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In the blogs: On the horizon

Published

1 month ago

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Crypto’s future; sobering CTC; inside and outside; and other highlights from our favorite tax bloggers.

On the horizon

  • Withum (https://www.withum.com/resources/): President-elect Trump has proposed several projects to boost the crypto sector, including dispensing capital gains tax for Bitcoin transactions and building a centralized Bitcoin holding account (a strategy reminiscent of America’s domination during the dot-com years). More clearly governed and with the support of the government, the crypto market could significantly increase in 2025.
  • Tax Vox (https://www.taxpolicycenter.org/taxvox): In 2025, the Tax Policy Center estimates that 17 million children younger than 17 will receive less than the full value of the Child Tax Credit because their parents earn too little. Most of these children also live in families that earn at least $2,500, the required minimum for any CTC beyond taxes owed. Congress has options when it debates the future of the CTC.
  • Institute on Taxation and Economic Policy (https://itep.org/category/blog/): As Congress negotiates federal funding during the lame-duck session, lawmakers would be wise to remember that stripping funds from the IRS costs more than it saves. 
  • Dean Dorton (https://deandorton.com/insights/): Next year could be a big one for the M&A market. A look at key metrics good and bad, from lower borrowing costs and thawing credit to valuation gaps and regulatory scrutiny.
  • Avalara (https://www.avalara.com/blog/en/north-america.html): Canada gets ready to “join the sales tax holiday fun.”
  • Sikich (https://www.sikich.com/insights/): Sikich has entered into an agreement to acquire the federal contracts of Cherry Bekaert Advisory LLC supporting the U.S. Patent and Trademark Office. 
  • HBK (https://hbkcpa.com/insights/): Reclassifying cannabis to Schedule III could expand access to banking, insurance, and other services for cannabis businesses. It may also ease the financial burden of Sec. 280E, which prohibits cannabis companies from taking standard business deductions due to marijuana’s current Schedule I status.
  • U of I Tax School (https://taxschool.illinois.edu/blog/): Interesting note on the beneficial ownership information reporting suspension: It invalidated much coursework and time in many tax schools this fall.

Good moves

  • Taxing Subjects (https://www.drakesoftware.com/blog): Preparing for the real season coming in the spring, from more IRS notices to high-net-worth clients to using artificial intelligence responsibly in your practice.
  • Canopy (https://www.getcanopy.com/blog): The importance of accountant-client privilege, the challenges in this age of technology and complex regulations, and how an accounting-based CRM platform is fundamental.
  • Turbotax (https://blog.turbotax.intuit.com): The “Moves That Matter” series kicks off with Drew, a lover of the outdoors from Montana. Interesting model in how to write a customer profile.
  • MBK (https://www.mbkcpa.com/insights): Estate planning is in many ways a big contingency plan. What about contingency plans for the beneficiaries?
  • Gordon Law (https://gordonlawltd.com/blog/): ‘Tis the season to tell them to stop sputtering: Why are bonuses taxed so heavily?

Virtual realities

  • Virginia – U.S. Tax Talk (https://us-tax.org/about-this-us-tax-blog/): How the “Bitcoin Jesus” now finds himself in a legal maelstrom after being arrested in Spain on U.S. charges of mail fraud, tax evasion and filing false returns.
  • Don’t Mess with Taxes (http://dontmesswithtaxes.typepad.com/): As internet betting continues to explode, a look at suggested tax rates of 15% to 25% of gross gaming revenue for new states where those feeling lucky can put their money down with a click.
  • TaxConnex (https://www.taxconnex.com/blog-): Holiday shopping season offers probably the year’s golden chance for your online biz clients, not only through sales on their own sites but also through household-name marketplace facilitators like Amazon. The glistening-once-again season also offers a big danger for your clients to ignite economic sales tax nexus.

Lowering the barter

  • Tax Foundation (https://taxfoundation.org/blog): The combined effect of net smuggling of cigarettes into U.S. states was a loss of more than $4.7 billion in forgone excise tax revenue in 2022. The annual effect of cigarette smuggling is significant, but the cumulative impact of annual smuggling from 2007 to 2022 demonstrates the severity of the issue when left to fester.
  • Mauled Again (http://mauledagain.blogspot.com/): “Analyzing the Federal Income Tax Consequences of a Crappy Barter Proposal.” Heavy on the “crappy.”
  • John R. Dundon II EA (http://johnrdundon.com/blog/): What to remind clients in biz partnerships about the difference between inside and outside basis. 
  • Boyum & Barenscheer (https://www.myboyum.com/blog/): What to remind biz-owner clients about the good and bad of retained earnings.

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Accounting

Business Transaction Recording For Financial Success

Published

2 days ago

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January 18, 2025

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Business Transaction Recording For Financial Success

In the world of financial management, accurate transaction recording is much more than a routine task—it is the foundation of fiscal integrity, operational transparency, and informed decision-making. By maintaining meticulous records, businesses ensure their financial ecosystem remains robust and reliable. This article explores the essential practices for precise transaction recording and its critical role in driving business success.

The Importance of Detailed Transaction Recording
At the heart of accurate financial management is detailed transaction recording. Each transaction must include not only the monetary amount but also its nature, the parties involved, and the exact date and time. This level of detail creates a comprehensive audit trail that supports financial analysis, regulatory compliance, and future decision-making. Proper documentation also ensures that stakeholders have a clear and trustworthy view of an organization’s financial health.

Establishing a Robust Chart of Accounts
A well-organized chart of accounts is fundamental to accurate transaction recording. This structured framework categorizes financial activities into meaningful groups, enabling businesses to track income, expenses, assets, and liabilities consistently. Regularly reviewing and updating the chart of accounts ensures it stays relevant as the business evolves, allowing for meaningful comparisons and trend analysis over time.

Leveraging Modern Accounting Software
Advanced accounting software has revolutionized how businesses handle transaction recording. These tools automate repetitive tasks like data entry, synchronize transactions in real-time with bank feeds, and perform validation checks to minimize errors. Features such as cloud integration and customizable reports make these platforms invaluable for maintaining accurate, accessible, and up-to-date financial records.

The Power of Double-Entry Bookkeeping
Double-entry bookkeeping remains a cornerstone of precise transaction management. By ensuring every transaction affects at least two accounts, this system inherently checks for errors and maintains balance within the financial records. For example, recording both a debit and a credit ensures that discrepancies are caught early, providing a reliable framework for accurate reporting.

The Role of Timely Documentation
Prompt transaction recording is another critical factor in financial accuracy. Delays in documentation can lead to missing or incorrect entries, which may skew financial reports and complicate decision-making. A culture that prioritizes timely and accurate record-keeping ensures that a company always has real-time insights into its financial position, helping it adapt to changing conditions quickly.

Regular Reconciliation for Financial Integrity
Periodic reconciliations act as a vital checkpoint in transaction recording. Whether conducted daily, weekly, or monthly, these reviews compare recorded transactions with external records, such as bank statements, to identify discrepancies. Early detection of errors ensures that records remain accurate and that the company’s financial statements are trustworthy.

Conclusion
Mastering the art of accurate transaction recording is far more than a compliance requirement—it is a strategic necessity. By implementing detailed recording practices, leveraging advanced technology, and adhering to time-tested principles like double-entry bookkeeping, businesses can ensure financial transparency and operational efficiency. For finance professionals and business leaders, precise transaction recording is the bedrock of informed decision-making, stakeholder confidence, and long-term success.

With these strategies, businesses can build a reliable financial foundation that supports growth, resilience, and the ability to navigate an ever-changing economic landscape.

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Accounting

IRS to test faster dispute resolution

Published

2 days ago

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January 17, 2025

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Easing restrictions, sharpening personal attention and clarifying denials are among the aims of three pilot programs at the Internal Revenue Service that will test changes to existing alternative dispute resolution programs. 

The programs focus on “fast track settlement,” which allows IRS Appeals to mediate disputes between a taxpayer and the IRS while the case is still within the jurisdiction of the examination function, and post-appeals mediation, in which a mediator is introduced to help foster a settlement between Appeals and the taxpayer.

The IRS has been revitalizing existing ADR programs as part of transformation efforts of the agency’s new strategic plan, said Elizabeth Askey, chief of the IRS Independent Office of Appeals.

IRS headquarters in Washington, D.C.

“By increasing awareness, changing and revitalizing existing programs and piloting new approaches, we hope to make our ADR programs, such as fast-track settlement and post-appeals mediation, more attractive and accessible for all eligible parties,” said Michael Baillif, director of Appeals’ ADR Program Management Office. 

Among other improvements, the pilots: 

  • Align the Large Business and International, Small Business and Self-Employed and Tax Exempt and Government Entities divisions in offering FTS issue by issue. Previously, if a taxpayer had one issue ineligible for FTS, the entire case was ineligible. 
  • Provide that requests to participate in FTS and PAM will not be denied without the approval of a first-line executive. 
  • Clarify that taxpayers receive an explanation when requests for FTS or PAM are denied.

Another pilot, Last Chance FTS, is a limited scope SB/SE pilot in which Appeals will call taxpayers or their representatives after a protest is filed in response to a 30-day or equivalent letter to inform taxpayers about the potential application of FTS. This pilot will not impact eligibility for FTS but will simply test the awareness of taxpayers regarding the availability of FTS. 

A final pilot removes the limitation that participation in FTS would preclude eligibility for PAM. 

The traditional appeals process remains available for all taxpayers. 

Inquiries can be addressed to the ADR Program Management Office at [email protected].

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Accounting

IRS revises guidance on residential clean energy credits

Published

2 days ago

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January 17, 2025

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The Internal Revenue Service has updated and added new guidance for taxpayers claiming the Energy Efficient Home Improvement Credit and the Residential Clean Energy Property Credit.

The updated Fact Sheet 2025-01 includes a set of frequently asked questions and answers, superseding the fact sheet from last April. The IRS noted that the updates include substantial changes.

New sections have been added on how long a taxpayer has to claim the tax credits, guidance for condominium and co-op owners, whether taxpayers who did not previously claim the credit can file an amended return to claim it, and a series of questions on qualified manufacturers and product identification numbers. Other material has been added on how to claim the credits, what kind of records a taxpayer has to keep for claiming the credit, and for how long, and whether taxpayers can include financing costs such as interest payments in determining the amount of the credit.

The IRS states that “financing costs such as interest, as well as other miscellaneous costs such as origination fees and the cost of an extended warranty, are not eligible expenditures for purposes of the credit.” 

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