The House Ways and Means Committee have released its first bill of the "Tax Cuts and Jobs Act." The 429 page proposed bill is the first look at the committee's proposed tax changes. There is still a long road until there is an actual bill passed by Congress. The bill still requires a vote in the House. The Senate then will attempt to pass a similar bill. Once both bills are passed, it will need to go through a process known as reconciliation where the House and Senate create a joint bill that will go to the President's desk for signature.
I continue to see and hear about issues that our clients and others in the nonprofit industry are having with their lenders with respect to financial statements. It is becoming more evident that many lenders do not understand nonprofit financial statements due to their unique financial reporting requirements. Below are the top 5 issues that nonprofits have with their lenders.
ASU 2017-02 was issued in January 2017 by the FASB to clarify when a not-for-profit entity (NFP) that is a general partner or limited partner should consolidate a for-profit limited partnership or similar legal entity.
Determining whether an event or an item was an extraordinary item has been a confusing and often burdensome determination for accountants and entities alike. Over the years, an item could be argued for and against the consideration to be treated as an extraordinary item. For example, Hurricane Katrina caused terrible damage and one might consider such an event would be an extraordinary item. However, a hurricane in and of itself is not considered to be unusual or infrequent in nature as hurricanes are a likely event. Although the damage was by the hurricane was catastrophic, it was not deemed and did not meet the requirements to be considered extraordinary. An extraordinary item was previously considered to be an item that was unusual and infrequent in nature. The gain or loss on these items was to be shown segregated from the results of ordinary operations on the statement of activities, net of any tax. In addition, the extraordinary item was to be disclosed in the accompanying notes to the financial statements describing the origin, nature and the amount.
Fox Business recently ran an article on a creative way non-for-profit universities have been raising funds. (See the article here). As a basic summary, universities have started renting out dorm rooms to people in order to raise additional funds to support the university. These creative ways to raise additional revenues come as enrollment numbers and state financing have been declining. With these creative fund raising ideas, non-for-profits need to be aware of unrelated business income and what effects these rules could have on their non-for-profit.
Thinking about hiring a new auditor can be overwhelming. Many times over the years I have heard auditees say, “I don’t want to get used to a new auditor, or have to deal with a new process.” They want to stick with what’s comfortable and familiar, despite the possibility that a better option may exist out there. However, there could be an auditor that is a much better fit for your organization, and you are missing out on an opportunity to better serve your organization by not considering the below items. Here are 10 signs that it may be time to consider a change. There are in no particular order, as each organization may feel certain items are more important than others.
When it comes to preparing individual tax returns, many individuals wonder what kind of documentation they need to support their charitable contributions. First and foremost, to qualify for a charitable contribution deduction, a contribution must have been given to a qualified charitable organization. The Internal Revenue Service (IRS) website contains a link in to search for exempt organizations (https://www.irs.gov/charities-non-profits/search-for-charities). Donations given to directly to an individual in need are not considered a deductible contribution but instead are considered by the IRS to be personal gifts. Secondly, an individual can only deduct contributions if they are itemizing their individual tax return. Generally an individual may be able to deduct up to 50 percent of their adjusted gross income, however, there are limitations. Seek advice regarding your individual deduction limitations from a tax professional.
A nonprofit will not ordinarily be taxed on its revenues. However, income from unrelated business income is subject to tax (UBIT). UBIT is based on gross income derived by any nonprofit from any unrelated business activity it regularly conducts less the expenses directly connected with the activity.
In 2007, President George Bush signed into law the Public Student Loan Forgiveness Program. This program allows people working in certain industries to have their student loans forgiven, tax-free, after 10 years. Usually people believe this program only applies to governmental employees. However, the law allows for employees of a 501(c)(3) not-for-profit to also qualify for student loan forgiveness. This is a great way to attract employees who may otherwise require a larger salary and a great way to keep employees at your not-for-profit.