Determining an Individual\u27s Federal Income Tax Liability When the Tax Benefit Rule Applies: A Fifty-Year Checkup Brings a New Prescription for Calculating Gross, Adjusted Gross, and Taxable Incomes

The tax benefit rule should be described to indicate that it applies to credits and exclusions besides deductions, and deduction recoveries should be reported in the same location as was affected initially. The recovery should not affect gross income, for the purpose of tax equity. The recovery should rather affect either taxable income or adjusted gross income. The IRS and the courts should adopt this new description and principles

The SEC and Accounting, In Part through the Eyes of Pacioli

As part of a symposium marking the seventieth anniversary of the creation of the Securities and Exchange Commission, this article pulls together two threads, namely Luca Pacioli\u27s prominence in accounting and the importance of the Management\u27s Discussion and Analysis (MD&A) requirements that seek to give investors an opportunity to view a public company through the eyes of management, to evaluate the SEC\u27s record on certain accounting issues. Because writers in legal journals have largely ignored Pacioli\u27s efforts, the article begins by highlighting some of the friar\u27s contributions to accounting precepts. The article next applies some of those precepts in a critique of the SEC\u27s record on accounting issues. Using this discussion as a springboard, the article then offers additional reflections regarding the SEC\u27s reliance, sometimes via congressional direction or acquiescence, on private-sector bodies to establish accounting principles and standards governing audits of public companies; the SEC\u27s leadership regarding the MD&A requirements, most notably through an administrative action against Caterpillar, Inc.; the SEC\u27s initiatives on internal controls; and auditor independence. After identifying particular accomplishments in most of these areas notwithstanding often inadequate resources, the article concludes that the failure to safeguard auditor independence stands as the SEC\u27s most glaring weakness during its first seventy years

Are Back Pay and Damages in Age Discrimination Cases Subject to Income Taxes?

The Internal Revenue Code excludes damages received on account of personal injuries from federal income taxation. In this case, the Supreme Court decides if back pay and damages received under the Age Discrimination in Employment Act qualify for this exclusion. The Court\u27s decision could affect thousands of workers who have brought, or may bring, federal age discrimination claims after losing their jobs in downsizings. It may also resolve the tax status of punitive damages

New Opportunities for Obtaining and Using Litigation Reserves and Disclosures

Following the publication of Opportunities for Obtaining and Using Litigation Reserves and Disclosures, which highlighted the helpful information about litigation reserves that a litigator can often detect or discover from an opponent\u27s financial statements, accounting books and records, tax returns, public filings with the Securities and Exchange Commission (the SEC), and auditor, two important regulatory developments occurred in early 2003 that create additional opportunities to obtain information about an opponent\u27s assessments of (i) expected liability in the underlying case or (ii) obligations or settlements in similar cases. First, pursuant to the Sarbanes-Oxley Act of 2002, the SEC issued final regulations that require new disclosures from many public companies about certain contractual obligations, including litigation settlements and, perhaps, other estimated amounts necessary to resolve litigation in the Management\u27s Discussion and Analysis section (MD&A) of various securities filings that contain financial statements for fiscal years ending on or after December 15, 2003. Second, the Treasury Department issued new tax shelter regulations, effective February 28, 2003, that require taxpayers to disclose specified confidential transactions, including certain out-of-court settlements, to the Internal Revenue Service on Form 8886, Reportable Transaction Disclosure Statement. Finally, this update notes that the SEC\u27s new rules on the Improper Influence on Conduct of Audits, which became effective on June 27, 2003, further threaten the viability of the American Bar Association\u27s Statement of Policy Regarding Lawyer\u27s Responses to Auditor\u27s Requests for Information

Determining an Individual\u27s Federal Income Tax Liability When the Tax Benefit Rule Applies: A Fifty-Year Checkup Brings a New Prescription for Calculating Gross, Adjusted Gross, and Taxable Incomes

The tax benefit rule should be described to indicate that it applies to credits and exclusions besides deductions, and deduction recoveries should be reported in the same location as was affected initially. The recovery should not affect gross income, for the purpose of tax equity. The recovery should rather affect either taxable income or adjusted gross income. The IRS and the courts should adopt this new description and principles

The SEC and Accounting, in Part through the Eyes of Pacioli

As part of a symposium marking the seventieth anniversary of the creation of the Securities and Exchange Commission, this article pulls together two threads, namely Luca Pacioli\u27s prominence in accounting and the importance of the Management\u27s Discussion and Analysis (MD&A) requirements that seek to give investors an opportunity to view a public company through the eyes of management, to evaluate the SEC\u27s record on certain accounting issues. Because writers in legal journals have largely ignored Pacioli\u27s efforts, the article begins by highlighting some of the friar\u27s contributions to accounting precepts. The article next applies some of those precepts in a critique of the SEC\u27s record on accounting issues. Using this discussion as a springboard, the article then offers additional reflections regarding the SEC\u27s reliance, sometimes via congressional direction or acquiescence, on private-sector bodies to establish accounting principles and standards governing audits of public companies; the SEC\u27s leadership regarding the MD&A requirements, most notably through an administrative action against Caterpillar, Inc.; the SEC\u27s initiatives on internal controls; and auditor independence. After identifying particular accomplishments in most of these areas notwithstanding often inadequate resources, the article concludes that the failure to safeguard auditor independence stands as the SEC\u27s most glaring weakness during its first seventy years