gs-cpas.com RSS Feed http://gs-cpas.com/ Take a look at our recent blog posts and client newsletter articles. en-us Fri, 01 Oct 2021 09:00:00 -0500 Fri, 01 Oct 2021 09:00:00 -0500 Use These Strategies To Pass on Wealth to Heirs http://www.gs-cpas.com/newsletter.php#4 Low interest rates and a volatile stock market create additional opportunities for wealthy individuals to transfer money to heirs tax-free. Fri, 01 Oct 2021 09:00:00 -0500 http://www.gs-cpas.com/newsletter.php#4 Small Business: Tips for Ensuring Financial Success http://www.gs-cpas.com/newsletter.php#2 Learn how cost accounting helps you make smarter business decisions and lead you to financial success. Fri, 01 Oct 2021 09:00:00 -0500 http://www.gs-cpas.com/newsletter.php#2 Marginal vs. Effective Tax Rates http://www.gs-cpas.com/newsletter.php#1 Understanding marginal and effective tax rates is important for tax planning purposes, but many taxpayers don't fully understand the difference. Fri, 01 Oct 2021 09:00:00 -0500 http://www.gs-cpas.com/newsletter.php#1 If You Receive an IRS Letter or Notice http://www.gs-cpas.com/newsletter.php#5 The IRS sends millions of letters and notices to taxpayers for a variety of reasons. Many of these letters and notices can be dealt with without calling or visiting an IRS office. Fri, 01 Oct 2021 09:00:00 -0500 http://www.gs-cpas.com/newsletter.php#5 Defer Capital Gains Using Like-Kind Exchanges http://www.gs-cpas.com/newsletter.php#3 If real estate's your game, did you know that it's possible to defer capital gains by taking advantage of a Section 1031 exchange that allows you to swap investment property on a tax-deferred basis? Fri, 01 Oct 2021 09:00:00 -0500 http://www.gs-cpas.com/newsletter.php#3 What Is a Designated Roth Account? http://www.gs-cpas.com/newsletter.php#2 If you are a high-income earner who participates in a 401(k), 403(b), or governmental 457(b) retirement plan that has a designated Roth account, making contributions to that account could be a smart move. Wed, 01 Sep 2021 09:00:00 -0500 http://www.gs-cpas.com/newsletter.php#2 Verifying Your Identity When Calling the IRS http://www.gs-cpas.com/newsletter.php#4 If you need to contact the IRS, you will be asked to verify your identity. Here's what you need to know before you call. Wed, 01 Sep 2021 09:00:00 -0500 http://www.gs-cpas.com/newsletter.php#4 Tax Rules for Divorce and Alimony Payments http://www.gs-cpas.com/newsletter.php#5 Tax rules regarding divorce and separation can and do change - as they recently did under tax reform - and the last thing on anyone's mind during a divorce or separation is its effect on their tax situation. Wed, 01 Sep 2021 09:00:00 -0500 http://www.gs-cpas.com/newsletter.php#5 Tax Relief for Those Affected by Natural Disasters http://www.gs-cpas.com/newsletter.php#1 Tax relief may be available if you've been affected by a natural disaster this year, but only if you meet certain conditions. Wed, 01 Sep 2021 09:00:00 -0500 http://www.gs-cpas.com/newsletter.php#1 Six Things To Know Before You Start a Business http://www.gs-cpas.com/newsletter.php#3 Starting your own business is an exciting prospect, but there is more to it than simply writing a business plan. Wed, 01 Sep 2021 09:00:00 -0500 http://www.gs-cpas.com/newsletter.php#3 IRS Announces Open to Efile Season: February 15th 2021 http://www.gsb-cpas.com/blog.php?id=11 IRS Announces Open to Efile Season: February 15th 2021 Fri, 15 Jan 2021 09:00:00 -0600 http://www.gsb-cpas.com/blog.php?id=11 December 29, 2020: Getting Ready for 1099 Filing Seaon http://www.gsb-cpas.com/blog.php?id=10 Who Must File & What's New Tue, 29 Dec 2020 09:00:00 -0600 http://www.gsb-cpas.com/blog.php?id=10 November 20th 2020: Key Provisions of the Secure Act http://www.gsb-cpas.com/blog.php?id=9 Passed by Congress in late December 2019, the SECURE (Setting Every Community Up for Retire-ment Enhancement) Act makes significant changes to certain retirement plan regulations. We be-lieve the five most significant changes of the act are: 1. Required minimum distributions (RMD) can start at age 72 Ã???Ã??Ã?¢?? if you turn age 70.5 in 2020 or later you do not have to take your RMDs until you either: reach age 72 or retire, whichever is later. Additionally, due to the COVID19 pandemic, individuals have the option of skip-ping the RMD entirely in 2020. 2. IRA contributions Ã???Ã??Ã?¢?? Beginning in 2020, if you are aged 70.5 and still working you can con-tinue to make IRA contributions. 3. Distributions from inherited non-spousal IRAs must be taken within ten years Ã???Ã??Ã?¢?? under the SECURE Act you can no longer stretch IRA distributions over your expected life. Pre 2020 inherited accounts are grandfathered and not subject to this new rule. 4. Non full-time employees may be eligible to participate in a 401(k) plan Ã???Ã??Ã?¢?? generally 401(k) participation was based on 1,000 hour per year eligibility requirement. Under the new Act if an employee, age 21 or over, has completed at least 500 hours of service for three con-secutive years they are eligible to participate in company sponsored 401(k) plans (generally not applicable to collectively bargained plans). 5. Non-penalty withdrawals for birth/adoption expenses Ã???Ã??Ã?¢?? the Act allows for a penalty-free withdrawal of up to $5,000 for childbirth or adoption expenses per child. The withdrawal will be taxed but no penalty for early distribution will be levied so long as the withdrawal is taken within twelve months following the birth/adoption. There are other changes made by the Act, but we feel the five listed above are the most significant and will be the most utilized. As with any new law we urge you to seek professional advice before taking any action. Contact our partners for assistance with the provisions of the Act. Fri, 20 Nov 2020 09:00:00 -0600 http://www.gsb-cpas.com/blog.php?id=9 October 2, 2020: Taxability of PPP Loans Updated http://www.gsb-cpas.com/blog.php?id=8 In the spring of 2020 many small businesses throughout the country received proceeds from the Paycheck Protection Program (PPP). Program terms called for funds to be spent as follows: at least 60% spent on payroll and related costs, remaining program funds spent on rent, utilities and interest obligations, and funds being expended within a 24 week period. Provided the above criteria were met it is very likely the loan would be forgiven and essentially the income received would be a tax-free grant from the government. However, are the expenses paid (the wages, rents, utilities and interest) with this tax free income deductible? The answer as of this writing is clear â?? no. The IRS has affirmed in notice 2020-32 that allowing a tax deduction for expenses paid with tax free funds is tantamount to business owners receiving a â??double benefitâ??. This disallowance of deductions results in taxpayers being in the same position as if the proceeds had been taxable in the first place. An example â?? a business shows a tentative loss of $-67,000 to date in 2020. Being in a loss position, no income tax liability would be expected with this scenario. But letâ??s assume that during 2020, that same business also received a $287,000 PPP loan which was fully forgiven. With these expenses being deemed non-deductible, the loss of $-67,000 turns into taxable income of $220,000. If a federal tax rate of 25% is assumed along with a 5% state tax rate, a tax liability of $66,000 now looms. The fix for this has to come from Congressional action which would dictate that tax free income received from the PPP program would not result in denial of deductions for income tax purposes. As of early October, 2020 political leaders from both parties indicate that a bill correcting this tax treatment will be passed. However, negotiations to this point have failed and with the end of the year just around the corner small business owners need to be aware of the possibility that forgiven PPP loan proceeds could become a taxable event. With this in mind, please do not hesitate to contact our office for updates or to review your specific year end tax situation. Fri, 02 Oct 2020 09:00:00 -0500 http://www.gsb-cpas.com/blog.php?id=8 August 20, 2020: Qualitative Factors within your Allowance for Loan Loss Calculation http://www.gsb-cpas.com/blog.php?id=1 While many think qualitative factors (Q-factors) are a new requirement leading into CECL, consideration of Q-factors has actually been a required part of the allowance calculation for years (ASC 450-20 formerly FAS 5). It is only recently that regulators, examiners, and auditors have given findings when Q-factor consideration is absent from a financial institutionâ??s allowance calculation in order to spur financial institutions to prepare for the changes CECL implementation will have on organizations. Within an allowance calculation, general reserves should be broken down by 1) segmenting of homogeneous loan pools, 2) calculating appropriate historic loss rates, 3) specific reserves for impaired loans, and 4) determining qualitative adjustments. According to the Federal Reserveâ??s 2006 Interagency Policy on the ALLL, â??management should also consider those qualitative or environmental factors that are likely to cause estimated credit losses associated with the institutionâ??s existing portfolio to differ from historical loss experience.â? Q-factors actually add to the historical loss calculation to help figure out the potential loss in loan portfolios based on inherent risks that are not easily quantified. In other words, past events may not be a complete indicator on current or future events, so you should include Q-factors in your calculation to bridge this potential gap. It may feel frustrating that you canâ??t find calculations or exact guidance on what Q-factors to look for and what % to use in your calculation, however that is because Q-factors are extremely subjective and will vary greatly from institution to institution. The 2006 Interagency Policy on the ALLL also provides some guidance on Q-factors based on nine factors that should be considered when estimating credit losses: 1) changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses, 2) changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments, 3) changes in the nature and volume of the portfolio and in the terms of loans, 4) changes in the experience, ability, and depth of lending management and other relevant staff, 5) changes in the volume and severity of past due loans, the volume of non-accrual loans, and the volume and severity of adversely classified or graded loans, 6) changes in the quality of the institutionâ??s loan review system, 7) changes in the value of underlying collateral for collateral-dependent loans, 8) the existence and effect of any concentrations of credit, and changes in the level of such concentrations, and 9) the effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institutionâ??s existing portfolio. Q-factors could potentially include a national or local increase in unemployment rate, instability of a large employer within your community, the increase in national web-based lending institutions, and as many have now discovered, the ripple effects of a global pandemic such as Covid-19. How do I account for Q-factors? Regulators require â??sound judgement and documentationâ? to support which factors affect the analysis and the impact of those factors on the loss measurement. The first and most important step is to document, document, document! An internal memo as part of your monthly or quarterly allowance calculation is a great way to document your consideration of the types of Q-factors your financial institution sees as a potential qualitative and environmental risks. This internal memo will be a requirement under CECL. Once you have determined what your Q-factors are, you then assign a % to apply to your allowance for loan loss calculation. This % and how it is applied to pools or to the total will vary from institution to institution. Regulators will be looking for you to document your considerations and how you applied the factors. You should make sure your allowance for loan loss policy includes a section on Q-factors, how often considerations need to be updated, and how they should be applied to your current calculation. Our best advice is to document everything, keep it simple, and donâ??t get lost in the weeds. Get creative and involve the appropriate personnel in the discussion. Consider holding a brainstorming meeting with audit/supervisory committee members, lending, and financial staff to come up with possible Q-factors. You may be surprised at how easy it is to come up with these considerations and to weigh each one to help determine the right factor to apply. You should refer to regional economic reports provided by the Federal Bank in your geographic area and/or the Bureau of Economic Analysis from the US Department of Commerce to assist you in establishing these potential Q-factors. Doing this now will help your institution when CECL does need to be implemented if your institutions does not currently account for Q-factors in your allowance calculation. But even more importantly, it will help you derive a more accurate allowance to account for losses on your loan portfolio. Thu, 20 Aug 2020 09:00:00 -0500 http://www.gsb-cpas.com/blog.php?id=1 May 14, 2020: SBA Provides Clarity on PPP Good-Faith Certification for Loans Under $2 Million http://www.gsb-cpas.com/blog.php?id=6 On May 13, 2020, the SBA released guidance in the Treasuryâ??s Q&A related to the PPP, Question 46, regarding Paycheck Protection Program (PPP) funds. What does it say about PPP loans of less than $2 million? The guidance states that borrowers who accepted money of less than $2 million will be deemed to have made their good-faith certification concerning the necessity of their loan request. What does this mean? It appears to say that those business will not be required to substantiate their need for the funds. What does it say about PPP loans of more than $2 million? For PPP loans over $2 million dollars, the guidance states that borrowers who accepted money of more than $2 million may still need to provide support for the need certification. The SBA expounded on this to say that during the review of these individual loans, if they determine there was a lack of adequate basis/need, the SBA will indeed seek repayment of the loan balance in full and the individual will not be eligible for forgiveness. The SBA hopes this clarification will provide borrowers with economic certainty as these individuals and businesses retain/rehire employees, while at the same time allowing the SBA to focus its reviews on larger loans. Thu, 14 May 2020 09:00:00 -0500 http://www.gsb-cpas.com/blog.php?id=6 April 9, 2020: CARES ACT- and its impact on Retirement Plans http://www.gsb-cpas.com/blog.php?id=7 The CARES (Coronavirus Aid, Relief, and Economic Security) Act was passed on March 27, 2020 and provides various options for access to retirement savings for those in financial distress due to the coronavirus pandemic. Tax Favored Distributions â?? Up to $100,000 of tax favored distributions are available to Qualifying Individuals â?? (i.e. a plan participant or their spouse or dependent who has been diagnosed with the virus; or any participant who has suffered adverse financial consequences as a result of a coronavirus related quarantine, furlough, lay off, reduction in work hours, unavailability of child care services or closing/reduction in operating hours of your business. The distributions are taxed as regular income â?? however, the 10% penalty on early withdrawal does not apply. Further, the taxable income can be reported ratably over a 3 year period beginning in 2020. Some or all of the amounts withdrawn may be repaid in one or more payments before the 3 year anniversary of the distribution â?? in effect reversing the taxability of the distribution to the extent repaid. These rules will apply to any distributions made between January 1, 2020 and December 31, 2020. Participant Loans â?? Normal loan limits for borrowings from a qualified plan have previously been the lesser of 50% of the plan balance, or $50,000. The CARES Act provides for increased loan amounts of the lesser of 100% of the participantâ??s vested balance, or $100,000. The deadline for such borrowings is September 23, 2020. For those making loan repayments on balances previously outstanding, any repayments which were to be due between March 27, 2020 and December 31, 2020 may be delayed for up to one year. If this one year delay applies, then the normal repayment requirement of a five year maximum is extended to six years. Language is still forthcoming as to how amortization schedules will be recalculated under these provisions. It is also noted that a participant MAY continue to make their regular loan repayments should they choose to do so. Required Minimum Distributions â?? (RMDâ??s) Required minimum distributions from defined contribution plans for calendar year 2020 are waived (RMDâ??s for defined benefit plans were not changed). The includes RMDâ??s which are required to be paid by April 1, 2020 for a participant whose initial RMD was during 2019, unless the distribution was already taken during 2019. Congress approved this waiver for two reasons 1) 2020 RMDâ??s are based upon December 31, 2019 account balances; in some instances those balances have decreased in value by as much as 30% and distribution based upon these values would be considered unfair, and 2) not waiving the RMD requirement would in essence be forcing many retirees to sell their investments with the market significantly down, thereby forcing them to take losses. Please remember, the bill was passed on March 27, 2020 â?? just days ago. Additional wording, clarifications and new details are evolving daily. With this in mind please, do not hesitate to contact our office with questions which might be specific to your unique situation. Thu, 09 Apr 2020 09:00:00 -0500 http://www.gsb-cpas.com/blog.php?id=7 April 8, 2020: Corona Virus Business Assistance Programs http://www.gsb-cpas.com/blog.php?id=2 Due to the COVID-19 pandemic, the US passed the CARES (Coronavirus Aid, Relief and Economic Security Act) Act which contains various economic stimulus opportunities for the citizens of the US. For the business community, the following options are available: US Small Business Administration (SBA) is offering three types of loan programs, as follows: Economic Injury Disaster Loan Assistance (EIDL) â?? this loan, which existed before COVID-19, allows low interest rate loans up to $2 million to qualified small businesses. Proceeds may be used for working capital and ordinary expenditures. The amount available is calculated based on the economic injury a business has suffered due to COVID-19. Rates of interest on the EIDL loans are 3.75% for small business and 2.75% for not-for-profit organizations. EIDL loans are not forgivable. Repayment terms are varied (depending on whether a refinancing of existing debt is taking place) but can be up to ten years. Eligibility is dependent on the industry your business is in. Manufacturing companies with less than 500 employees and most non-manufacturing companies with annual receipts under $7,500,000 can qualify. Applications are made directly to SBA and are available on the SBA website. Paycheck Protection Program- this program provides federally guaranteed loans to small businesses. The program is administered through the SBA's 7(a) loan program. Loans can be as large as 2.5 times the businesses average monthly payroll costs as calculated over the preceding twelve months, or $10,000,000, whichever is less. Loans bear interest at a rate not to exceed 4%. For loans issued between now and June 30, 2020, payments of both principal and interest can be deferred for between six and twelve months. If the business retains existing employees at or near current salary levels, the debt will be forgiven â?? to the extent that the proceeds are used in an eight-week period following loan origination for payroll costs, mortgage interest, rent and utility payments. The amount forgiven is based on a formula surrounding workforce reductions. Employee cuts and/or salary/pay reductions will reduce amounts forgiven. Eligibility is based on meeting one of the following requirements: <500 employees; meeting applicable size standards in the business' NAICS code; or <500 per location for those in Accommodations/Food Service industry (per their NAICS code). Sole proprietors, independent contractors and other self-employed individuals are also eligible. Applications for these loans are made directly with a participating SBA lending financial institution. There is a listing of these institutions on the SBA website. Borrowers may not have an EIDL and a Paycheck Protection loan simultaneously. Emergency Relief Funding- the CARES Act establishes a relief program for losses incurred as a result of the COVID-19 pandemic in amounts not to exceed $500,000,000,000 (billion), with the Treasury making loans, loan guarantees and other investments in support of eligible businesses, states and municipalities. This includes assistance to eligible businesses with between 500 and 10,000 employees. Further guidance is forthcoming on this program. Loans under this program will carry interest not to exceed 2% with repayment terms being deferred for the first six months. These loans are not forgivable. Applications under this program are not yet available. Wed, 08 Apr 2020 09:00:00 -0500 http://www.gsb-cpas.com/blog.php?id=2 April 3, 2020: Credit Unions Not Eligible for Paycheck Protection Program Loans http://www.gsb-cpas.com/blog.php?id=4 As the COVID-19 pandemic unfolds we have been getting numerous questions regarding whether Credit Unions are eligible for the forgivable Paycheck Protection Program Loans. Our research indicates that they are not and based on the press release from CUNA (see below) they confirm this. We will continue to monitor the situation as it unfolds. Paycheck Protection Program (PPP) Loans to Credit Unions Posted April 02, 2020 by dyi The Paycheck Protection Program (PPP) Small Business Administration (SBA) loans are an integral part of the CARES Act that President Trump signed into law last week.  According to the SBA, a PPP â??loan is designed to provide a direct incentive for small businesses to keep their workers on the payroll.â? SBA will forgive PPP loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. The CARES Act makes clear that credit unions, as with other SBA lending programs, are eligible to make these loans, but can credit unions borrow through this program? CUNA staff attorneys and outside counsel have analyzed credit unionsâ?? eligibility as PPP borrowers, and agree that according to 13 CFR § 120.110(b), credit unions and other businesses  â??primarily engaged in the business of lendingâ? are not eligible PPP borrowers.§ 120.110(a) excludes non- profit businesses, but does indicate that for profit subsidiaries are eligible for SBA loans. We have been asked if Sec. 1102(a)(2)(d)(i) of the CARES Act, which lists organizations subject to â??increased eligibilityâ? for PPP loans, includes credit unions since it includes â??nonprofit organizations.â? This section wouldnâ??t apply because in Sec. 1102(a)(2)(A)(vii), a nonprofit is defined as an â??organization that is described in section 501(c)(3) of the Internal Revenue Code.â? Credit unions fall under 501(c)(5) and 501(c)(14) of the Internal Revenue Code. It is possible that SBA can make credit unions eligible for PPP through a change in their rules. CUNA is working with SBA and NCUA to see if the SBA is willing to explore these changes as many credit unions could use access to these funds to provide economic relief and offset extraordinary costs related to the pandemic.   Fri, 03 Apr 2020 09:00:00 -0500 http://www.gsb-cpas.com/blog.php?id=4 April 2, 2020: Stimulus Checks http://www.gsb-cpas.com/blog.php?id=3 On March 30, 2020, the IRS released some guidance on distributions of the economic impact payments (stimulus checks). The IRS and Treasury Department say they will start sending out COVID-19 economic impact payments in the next three weeks. Many questions remain regarding these payments, but this is our current understanding. Who is eligible? Tax filers with adjusted gross income (AGI is found on 2019 Form 1040 line 8b/2018 Form 1040 line 7) up to $75,000 for single individuals and up to $150,000 for married filing jointly return filers will receive full payments of $1,200 (S) or $2,400 (MFJ), respectively. Filers with income above these amounts will see their payment reduced by $5 for each $100 above the AGI thresholds mentioned above. Single filers with AGI in excess of $99,000 and joint filers without children with AGI over $198,000 are phased out and not eligible. Parents will also receive $500 for each qualifying child under 17. The IRS will calculate the majority of taxpayerâ??s payment based on your 2019 or 2018 Form 1040, whichever has been most recently filed. Who else is not eligible? Our understanding is that some individuals will not be eligible regardless of income level. Specifically, it appears many college-age students and other adult dependents will not be eligible if they are a dependent on another taxpayerâ??s return and are over 17 years of age. The IRS has not provided additional guidance on this area of the population which appears to be left out. Nonresident aliens and those without a social security number are also not eligible. How will you get your payment? If a bank account is noted on this most recently filed 2018 or 2019 Form 1040, the economic impact payment will be direct deposited to that account. The IRS has plans in the coming weeks to set up a web-based portal for individuals without bank accounts noted on their return to provide banking information to the IRS online. Otherwise, a check will be mailed. What if you donâ??t typically need to file a tax return? The IRS guidance has recently become clear on this for senior citizens and those receiving social security. Social Security recipients who are not typically required to file a tax return do not to need take an action and will receive their payment directly to their bank account. Low income individuals who donâ??t otherwise meet the income guidelines for filing an income tax return may need to file one in order to receive their stimulus check, although the IRS may provide further guidance on this in the coming days. The IRS states that these economic impact payments will be available throughout 2020. These payments are an advancement on a refundable credit on your 2020 Form 1040. While not every aspect of the CARES Act and its economic impact payments is clear yet, Garvey, Steele & Bancroft is staying current with each update. Even though the tax filing deadline for 2019 tax returns has been extended to July 15, 2020, it may very well be in the best interest of most of our clients to get their tax return filed as soon as possible. Although our offices are currently closed to clients, we already have the technology in place so that this is not a factor. In short, we are still working diligently on tax returns. We have numerous ways that you can get your tax documents to us. Please do not hesitate to contact us with questions or concerns. Thu, 02 Apr 2020 09:00:00 -0500 http://www.gsb-cpas.com/blog.php?id=3 December 20, 2019: Point of View http://www.gsb-cpas.com/blog.php?id=5 Welcome to the first edition of â??GSB Point of Viewâ?. We will be sending this electronic update to all of our clients with the goal of keeping you informed about current issues and happenings. Our Point of View will be divided into Audit (focusing on Credit Unions and Not-for-Profit Organizations) and Tax. In this our initial offering, the content will be focused on audit matters, as follows: Upcoming pronouncements There are three pronouncements that will affect our audit clients in the near future, as follows: Accounting for equity investments â?? FASB passed ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. As part of that, FASB also created a new topic in ASC Topic 321, Investments â?? Equity Securities (ASC 321). The major changes within this area are that trading and available for sale categories for equity securities have been eliminated. Also eliminated is the requirement to determining whether equity securities are impaired. Why? ASC 321 requires that equity investments with readily determinable fair values within its scope be measured at fair value with changes in value being recognized in net income. ASC 321 does not apply to certain entities subject to specialized accounting guidance such as broker-dealers, defined benefit plans and investment companies. To make it easy, if you hold equity investments (corporate stocks mainly) you will be required to adopt this new accounting. For Non-public business entities the required date of adoption is effective for fiscal years beginning after December 15, 2018 (2019 for calendar year companies) and for interim year-ends beginning after December 15, 2019. Please note that this standard does not affect accounting for debt investments (bonds), only equity investments. Accounting for Leases - FASB passed ASU 2016-02, Leases (Topic 842). This new pronouncement requires all leases to be â??bookedâ? onto the balance sheet. The accounting for capital-type leases does not change as the underlying asset is booked to fixed assets with a corresponding lease payable in the liability section of the balance sheet. The new requirement is that operating leases must now also be put on the balance sheet as follows, an other asset (called Right to Use assets) with an offsetting lease payable. The other asset will be amortized to the income statement over the life of the lease and all payments on the lease go to reduce the liability. The effective dates for adopting this pronouncement were recently delayed another year. For Non-public business entities the new effective dates are to fiscal years beginning after December 15, 2020 (Calendar year 2021 for calendar year ends). CECL- Also in 2016 (FASB was busy!) FASB issued 2016-13, Financial Instruments â?? Credit Losses (Topic 326). The focus of this standard is to revise the mechanics for calculating the allowance for loan loss accounts for both accounts receivable and loans receivable. The new standard is quite complex and cumbersome, especially for smaller organizations. We will be dedicating future newsletters specifically to CECL and both the requirements and potential methodology for complying. The effective dates for adopting this pronouncement were recently delayed another year. For Non-public business entities the new effective dates are to fiscal years beginning after December 15, 2022 (Calendar year 2023 for calendar year ends). Fri, 20 Dec 2019 09:00:00 -0600 http://www.gsb-cpas.com/blog.php?id=5