No Future Tax Shock for Bristol-Myers

Pharmaceutical giant Bristol-Myers Squibb plans to “split off” its 97.5% interest in Mead-Johnson Nutrition Co., and according to a November 15 press statement, it’s likely that the deal will constitute a stock-for-stock, tax-free transaction for Mead-Johnson shareholders. Indeed, despite the pub...

By Robert Willens • Nov. 25, 2009

Possession Is 100% of the Tax Law

In a case dating back to a lawsuit filed in 2000, the Tax Court has ruled on the matter of accruing disputed payments involving barge-maker Trinity Industries, an accrual method taxpayer, and its customers J. Russell Flowers Inc. and Florida Marine Transporters Inc. (FMT). The case facts are as f...

By Robert Willens • Nov. 23, 2009

Explore the Trendline➔

Tax policy shifts: What CFOs need to know to stay ahead

Discover how evolving tax policies are creating new opportunities and challenges for CFOs.

By CFO.com staff

IFRS: Jekyll or Hyde?

The primary benefit of the United States adopting International Financial Reporting Standards, touted by accounting standard-setters on both sides of the Atlantic, is that it would make the financial statements of U.S. companies more comparable to those in other countries. In theory, this would h...

By David McCann • Nov. 20, 2009

CFOs High-five on 404 Rollback Bill

The news last week that the requirements of Section 404(b) of the Sarbanes-Oxley Act might never, ever come to bear for small companies had Jeff Klausner, CFO of Infosonics, a wireless-equipment provider with a market cap of around $14 million, “doing backflips,” he says. “This wouldn’t change an...

By Alix Stuart • Nov. 18, 2009

Herz: U.S. Convergence Ball Is in SEC’s Court

“The $64,000 question,” said Financial Accounting Standards Board chairman Robert Herz, is: where is the United States headed as far as converting from U.S. generally accepted accounting principles to international financial reporting standards?His answer: “the ball is mostly with the [Securities...

By David Katz • Nov. 17, 2009

Ghosts of Barbarians Limit New NOL Carrybacks

On November 6, Congress passed, and President Obama signed, legislation extending the period to which net operating losses sustained in 2008 or 2009 may be carried. As a result, the NOLs incurred in either year (but not both) may be carried back to the fifth taxable year preceding the taxable yea...

By Robert Willens • Nov. 16, 2009

GM Speeds Up Checks to Suppliers, Government

General Motors will be paying suppliers more regularly as the postbankruptcy version of the company seeks to grow and eventually become publicly traded again. Doing so will “smooth out the cash-flow portfolio for our supply base as well as smooth out the cash-flow portfolio for us,” said CFO Ray ...

By Sarah Johnson • Nov. 16, 2009

Business Models Matter (for Accounting, That Is)

Changes to the controversial rules surrounding the accounting treatment of financial instruments — rules that were skewered during several rancorous debates among politicians, bankers, and accounting experts during the past year — are one step closer to being finalized.On Thursday the Internation...

By Marie Leone • Nov. 13, 2009

Where’s the Cash? Look Behind You

There’s something for everyone in the aptly named Worker, Homeownership, and Business Assistance Act of 2009, an economic-recovery package signed into law last Friday. The statute, which garnered bipartisan support, provides added unemployment insurance for those who have been out of work the lon...

By Marie Leone • Nov. 11, 2009

Doing the Internal Audit-Management Dance

Internal auditors are used to walking fine lines, but championing a “continuous controls monitoring” program requires extra balancing skill. That’s because designing controls, such as those aimed at preventing financial fraud, is typically defined as an activity performed by company management or...

By David McCann • Nov. 10, 2009

Invesco’s Tax-Free Deal for Van Kampen

Invesco Ltd., a Bermuda corporation, entered into a definitive agreement to acquire Morgan Stanley’s retail investment business, Van Kampen Investments, on October 19. The consideration for the acquisition consists of some $500 million in cash and an amount of Invesco common stock that can equal ...

By Robert Willens • Nov. 9, 2009

Start Your IFRS Engines?

A 40-word statement by Securities and Exchange Commission chairman Mary Schapiro Thursday night, after U.S. and international accounting rulemakers reaffirmed their commitment to creating a single set of principles, didn’t say much on its face. The innocuous two sentences read: “I am greatly enco...

By Marie Leone • Nov. 6, 2009

“Convergence Doesn’t Necessarily Mean the Same.”

The world’s two most influential accounting rulemaking organizations sat down for a joint meeting last week to figure out how to resolve persistent differences in their standards. What’s interesting, say experts, is that while the International Accounting Standards Board and the Financial Account...

By Marie Leone • Nov. 5, 2009

How to Repatriate Earnings Tax-Free

In the realm of overseas investment earnings, the Internal Revenue Code — specifically Section 956(c) — defines “U.S. property” to include an obligation of a “related U.S. person” held by a controlled foreign corporation (CFC). In general, an investment in U.S. property by a CFC produces dividend...

By Robert Willens • Nov. 2, 2009

When Is a Lease a Lease?

A revamped lease accounting standard in the works will likely put hundreds of billions of dollars in assets and obligations onto some companies’ balance sheets. That has had companies that will be most affected by the changes — such as airlines, retailers, and railroads — dreading any progress th...

By Sarah Johnson • Nov. 2, 2009

Sooner, Not Later

Ahead of sweeping changes slated for all revenue-recognition rules in 2011, the Financial Accounting Standards Board threw some companies a bone in October by tweaking two parts of the current rules that could help many companies recognize more revenue earlier, potentially amplifying year-end ear...

By Alix Stuart • Nov. 1, 2009

On Convergence, Speed Is In; Hubris Is Out

If you spot Bob Herz on Cannon Street in London more often over the next year, or discover that David Tweedie is spending more time in Norwalk, Connecticut, it’s because the two accounting standard-setters have agreed that their boards should meet more frequently now that the deadline for converg...

By Marie Leone • Oct. 30, 2009

Pro-American Mood Clouds Convergence

With regulators pushing hard for a convergence of U.S. generally accepted accounting principles and international financial reporting standards within the next few years, the mood here appears to be swinging decidedly in favor of American standard-setters and American standards.For example, 71% o...

By Tim Reason • Oct. 29, 2009

What a Difference a Day Makes to Some Mergers

Equinix Inc. and Switch & Data Facilities Company entered into a definitive agreement last week, in which Equinix aims to buy its rival in a cash and stock deal worth $689 million. The transaction is intended to qualify as a tax-free exchange and, presumably, is conditioned on securing an opi...

By Robert Willens • Oct. 26, 2009

Bridging the Gap on Booking Bank Loans

Accounting for financial instruments – including everything from traditional bank loans to exotic hybrid securities and derivatives – was in the spotlight this week as both U.S. and international standard setters announced changes in how companies would have to account for them.Each group is near...

By Marie Leone • Oct. 23, 2009

Living with a Scarlet Audit Letter

By the time an audit firm announces that it doubts one of its clients will be able to continue as a going concern for the next 12 months, the company in question is usually in the midst of a public downward spiral. It likely has liquidity problems, financing issues, and a plummeting stock price.C...

By Sarah Johnson • Oct. 21, 2009

How to Get on the Same Page as the Taxman

Charlie Brown’s sister should have been a tax authority. When badgering her brother into writing her Christmas list, Sally made a memorable declaration that would resonate with any taxman: “All I want is what I have coming to me. All I want is my fair share.”Indeed, tax authorities are increasing...

By Sarah Johnson • Oct. 20, 2009

Spin-off Options Abound for Bristol-Myers Squibb

Most observers have conceded that a divestiture of Mead Johnson Nutrition Co. by Bristol-Myers Squibb will be a taxable transaction — and the tax liability incurred by Bristol-Myers likely will be commensurately substantial in light of its low basis in Mead Johnson. Bristol-Myers owns 83.1% of Me...

By Robert Willens • Oct. 19, 2009

PCAOB Mulls New Fair-Value Rules

For the past couple of years, regulators have nudged auditors to get more skeptical when it comes to evaluating fair-value measurements. In the meantime, the controversial accounting rules governing how companies apply fair value have been tweaked and companies’ use of judgment for assigning fair...

By Sarah Johnson • Oct. 12, 2009

When Are Capital Contributions Not Taxable?

Virtually all “accessions to wealth” over which the taxpayer has “dominion and control” constitute gross income under the Internal Revenue Code.1 There are, however, certain exceptions that apply, with which companies may want to become familiar. For example, Section 118(a) of the IRS code provid...

By Robert Willens • Oct. 12, 2009