Manager

[email protected]

408.286.7780

Jacqueline Pruscha

Audit Manager

[email protected]

650.358.9000

Jessica Mendiola

Audit Manager

[email protected]

925.271.8700

Katie Owen

Experienced Senior

Audit Associate

[email protected]

650.358.9000

Lourdes Rabara

Tax Manager

[email protected]

925.271.8700

Donna Holm

Senior Tax Manager

[email protected]

408.286.7780

Jay Lee

Experienced Senior

Tax Associate

[email protected]

925.271.8700

Documents

Sensiba San Filippo LLP - ssfllp.com · ASU 2016-10 - Identifying Performance Obligations and Licensing Improves the licensing guidance when determining whether an entity has granted