New tax provisions for 2012

With the ringing in of the new year, several new tax provisions took effect. While the list of new items does not compare with the number of tax provisions that expired at the end of 2011, practitioners should be aware of what has changed.

Inflation Adjustments

The applicable amounts for many tax items increased on Jan. 1, due to annual inflation adjustments. Revised tax tables are in effect, as well as an increased personal exemption amount (now $3,800) and standard deduction amounts. Various credits and other items also were adjusted. Contribution limits and other amounts for pension plans retirement accounts were also changed for 2012. The Social Security wage base for 2012 is $110,100.

The standard mileage rate for business use of an automobile remains at 55½ cents per mile for 2012; for medical and moving expenses it decreases to 23 cents per mile, down a half-cent from the second half of 2011.

Capital Gain and Loss Reporting

Taxpayers will have to report new information on Form 1040, Capital Gains and Losses, and file a new form, Sales and Other Dispositions of Capital Assets, to report gains and losses of certain capital assets. The information on Form 8949 will correspond to the new information being reported on 2011, Proceeds from Broker and Barter Exchange Transactions.

Read more here

Companies perform better with small, regular M&As, study finds

Companies that regularly acquire or merge with other companies on a relatively small scale tend to outperform those that undertake large acquisitions or focus on organic growth, a study by McKinsey & Co. concluded. Looking at shareholder returns at 1,000 companies over 10 years, McKinsey found that companies with regular M&A programs representing 19% or more of their market capitalization performed better than those with large deals or no M&A activity. The Wall Street Journal/CFO Journal (tiered subscription model) (1/23)

Stakes are high as World Economic Forum meeting begins

Bankers, officials and other interested parties from around the world are converging on Davos, Switzerland, for the World Economic Forum's annual meeting. With Europe's sovereign-debt crisis ongoing, the stakes are high. "We're fighting the last war. The sovereign-debt crisis is undermining the global banking system," said Tobias Levkovich, chief U.S. equity strategist at Citigroup. "We need to take the dire scenario off the table and get a credible path to a resolution." CNBC (1/23), Financial Times (tiered subscription model)(1/23), BBC (1/23)

Now is a great time to start

As the old saying says, the only things about life that are certain are death and taxes and it might behoove us to pass over the former and focus on the latter of life's certainties...taxes.
April 15 is a little more than 3 months away but now is the best time of the year to put your taxpayer hat on and meet with your accounting firm so you can beat the April rush, especially if you're counting on a refund!
Neikirk, Mahoney & Company can help your individual tax filings and with your corporate returns as well, whether you're a large firm or a small mom & pop.
The professionals at Neikirk, Mahoney & Company are ready to help you with your 2011 Returns and our consulting service can help make 2012 taxes the least painful possible.
Just give us a call at 502-896-2999 or send us a note at http://neikirk.net/contact.php.  

Comment period on private company reporting draws to a close

BY KEN TYSIAC

JANUARY 12, 2012

A comment period on private company financial statements that already has produced more than 6,500 letters has left the Financial Accounting Foundation (FAF) trustees with a lot to consider, FAF President and CEO Terri Polley said Thursday.
Speaking at a North Carolina Association of CPAs meeting that was simulcast on the Web, Polley said the input has been helpful. The deadline is Saturday for comment letters on a FAF proposal that has been strongly contested by the AICPA because it would continue to give FASB the final decision on any modifications to U.S. GAAP for private companies.
FAF’s Oct. 4 proposal called for the creation of a Private Company Standards Improvement Council (PCSIC) to recommend changes to U.S. GAAP for private companies. Those recommendations would be subject to FASB approval.
Polley said the FAF trustees believe it’s important to have a single GAAP and keep standard setting under one organization. The AICPA believes an independent board under FAF’s supervision is the best mechanism for accommodating the needs of private companies that struggle with certain complexities and costs of U.S. GAAP that many deem unnecessary for nonpublic entities.
“I would definitely envision that there will be some changes from what the trustees have proposed,” Polley said in an interview after Thursday’s speech. “How substantive they will be, that remains to be seen, and (the trustees) are the ones that are going to have to make that decision.” - see the rest of this article in the Journal of Accountancy

Will this be The Winter of Our Discontent?

     With apologies to Shakespeare this is a little preview of some of the emerging economic concerns that will start to focus the mind before the winter months give way. Much of what we will be dealing with in the months to come will be extensions of what we have been wrestling with for the past three years but there are some new issues that are rearing their ugly heads and that will complicate the
strategies that have been in place thus far.
     The three to focus on for the moment are inflation threats, the impact of long term unemployment and the impact of a new Congress with more deficit hawks than before. Up to this point the strategy from Congress, the Executive branch and the Federal Reserve has been basically in sync and focused on economic pump priming. There has been no real concern over inflation as deflation had seemed more
imminent only a few months ago. The issue of employment has been front and center for the entire recession although there has clearly been a limit as to  what could practically be done. The deficit hand wringing was universal but very few in Congress had anything approaching a mandate to do something about all this.
     Now there is some evidence developing that will force a new look at the inflation threat in the future. Reports from the regional Fed banks in Philadelphia and New York show that manufacturers are universally reporting an expectation of higher priced inputs and when that hits the economy there will be increased price pressure.
    The employment situation is vexing and there is about to be a real crisis for
those who have been without jobs for the longest period of time. Getting this group back into the work force will be a major undertaking. The deficit hawks will be put to the test but there has already been a rejection of the budget for next year.

Congress Messing With Mortgage Market...Again

Washington lawmakers, who began 2011 with sweeping plans to shrink the U.S. government’s role in mortgage finance, are heading into 2012 after enacting policies that expand it.

An 11th-hour payroll tax cut extension signed into law last week will for the first time divert funds directly from Fannie Mae (FNMA) and Freddie Mac, the two mortgage-finance companies under U.S. conservatorship, to pay for general government expenses.

That move came after two others that also could increase government involvement: Lawmakers allowed a tax break on private mortgage insurance to expire and raised loan limits for mortgages insured by theFederal Housing Administration. Advocates of private mortgage finance say they are concerned that using fees from Fannie Mae and Freddie Mac is setting a precedent that will keep the government in the mortgage business for a decade or more.

“The goal was, at the beginning of the year, how do we wind these down?” said Edward Pinto, a resident fellow at the American Enterprise Institute, a Washington-based research organization that favors limited government. “And at the end of the year we have further entrenched them and made it more difficult to wind them down, which is classic Washington.”

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac (FMCC), today directed the companies to increase fees on new mortgages by an average of 10 basis points, or .1 percentage point, effective April 1, to comply with the law.

Washington Messing With Mortgage Market Again!