Are You the Gatekeeper? SEC’s Hunt Reminds Auditors of Their Role

Isaac Hunt Jr. has weighed in once again on the state of financial reporting. And once again, it appears the SEC commissioner is not pleased with what’s going on out there.Four days after newly appointed SEC chairman Harvey Pitt warned that his administration would crack down on “pro forma” earni...

By Stephen Taub • Oct. 30, 2001

Tax Shelter Fallout

As political footballs go, tax shelters seem to encourage a lot of punting. But that doesn’t mean CFOs can just sit back and watch.To crack down on abuse, the House and Senate are pushing for tax shelter legislation. But the bills are Clinton Administration holdovers, so politicking ensues. Meanw...

By Marie Leone • Oct. 29, 2001

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

Bridge Act Could Be Boon for Small Businesses

Small businesses may be the engine of economic growth, but managers at many of those companies are having trouble obtaining a little petrol. With a recession in full sway, finance executives at small companies are finding it increasingly difficult to raise capital for expansion. To help entrepren...

By Lisa Yoon • Oct. 23, 2001

Balancing Act

Where new financial accounting rules go, are a spate of complex new tax issues sure to follow?Under FAS 142, for the most part, “the tax planning [does] not really change at all,” says Frank O’Connell, tax partner at accounting firm Crowe Chizek and Co. LLP. The tax code’s counterpart to FAS 142,...

By Lisa Yoon • Oct. 16, 2001

Investors Can See Clearly Now

Break out the compasses. Starting early next year, many CFOs will be entering the uncharted territory of goodwill impairment charges.The new disclosures come in the wake of companies’ adopting the Financial Accounting Standards Board’s Statement No. 141, Business Combinations, and Statement No. 1...

By Jennifer Caplan • Oct. 16, 2001

Separation Anxiety

Generally speaking, CFOs are quick to dismiss any notion that the Financial Accounting Standards Board’s recent issuance of Statement 141, Business Combinations, might possibly alter their companies’ acquisition strategies. And on first blush, the standard’s call to end goodwill amortization for ...

By Craig Schneider • Oct. 16, 2001

First Accounts

If there is one axiom to be drawn from the decline and fall of the dot-com economy, it is this: Last-mover advantage is vastly underrated. And if there is a corollary to this axiom for the finance function, it is: Early adopters often get the shaft.Just ask Tony Ryan, CFO at Ansoft Corp. In April...

By Craig Schneider • Oct. 16, 2001

Watch Your Step Transactions

In Rev. Rul. 2001-46 a corporation acquired (via a reverse merger) the stock of another corporation. In the transaction, the shareholders of the target received both stock and cash, in a 70/30 ratio. As part of the plan, the target was merged with and into the acquirer.In Rev. Rul. 90-95, where t...

By Robert Willens • Oct. 11, 2001

Commission’s Guidance Puts Damper on Leveraged Recaps

Public share prices may be down, but the leveraged-buyout crowd isn’t exactly jumping at bargains.One reason could be new guidance from the SEC on accounting for leveraged recapitalizations. Per Staff Accounting Bulletin 54, if corporate or financial buyers acquire more than 94.9 percent of a com...

By Andrew Osterland • Oct. 11, 2001

The Truth About Grantor Trusts and Subpart F Income

Where a foreign corporation is classified as a ”Controlled Foreign Corporation” (CFC), because more than 50 percent of its stock is owned by U.S. shareholders (U.S. persons who own at least 10 percent of the voting power of the foreign corporationís outstanding stock), such U.S. shareholders must...

By Robert Willens • Oct. 4, 2001

Real Estate Debate: Spin-off or Wait?

To spin or not to spin? The question has led to head-scratching at companies with considerable real estate holdings, thanks to a recent decision by the Internal Revenue Service to approve tax-free spin-offs of such property through real estate investment trusts (REITs). McDonald’s Corp. had plann...

By Alix Stuart • Oct. 3, 2001

Ledger Domain: Explaining Away Bad Numbers

The earnings reporting period that gets under way in a week or so should prove mighty interesting.Clearly, a lot of companies are going to miss their consensus forecasts. But beyond that, this next batch of earnings reports will underscore the true creativity of finance executives.First, a number...

By Stephen Taub • Oct. 2, 2001

Losses From Terrorism Not ‘Extraordinary,’ Concludes FASB

A big reversal from the Financial Accounting Standards Board. FASB’s Emerging Issues Task Force has ruled that the September 11 terrorist attacks were not an “extraordinary” event…at least from an accounting standpoint.This means that companies will not be able to break out as a separate line-ite...

By Stephen Taub • Oct. 1, 2001

Recap on Recaps

For a spin-off to qualify for tax-free treatment under Sec. 355, among other requirements, the distributing corporation must control the corporation whose shares it is distributing. This must occur immediately before the distribution.Control, for this purpose, is set forth in Sec. 368(c). That se...

By Robert Willens • Sept. 28, 2001

Liability Assumption in a Spin-Off

Most spin-offs are component parts of a “D” reorganization. This means that the spin-off is preceded by a transfer (by the distributing corporation) of assets and liabilities (to the controlled corporation). The stock is then parsed out to the distributing corporation’s shareholders. Normally, th...

By Robert Willens • Sept. 21, 2001

Airlines Seek Accounting Break For Attack-Related Costs

Airlines hard-hit by the fallout from last week’s terrorist attacks have asked accounting regulators for a break on how they ultimately report losses stemming from the attacks on their financial statements, reports Dow Jones Newswires.In a letter to officials at the Financial Accounting Standards...

By CFO Editorial Staff • Sept. 20, 2001

Reality Check for Real Options

It’s time to get real about real options. To be sure, this much- vaunted alternative to the conventional method of evaluating capital- spending decisions using net present value (NPV) is catching on with more and more senior finance executives. To one degree or another, CFOs and strategic planner...

By Ronald Fink • Sept. 13, 2001

Accountants Seek To Unify International Standards

The accountant’s dream of uniform international accounting standards that started in the early 1990s is getting closer to realization, according to Dow Jones Newswires.Working toward unified accounting principles is now a full-time job for Patricia O’Malley, who left her post as Canada’s top acco...

By CFO Editorial Staff • Sept. 10, 2001

Undone Deals: Taxes and Abandoned Capital Transactions

Not surprisingly, expenses incurred in connection with capital transactions are considered capital expenditures and, hence, may not be deducted. For example, costs incurred in the acquisition or disposition of a capital asset — prototypical capital transactions — are capital expenditures that are...

By Robert Willens • Sept. 7, 2001

Xerox Names Dugan Business Ethics Head

Xerox Corp. named Allan Dugan to the newly created executive vice president of corporate business ethics and compliance position, reports Dow Jones Newswires. In a press release Wednesday, the company said Dugan will be responsible for reinforcing Xerox’s ethical standards and assuring worldwide ...

By CFO Editorial Staff • Sept. 5, 2001

FASB Issues FAS 143, Accounting for Asset Retirement Obligations

The Financial Accounting Standards Board (FASB) issued Statement No. 143, Accounting for Asset Retirement Obligations on Thursday. Initiated in 1994, the project focused on accounting for the costs of nuclear decommissioning. Later, FASB expanded the project’s scope to include similar closure cos...

By CFO Editorial Staff • Sept. 3, 2001

Shipment Fever

While there have been some glorious moments in the field of logistics — think of the Pony Express and the Berlin airlift, not to mention St. Nick’s annual trek — on a day-to-day basis, most CFOs will happily let line managers sweat the details. The fine art of getting things from one place to ano...

By Scott Leibs • Sept. 1, 2001

Loan Origination: Getting Tax and Financial Accounting to Mesh

We have seen that, with respect to many items of income and expense, tax accounting differs, diametrically, from financial accounting. This divergence, of course, is not surprising in light of the fact that the fundamental goals of each system also diverge.Financial accounting has as its underpin...

By Robert Willens • Aug. 31, 2001

Debate Over Real-Estate Earnings Puts Analysts at Odds

The debate over real-estate earnings continues, according to a Wall Street Journal report.For the past 10 years, the real-estate investment trust industry has focused on an earnings recipe called funds from operations, or FFO, rather than net income. Public real-estate firms say FFO — which gener...

By CFO Editorial Staff • Aug. 29, 2001

IRS and Merrill Lynch Settle on Tax Shelter Dispute

The Internal Revenue Service, as part of an effort to curb abusive tax shelters, reached a settlement resulting in Merrill Lynch & Co. making a “substantial payment” in connection with corporate tax shelters that the brokerage firm marketed a decade ago to big-name clients, reports the Wall S...

By CFO Editorial Staff • Aug. 29, 2001