Effective January 1, 2019 for non-public companies, accounting for contracts will change significantly for the first time in 35 years. Although several characteristics of the old guidance are not drastically altered conceptually, there are numerous improvements in the new standard that allow for more comparable recognition of revenue, consistent terminology across industries, and enhanced disclosures. Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, is not only effective January 1, 2019, but any long-term contracts that are currently in process and extend past January 1, 2019 will be subject to the new standard.
The following are the main provisions of ASC 606:
In order to have a successful implementation of ASC 606, each company should create an implementation plan that includes both internal and external stakeholders. Internal stakeholders include owners, accounting department personnel, project managers and estimators. External stakeholders include bankers, sureties, and other pre-qualification entities. The internal team selected to guide implementation should analyze revenue streams and begin the 5-step process above for each identified contract. The team should also consider potential impacts on debt covenants, taxes, bonding capacity, or incentive plans.
Some key areas of focus during the analysis phase will be multiple performance obligations, pre-contract costs, and uninstalled materials. Documentation and communication of the team’s determinations will be critical in maintaining consistent application of the new standard internally. This will allow for consistent reporting to external stakeholders.
For more information on how to prepare for the new revenue recognition, please contact me at Jasay@conoverasay.com.
Jared A. Asay, CPA, CCIFP | Financial Partner
Office | (480) 500-6333 Cell | (480) 684-4300
Email | Jasay@conoverasay.com
The US Treasury Department and the Internal Revenue Service released draft regulations on Thursday that change how the federal government will treat donations to charitable organizations that generate state government tax credits. As written, the draft would apply to many programs in Arizona that provide a state tax credit when a taxpayer makes a donation to certain nonprofits. This includes the AZ credits for Fees paid to public school, credits for contributions to private school tuition organizations and credits for Qualifying Charitable organizations.
The rule is not final, but this change could potentially affect the federal tax deductibility of your charitable tax donations that occur after Aug. 27, 2018!
In Arizona, you may currently qualify for a dollar-for-dollar tax credit on your state taxes. In addition, this also may qualify as a charitable deduction on your federal income tax return. If this proposed rule is finalized, it’s possible the federal deduction will no longer apply for donations made after Aug. 27, 2018.
A public hearing is scheduled for Nov. 5, 2018. Because this is still in process, the amendment is not yet final, and we do not know if the proposed date of applicability — Aug. 28, 2018 — will take effect. This legislation will not affect your ability to take the Arizona state tax credit. It would affect only your ability to claim the deduction on your federal taxes as well.
Many of the larger charities affected by this proposed law have already sent out emails to their prior contributors, so you may have been alerted to this issue already. The taxpayers affected by this change are those that will have more than $24k in itemized deductions for 2018 ($12k for single filers). If you fit in this category, you would benefit from making your state tax credit contributions by Monday instead of waiting until December. If you are unsure if you are in this category or have any questions about this proposed law change, please email me or give me a call.
Glenn Conover, CPA, CCIFP | Tax Partner
Office | (480) 500-6333 Cell | (602) 616-7245
Email | firstname.lastname@example.org
Nevada passed legislation in 2016 creating a new Commerce Tax on all businesses doing business in NV. The Commerce Tax is based on gross revenue and is calculated using a fiscal period of July 1 through June 30 regardless of the entities normal fiscal year. Everyone doing business or licensed to do business in Nevada must file the form annually by 8/15.
The tax only applies if the business has more than $4,000,000 of NV gross revenue. If gross revenue is less than $4,000,000 a simplified filing is allowed. We know that Nevada is sending out "Welcome" letters to businesses that are licensed there.
Penalties can be assessed for failure to file the return but at this time it appears that penalties are based on tax due, so if no tax is due, there will be no penalties. Conover Asay suggests that you file the required forms even if there is no penalty as the State of Nevada may have other consequences for non-filing that may result in a termination of your licenses.
If you have any questions concerning the new filing requirement, here is the link to the Nevada Department of Taxation or call Glenn Conover at 480-500-6333.
Glenn Conover, CPA, CCIFP
As a construction company owner - are you maximizing your profits through brutal cost recapture? If not, hopefully this article will help give you some good ideas to create a great Business, a great Life, and a lasting Legacy.