“Is It A Profit? Is It A Loss? NO, It’s Super Manipulation”

“Is It A Profit? Is It A Loss? NO, It’s Super Manipulation” – addressing the investigative accounting process, explaining selected key adjustments that we commonly experience, looking at it from the bigger picture point of view. Those areas are often the ones that create the larger adjustments. Areas covered include cash versus accrual, unreported income, income deferral, payroll and depreciation.

Read entire article here: www.barsongroup.com/articles

“Revenue Ruling 59-60 – A Return To The Basics”

“Revenue Ruling 59-60 – A Return To The Basics” – explaining the importance of this IRS Revenue Ruling in understanding the theory and process of business valuation. It highlights the cautionary and advisory steps provided in that Revenue Ruling, including the need to take into account a multitude of factors involving the specific business and the economy, as well as expectations going forward.

Read entire article here: www.barsongroup.com/articles

“Nuggets From The Tax Return”

“Nuggets From The Tax Return” – in performing the forensic/investigative accounting function, particularly in relevance to determining income and the value of a business, the key items to look for on a tax return to give you an idea as to whether or not there are any problems or likely areas to investigate further. These include sales revenues, gross profit, payroll, depreciation, pension expense, distributions to partners or shareholders and book value.

Read entire here: www.barsongroup.com/articles

“Don’t Be A Victim”

“Don’t Be A Victim” – with fraud and embezzlement a constant concern of businesses, this article provides the reader with some warning signs, flags of where there might be fraud or embezzlement, or an increased likelihood of same. Cautions include illegal actions, changes in business ownership, and financial statement concerns.

Read entire article here: www.barsongroup.com/articles

“Valuation on Trial”

“Valuation on Trial” published in the American Journal of Family Law. Based on a divorce case that went to trial, illustrating a few selected key aspects of that trial, and how the experts testified and explained certain issues and how the judge ruled. This covers reasonable compensation, development of the cap rate, the use of subsequent information and the tax basis of assets.

Read entire here: www.barsongroup.com/articles

Anecdote of the Week

Mi Casa es Su Casa

If you are going to run personal home maintenance and repair expenses through a business, some effort should be made to see to it that the bills in support of those expenses at least reflect business purposes. In this particular case, invoices indicated repairs to and painting of the master bedroom and the kitchen. To help the deceiving process along, there was also a journal entry at the end of each year of several years charging various expense categories for alleged out-of-pocket expenses by the business owner. Not only were there no invoices or other documentation in support of these alleged expenses, but when you added together the various parts of this multiple-part journal entry, miraculously, each year, they added up to exactly $10,000

Tax Tip of the Week*

Early Withdrawal of Retirement Money

Just about everybody knows that if you take money out of an IRA or company retirement plan prior to reaching age 59 ½, you will be subject to a 10% penalty. There are a number of exceptions to that rule – and one of the most interesting, and difficult to use, as well as typically worthwhile only in the exception, is that anyone, for no reason at all, can take withdrawals from his/her IRA or retirement plan at any age and avoid the penalty. The “trick” is that the payments need to be relatively constant, and approximate an annuity type withdrawal (roughly meaning estimated over your anticipated lifespan) from that account or plan. Further, you cannot stop those withdrawals until you are at least age 59 ½. This is a complex area, but for those in need of IRA type funds who happen to have enough to make a difference in their lifestyle, it is something to consider.

Anecdote of the Week

I Never Said I Was Bright

Our work brings us into contact with many people with very unusual ideas of recordkeeping and reporting, many of them are reasonably bright, some very bright. Every once in a while we come across someone who, let’s say, has a few rungs missing from his/her ladder. One case involved a couple with a considerable amount of cash in the bank – nothing improper, legitimate funds accumulated over the years, in various bank accounts and cds. Over a period of several months, a large portion of that money kind of disappeared – it was no longer in the bank. This continued for a few years – which is about the time that the divorce complaint began and we were called in. The explanation was amazingly simple. The husband figured he could hide this money from his wife if he put it – the “it” here being literally cash in the form of dollar bills – in a safe deposit box, a couple of tin cans, under the mattress, etc. And, yes, in that fashion it also failed to earn any interest. Not only of course was the money all discovered, but the husband was held responsible for the loss of the interest to the marital estate.

Tax Tip of the Week*

Retirement Money
There is one key difference between IRAs on one hand, and just about all other plans (profit sharing, pension and the like) on the other hand relevant to retirement funds being carved up in the divorce process. That major difference is that when retirement funds are carved up between divorcing spouses, regardless of age, there is a window when you can receive funds from a qualified retirement plan (profit sharing, pension, 401(k), 403(b), etc.) without penalty; whereas there is no such opportunity with monies coming from an IRA. That is, the age 59 ½ rule, under limited circumstances, does not apply to those qualified plan distributions resulting from a divorce – but they still apply to IRA distributions.