Financial reporting

AMERITAS DIRECT ROLLS OUT NO-LOAD ANNUITY: Ameritas Life Insurance Corp. has unveiled its Genesis No-Load Variable Annuity, distributed via its Ameritas Direct unit, which markets the No-Load series of insurance and annuity products to self-directed consumers.Ameritas Direct designed the Genesis Variable Annuity, which features no commission, no sales charge, no withdrawal charge and no policy fee. (Gains are taxed as ordinary income and additional penalties may apply to withdrawals made prior to age 59-1/2.)

Do you have clients who complain that their life insurance was supposed to be paid up by now, but it isn't? Notices from their insurance companies may even indicate that their suggested premium payment has increased, or that their policies are about to lapse.Do you have clients whose investment-type life insurance policy is not performing as projected? Ever have clients cancel their life insurance and get a taxable statement of gain? This can even happen if their policy lapses and they get nothing back (they had a paper gain).

"The individual investor should act consistently as an investor and not as a speculator. This means that he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning that satisfies him that he is getting more than his money's worth for his purchase."These are the words of Benjamin Graham, a stock market investor and economist who was famous for remarkable returns from investing in stocks, value investing and influencing Warren Buffet.

A Senate panel’s review of interactions between imprisoned former lobbyist Jack Abramoff and a number of tax-exempt organizations had lead the committee to question the groups’ tax status and a portion of the federal Tax Code dealing with unrelated business income taxes.

Merrill Lynch, considered the world's largest employer of brokers, is now undergoing a change on what it is teaching its trainees. Instead of instructing them on how to make cold calls, they are putting those new employees in classrooms that emphasize statistical analysis, financial planning, and wealth management. Merrill’s new training program specifically covers the Monte Carlo analysis and they also have psychology classes such as behavioral finance.

Improving the accounting and disclosures for mergers and acquisitions by non-profit organizations is the aim of two exposure drafts released by the Financial Accounting Standards Board.

The chairman of the House Ways and Means Committee has asked for information on the NCAA’s finances -- suggesting in the process that he might next be questioning the association to justify its tax-exempt status. "Most of the activities undertaken by educational organizations clearly further their (tax) exempt purpose," Rep. Bill Thomas, R-Calif., wrote in a letter to NCAA president Myles Brand. "The exempt purpose of intercollegiate athletics, however, is less apparent, particularly in the context of major college football and men's basketball programs." Specifically, Thomas asked for information on the NCAA’s television contract, the salaries of coaches, school sports facilities and total annual revenues and expenditures for Division I-A football programs and Division I basketball programs. He requested a response by the end of this month. Since 2004, the Ways and Means committee of Representatives has been conducting a broad review of the tax-exempt sector -- already looking into the tax-exempt status of nonprofit hospitals and credit unions among others. The NCAA's projected 2006-07 budget anticipates nearly $563 million in revenue, most from its TV contracts. More than half that figure is distributed to member leagues and schools, through student-athlete welfare, academic-enhancement and other programs. The remainder is paid according to the success of schools in the annual NCAA men's basketball tournament. Thomas notes in his letter that the annual returns filed by the NCAA with the IRS states that the primary purpose of the NCAA is to "maintain intercollegiate athletics as an integral part of the educational program and the athlete as an integral part of the student body,” and goes on to obliquely question college athletics' connection to higher education.

It’s no secret that more and more people are turning to professionals for help in preparing their financial future. The problem becomes a question of who do you actually turn to for such advice. Manarin Investment Counsel based in Omaha, Nebraska, is an independent investment advisory firm offering professional financial planning and investment management services to small businesses, families, and individuals. Founded in 1983 by Roland Manarin, who immigrated to Omaha from northern Italy at the age of 10, it is an independent, fee-based investment advisor registered with the SEC. Manarin has some 30 years of experience working as a professional in investment management. He says that he educates the public in a variety of ways including a Wealth-Building Seminar Series, which he has presented since 1977 teaching investors to ignore conventional wisdom and practice true wealth-building strategies,a weekly radio talk show, "It’s Your Money," that he hosts, and a quarterly newsletter -- not to mention numerous lectures around the country. In 2004, he was named one of "America's Best Wealth Advisors" by Barron's and in 2005 was selected as a keynote speaker for the "Excellence in Financial Planning Conference." Manarin feels there is a basic question the vast majority of Americans face: Do you ‘go it alone’ when it comes to planning your financial future, investments, and savings plans; or do you get the help of an ‘expert’ to guide you through the process and ensure you get the most bang for your buck? “Increasingly, most of us choose to seek professional help. But to whom do you turn to and trust? There are five essential facts one needs to know before hiring a financial professional.”

I speak at numerous conventions and conferences, and attendees sometimes contact me for additional information about abusive tax shelters and Circular 230.Among other things, Circular 230 sets forth the requirements for disclosure of certain tax shelter transactions by tax professionals. Regulations also impose new obligations on tax professionals, and on taxpayers engaged in any kind of tax-avoidance transaction.

A surviving spouse who is the sole beneficiary of the balance remaining in their deceased spouse's traditional IRA may leave the account as it is, or roll over the decedent's IRA into their own IRA, or elect to treat the IRA as their own for all purposes, including the rules of IRC §72(t) as to the imposition of a 10 percent penalty tax if the amount in the IRA is withdrawn before age 59-1/2.Whether a rollover to the surviving spouse's own IRA or an election to treat the deceased spouse's IRA as their own should be made depends mainly on the surviving spouse's age.

Should governments provide more information on their economic conditions? How should changes in the fair value of government investments be measured? Is the Statement 34 reporting model working well enough?Such questions being crucial to financial reporting by government entities, the Governmental Accounting Standards Board has put out a call for proposals for research projects. Offering up to $5,000 per project, the board is seeking input on several questions relating to three general issues:

Alan Haft is the president of 5th Avenue Financial, a financial planning firm based in Boca Raton, Florida. He is a pretty savvy guy when it comes to financial planning and recently set forth what he considers the five biggest financial retirement planning mistakes that Baby Boomers make. At the outset, he says that most Baby Boomers, and even retirees, realize rather quickly that their so-called bulletproof retirement savings plan is actually riddled with bullet holes. To Haft, living longer could mean outliving nest eggs that were intended to secure that financial comfort zone. Haft is well known in helping the wealthy become even wealthier and the not-so-wealthy achieve financial security. “Most of what I’ve seen in the industry in terms of poor retirement planning,” he says, “involves improper guidance or self-guidance, and a lack of foresight.” Here are what he considers the five biggest mistakes in such planning: 1) It’s Too Late to Start Planning. Once you reach your 50s or 60s, many people think that the parade has passed them by. But Half points to the power of compounding, boosted by the tax-deferred growth offered by IRAs, 401(k) plans, and the like. So, building up that nest egg may not be too late. 2) Underestimating Life Expectancy. He says studies show that some 20 percent of workers expect their retirement to last 10 years or less but according to the 2000 Retirement Confidence Survey by the Employee Benefit Research Institute (EBRI), half of the men reaching age 65 have an additional life expectancy of some 17 years while half of the women reaching that age are spun out 21 years. 3) Miscalculating Needs. Most financial planners say that you must plan on needing 60-85 percent of your pre-retirement income in your retirement years. According to that EBRI survey, only 53 percent of workers have tried to determine how much money they’ll need in retirement. 4) Looking at Inflation. Many investors, Haft says, particularly older ones, are uncomfortable with market volatility. They invest solely in Treasury bills, fixed-rate CDs, and savings accounts. He feels it is important to consider keeping some money in growth investments such as stocks and stock mutual funds. 5) Putting Other Financial Goals First. Haft points out that to many people, retirement probably isn’t the only financial goal--not when you may be saving for a child’s college education or for a down payment on a second home. But he cautions not to place them ahead of a financially secure retirement. Of course, easier said than done.

A slow response to a Freedom of Information Act request has lead the L.A. Gay & Lesbian Center to sue the Internal Revenue Service. The center said that the documents requested in March 2005 are related to the rejection of its application for non-profit status in the early 1970s. In the court filing, the center accuses the IRS of attempting to “cover up its misconduct,” while chief executive Lorri Jean has said members are interested in reviewing the documents as a historical exercise. In October 2005, the center said it had received a written response to its information request from the IRS, which said that the documents had been located and were being reviewed by the IRS Office of Collection Policy. Since then, the center has not received any updates on its request. According to the center, then operating as the "Gay Community Services Center," it was the first organization with the word "gay" in its name to apply for non-profit status from the federal government. That application was rejected on the grounds that the center was not "organized and operated exclusively for charitable and educational purposes." Following several appeals, the IRS eventually awarded the center non-profit standing in August 1974, but included a number of caveats -- including that the center would not "contend that homosexuality is normal" and that the center's officers and directors not be “avowed homosexuals." Among the documents requested on behalf of the center are all records analyzing, discussing or considering its original 501(c)(3) application; a copy of the original IRS denial letter; all records in conjunction with the original denial letter; and all records in conjunction with the later IRS approval letter. The lawsuit requests that the court order the IRS to produce the requested records, provide a detailed explanation of why the requested documents were withheld and reimburse the center for its legal fees.

A sampling of tax returns filed by fishermen in 2004 revealed that thousands of workers had overpaid an average of $530, after failing to take advantage of the averaging provision in calculating their income tax liability. According to the report from the Treasury Inspector General for Tax Administration, more than 4,600 taxpayers -- about 90 percent of the fishermen who could have benefited from the averaging provision -- didn't take advantage of the provision included the American Jobs Creation Act of 2004. TIGTA said that the overpaid taxes for the individual returns filed during the 2004 tax year totaled more than $2.4 million; and a startling 90 percent of the fishermen’s returns were prepared by paid tax preparers. The 2004 law allows fishermen to elect to compute their tax liabilities by averaging all, or a portion, of their taxable fishing income from the prior three years. The measure was designed to help fishermen recover from low-income years by keeping more of their income in successful years and offsetting potentially high tax burdens in isolated years. At the time of its enactment, the Joint Committee on Taxation estimated the provision could save fishermen up to $61 million in taxes over the next decade -- between $3 million and $10 million annually. During a prior audit, TIGTA noted that less than one half of taxpayers who could benefit from a similar provision for farmers, had actually taken advantage of the measure. The inspector general recommended to a variety of federal offices that a better and broader effort be made to educate both fishermen and tax preparers about the averaging provision. The full report is available at www.treas.gov/tigta/auditreports/2006reports/200630158fr.pdf.

The Internal Revenue Service has issued details on the process for military reservists called to active duty to receive payments from individual retirement accounts, 401(k) plans and 403(b) tax-sheltered annuities, without penalities.

A church in California has refused to comply with an Internal Revenue Service request to turn over all the documents and e-mails it created during the 2004 election year containing references to political candidates. Last week, the 26-member vestry of All Saints Episcopal Church in Pasadena voted unanimously to challenge the IRS on the matter in court. The refusal to cooperate forces the IRS to either drop the case, or to ask the Justice Department to take the church to court. The agency could also revoke the church’s tax exemption. The church is one of dozens of tax-exempt groups under investigation by the Internal Revenue Service for possible violations of laws against political activities. The church said it regarded an IRS investigation of an antiwar sermon delivered by the church’s former rector on the Sunday before the 2004 election as an attack on freedom of speech and religion. The agency has not said what part of the sermon the reverend delivered may have violated the law. In the sermon, the former rector, imagined Jesus chiding President Bush and Democratic opponent Senator John Kerry on topics including the war in Iraq, nuclear weapons, poverty and the increasing income gap. In July, the IRS warned 15,000 tax-exempt groups across the nation to stay neutral on political matters. IRS officials said then that investigations into charges of improper campaigning would be carried out under a new enforcement program, the Political Activity Compliance Initiative. Under it, the IRS will no longer wait for an annual tax return to be filed or for the tax year to end before investigating allegations of improper campaigning.

Did you ever stop and think why you are now at the ATM machine again taking more money out when you were just there a few days ago? Does it seem like you are constantly replenishing your wallet and can’t understand why? Visa did something about it. They decided to do some research on where money goes, other than, of course, paying for their credit cards or people charging on the Visa card. Actually, in England, they discovered that the Brits spend as much as $160 billion (yes, with a “B”) a year but have no idea where that money went. Actually, Visa surveyed more than 1,000 people and found out that the average adult was spending some $60 every week with no idea of where the money was going. In other words, in answer to the question, “On what did you spend that extra $60?” the response was “I don’t remember.” Now, according to Visa, if you didn’t spend that $60 a week for something you don’t recall, you could have paid for the following: 1) All your electric and water bills for a full year 2) 96 percent of traveling costs for year 3) Your weekly grocery shopping for some nine months of the year 4) Three months’ of mortgage payments. So, to where is this money traveling? Visa says that most people spend more than they would like when grocery shopping (that’s the impulse buying habit) and on entertaining for children or grandchildren, not to mention their own “night out.” Who spends the most? Oddly enough, men do, averaging some $70 a week compared to half that by women. So ends that woman/shopping myth. Also, those 18-24 year olds spend almost a $100 a week. Who spends the least? Besides a five-month old baby, it’s the over 55ers who only use up about $30 a week on items they don’t remember buying. So, what does Visa recommend? They suggest monitoring your money through online banking and by maintaining accurate records every time you go to that ATM machine; in other words, marking down what the money’s for. According to Visa, if you can check your bank balance from home, you will find this is an enormous benefit in indicating what’s happened to your money.

A church in Pasadena, Calif., says that the Internal Revenue Service has asked it to turn over all the documents and e-mails it created during the 2004 election year containing any references to political candidates.

You can hear it in their voices: There's something about providing accounting work for not-for-profit entities that produces a smile of satisfaction. These people like what they're doing for a living."They very much appreciate what you do for them. They're not out just to increase the bottom line of the organization - they're out there to do a service for the community, and they appreciate anything you can do to help them," said Rob Fleming, shareholder director of the Not-for-Profit Services Group at the Bellevue, Wash.-based firm of Clark Nuber.

Recent headlines surrounding the ordeal of 104-year-old socialite Brooke Astor chronicled a lawsuit filed by her grandson that accused his father of mismanaging his grandmother's financial affairs.For once, maybe the rich aren't so different: Experts predict that, for millions of Americans, the problems associated with relatives acting as trustees, guardians or conservators will only grow as the population ages. Policymakers are focusing on solutions that may well affect the way CPAs serve clients in the coming years.