Were you aware that the Commonwealth of Virginia appropriates grant funding for Companies that invest in certain areas in the state? The Commonwealth of Virginia wants to encourage rejuvenation of certain towns and cities and is willing to award funding for the rehabilitation, expansion or new construction of real estate and/or creation of higher wage jobs. In 2016, approximately $12m was set aside for this purpose, and in 2017 the General Assembly has approved a total of approximately $13m to be awarded to Companies who meet the specific criteria.
Each year the Virginia Legislature passes changes to the Virginia Tax Code that impacts residents and those doing business in Virginia. While many of the changes can seem mundane or minor, there are two that will have a significant impact on two segments of Virginia Business, automotive service centers and retailers and contractors selling and installing tangible personal property. Both will likely require changes to POS retail and accounting systems in order to administer properly.
Effective January 22, 2017, employers must use the revised form I-9, Employment Eligibility Verification Form.
December and January are undoubtedly busy times for businesses with closing out their calendar years, gathering documentation for their accountants, tax preparers, and auditors, and filing wage and income information returns to taxing authorities for their employees and contractors. Unfortunately, adding to this year’s stress and complexities are some accelerated due dates for certain information returns. Below are those changes and some important reminders.
For many years debt issuance costs have been a bit tricky to present and display correctly on financial statements. As part of the Simplification Initiative, the FASB issued Accounting Standard Update 2015-03, revisiting the issue of properly accounting for debt issuance costs and specifying their new categorization on the balance sheet. The change is a big shift, moving the issuance costs from the asset side of the ledger where it was originally reported. Now, debt issuance costs need to be reflected in the balance sheet as a direct reduction against the related debt. However, the effect is the same at the end of the day in that the debt liability is reduced up front rather than as an asset balanced against a liability over time.
Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) – issued February 25, 2016
For most non-public entities this update is effective for fiscal years beginning after December 15, 2019. However, now is the time to start thinking about longer-term impacts before entering into new leases over the next few years.
Following is an overview, for lessees, of this comprehensive and intricate standard.
Many companies may need to file Form 2290 - Heavy Highway Vehicle Use Tax for registered vehicles with a taxable gross weight of 55,000 pounds or more. This return is filed for the upcoming year of July 1, 2016- June 30, 2017 and is due August 31, 2016.
The tax reporting options for long term construction contracts can be perplexing. The rules are complex, sometimes counter-intuitive, and a bad decision or poor advice can lead to some negative tax consequences.
First off, what is a long term contract? A long term construction contract is any contract written for the purpose of manufacturing, building, installing, or constructing a property that spans more than one tax year. In other words, if a calendar-year taxpayer begins a construction job on December 31st and finishes it on January 1st, the contract would be deemed "long-term" since it spans two tax years.
Percentage of Completion Option
Long-term contracts are subject to the percentage of completion method for reporting taxable income (IRC Section 460(b)(1)); however, there are exceptions discussed later. Percentage completion is a method of allocating the taxable income generated from a contract based on how much of the work has been completed. Generally, the overall cost of the contract is used as the basis for allocation. For example, if a contract is estimated to generate $30,000 in income and will cost $75,000 to complete, when $50,000 or 2/3 of the total contract costs have been incurred, $20,000 or 2/3 of the estimated contract net income would be recognized.
On May 28, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers.
This significant undertaking – which resulted from a joint task force between the FASB and the International Accounting Standards Boards (IASB) – affects every entity across all industries.
So what does ASU 2014-09 mean for construction contractors?