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Estate Planning for the Young and Affluent Can Be Tricky

Posted by Melanie Abigania and Jessica Simons on Oct 27, 2021 1:52:50 PM

Events of the last decade have taught us that tax law is anything but certain. So how can young, affluent people plan their estates when the tax landscape may look dramatically different 20, 30 or 40 years from now — or even a few months from now? The answer is by taking a flexible approach that allows you to hedge your bets.

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Topics: Estate Planning

If Your Wealth is Concentrated in a Single Stock: Estate Planning Pitfalls May Exist

Posted by Melanie Abigania and Jessica Simons on Oct 27, 2021 1:51:22 PM

Estate planning and investment risk management go hand in hand. After all, an estate plan is effective only if you have some wealth to transfer to the next generation. One of the most effective strategies for reducing your investment risk is to diversify your holdings.

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Topics: Estate Planning

Don't Forget to Take State Estate Taxes into Account

Posted by Melanie Abigania and Jessica Simons on Oct 27, 2021 1:38:13 PM

A generous gift and estate tax exemption means only a small percentage of families are currently subject to federal estate taxes. But it’s important to consider state estate taxes as well. Although many states tie their exemption amounts to the federal exemption, several states have exemptions that are significantly lower — in some cases $1 million or less.

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Topics: Estate Planning

Reporting Exit and Disposal Costs Under FASB ASC 420, Exit or Disposal Cost Obligations

Posted by Sara West and Madison Oraivej on Oct 21, 2021 12:49:53 PM

The impacts of COVID-19 have caused many private companies and organizations to restructure, pivot their operations, and, in some cases, exit certain business activities, product lines, or operating facilities. As a result, exit and disposal costs may be incurred which must be accounted for in accordance with FASB ASC 420, Exit or Disposal Cost Obligations. As we approach another calendar year-end in the midst of a pandemic, management should consider if they have incurred exit and disposal costs falling under the scope of ASC 420, and if these costs were recorded in accordance with the standard.

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10 Financial Statement Areas to Watch for COVID-related Effects

Posted by Craig Looper on Oct 21, 2021 12:18:12 PM

The COVID-19 pandemic is still adversely affecting many businesses and not-for-profit organizations, but the effects vary, depending on the nature of operations and geographic location. Has your organization factored the effects of the pandemic into its financial statements? You might not have considered this question since last year if your organization prepares statements that comply with U.S. Generally Accepted Accounting Principles only at year end.

As we head into audit season for 2021, it’s time to evaluate whether your financial situation has gotten better — or worse — this year. Here are 10 financial statement areas to home in on:

1. Revenue recognition. Assess how changes in customer preferences, contract modifications, discounts, refund concessions, and changes in credit policies or payment terms impact the top line of the income statement. Also consider related collectability of accounts receivable.

2. Government grants. You may account for these grants as revenue or donor-restricted contributions. Government funding programs may have eligibility, documentation, expense tracking and other requirements (such as government audits) that you may need to address.

3. Estimates and fair values. These items are typically based on budgeting and forecasting of revenue, costs and cash flows. Uncertainty may increase the discount rates used in making estimates and decrease the fair values of certain balance sheet items.

4. Investments. Market changes caused by the pandemic may negatively affect the fair values of investments and financial instruments that qualify for hedge accounting.

5. Inventory. It’s possible that certain market conditions — including inflation, reductions in production and supply chain disruptions — may affect the value of raw materials, work-in-progress and finished goods inventory. Consider the need for write-offs due to obsolescence.

In addition, travel and work restrictions may delay, restrict or prevent year-end physical inventory counts. Your external auditors may have to observe counts remotely, which, in turn, may require additional testing procedures during audit fieldwork.

6. Property, plant and equipment. Evaluate changes in useful lives and related deprecation due to changes in business plans. There may also be potential impairment of long-lived assets and leased assets.

7. Goodwill and other intangible assets. Because of COVID-19 triggering events, these items may require impairment testing and write-offs may be needed.

8. Deferred tax assets. Consider the realizability of these assets in light of current year losses and uncertainty about future events, including the impact of possible federal tax law changes.

9. Accrued liabilities. You may need to book additional liabilities this year for employee terminations, changes in benefits and payroll tax payment deferrals. Also consider whether existing contingency accruals are still adequate.

10. Long-term debt. You may have debt classification issues for existing loans if your organization fails to meet its debt covenants. Financial difficulties may result in debt modification or extinguishment. Also evaluate the compliance requirements of the Paycheck Protection Program (PPP) loans and the probability of forgiveness.

This list is a useful starting point for discussions about how the pandemic has affected financial results in 2021. If you have questions about how to report the effects, contact us for guidance. Your preparedness will help facilitate audit fieldwork and minimize adjustments to your in-house financial reports.

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One Potential Solution to the Retirement Crisis

Posted by Wende Wadsworth, Audit Shareholder on Oct 5, 2021 3:34:17 PM

Recent statistics indicate that the retirement crisis in the United States is very real. According to the Federal Reserve’s Report on the Economic Well-Being of U.S. Households, one-quarter of non-retired citizens have no retirement savings or pension whatsoever.

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Topics: Retirement Reporter, Employee Benefit Plans

Is Your Power of Attorney for Property Powerful Enough?

Posted by Melanie Abigania and Jessica Simons on Sep 29, 2021 12:57:45 PM

Your estate plan may include a power of attorney for property that appoints another person to manage your investments, pay your bills, file your tax returns and otherwise handle your property if you’re unable to do so. But not all powers of attorney are created equal. Thus, it’s a good idea to periodically review your power of attorney with your advisor to ensure that it continues to serve its intended purpose. Questions to consider can include:

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Topics: Estate Planning

Estate Planning in a Socially Distanced Environment

Posted by Melanie Abigania and Jessica Simons on Sep 28, 2021 2:31:48 PM

As many states continue to struggle with the current surge in COVID-19 cases, the “new normal” demands continued social distancing in many areas of life. What does this mean for estate planning? Clearly, estate planning is as important today — or arguably more important — than ever. But how do you plan your estate and execute critical documents if you’re uncomfortable with face-to-face meetings or are required to self-quarantine?

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Topics: COVID-19, Estate Planning

Accounting Methods: Private Companies Have Options

Posted by Sweeney Conrad, PS on Sep 21, 2021 1:44:39 PM

Businesses need financial information that’s accurate, relevant and timely. The Securities and Exchange Commission requires publicly traded companies to follow U.S. Generally Accepted Accounting Principles (GAAP), often considered the “gold standard” in financial reporting in the United States. But privately held companies can use simplified alternative accounting methods.  What’s right for your business depends on its size, regulatory and contractual requirements, management’s future plans and the needs of its stakeholders.

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Accounting Estimates Present Challenges in Times of Uncertainty

Posted by Sweeney Conrad, PS on Sep 21, 2021 1:05:38 PM

In today’s unprecedented market conditions, it can be challenging to predict metrics that underlie your company’s accounting estimates. Examples of key “unknowns” include how much longer certain pandemic issues will continue, how federal stimulus spending will affect the economy over the long run, and the extent to which tax laws and environment regulations may change under the Biden administration.

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