CPA Observation Post

Taxpayers get relief for late elections to combine real estate activities (from @AICPA_JofA)

The Internal Revenue Service created a special procedure allowing taxpayers to make a late election to treat all their real estate activities as a single activity for purposes of meeting material participation rules. The guidance allows eligible taxpayers to avoid applying for private-letters ruling to obtain relief. Taxpayers who don't qualify under the revenue procedure's requirements can still seek relief via letter rulings. Read More>>

IRS Scrutinizes Gifts of Real Estate (from @WSJ)

The Internal Revenue Service is using state land-transfer records to find taxpayers who did not report gifts of real estate from family members. As more states provide their records to the IRS, more examinations can be expected, says Beth Shapiro Kaufman, a partner at Caplin & Drysdale. Read More>>

Americans shed mortgage debt at record pace

Americans are reducing mortgage payments at a record clip, directing cash that once went for debt into consumer spending and savings. Low interest rates, defaults and refinancings have shaved more than $100 billion off the nation's annual mortgage bill — an amount comparable to all unemployment benefits for one year or this year's Social Security payroll tax cut.

H&R Block tumbles on fears regarding mortgages

Shares of H&R Block Inc. lost nearly 8 percent Monday on renewed fears that the company will be dragged back into the subprime mortgage mess. Read More>>

FASB considers applying fair-value rules to real estate

The Financial Accounting Standards Board is looking at expanding fair-value rules to include land and buildings, which could affect the balance sheets of real estate firms. Real estate investment trusts, which hold about $500 billion in commercial property, would likely be affected the most, experts say. Currently, REITs value their real estate holdings based on historic costs that are depreciated each year, a practice that has been criticized because real estate usually appreciates over time. Read More>>

Critics call for elimination of housing tax breaks (from USA Today)

Federal housing tax breaks benefit the wealthiest Americans and don't do enough to promote homeownership to make them worthwhile, critics said Tuesday at a government conference on reforming housing policy. The mortgage tax break was worth $91 a year to families earning less than $40,000, and $5,459 a year to households earning more than $250,000, according to a study by the Tax Policy Center of the Brookings Institution and the Urban Institute. Read More>>

Private Investment Funds Face a Fair-Value Issue

Under new accounting proposals being circulated, managers would face tougher rules on explaining how they arrived at an asset's value and the methods used to value assets. Fair-value accounting took effect in 2007 in the form of Financial Accounting Statement 157. Now the question of  how fair value should be applied — especially in a distressed environment — has become a hot topic in the industry, and the new proposals are a concern Read More>>

Changes in ASC 840 May Impact Commercial Real Estate Leasing

An accounting rule under consideration - and likely to take effect soon - would change the way commercial real estate leases are treated. The result could have an impact on businesses making "buy or lease" decisions.  Read More>>

Signs of life in three important sectors of the economy

While there is still plenty to worry about, three reports released today show signes of life in construction spending, home sales and manufacturing. Read More>>

Sheraton wins in tax court on leasing issue

Lease agreements have economic substance and are not designed merely to reduce taxes, according to a U.S. Tax Court decision. The case involved a partnership that operates the Sheraton Cleveland Airport Hotel.  Read More>>