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February 6, 2023

Accounting News Roundup: Convenience vs. Necessity Tests and Free Bathroom Renovations | 08.09.17

Businessman telling businesswoman about how he’ll be working late, but not as late as her, and not be judged for it.

Convenience tests

This Bloomberg BNA article discusses the strange but very real issue for workers who work from home but also work in an office…that’s in a different state. New York, Pennsylvania, Delaware, and Nebraska all have what’s called a “convenience versus necessity test” and it sounds pretty inconvenient:

Under a convenience versus necessity test, the state where the employer is located taxes the employee on all income earned from the employer when the out-of-state work is performed for the employee’s convenience, rather than out of necessity to the employer. This includes even income earned while telecommuting outside of the state. This circumstance can ultimately lead to double taxation for some telecommuting taxpayers.

And if you think that you can claim necessity just because, New York says NOPE:

[T]he home office must contain, or be near, specialized facilities that cannot be made available at the employer’s workplace. If this is not the case, the taxpayer must demonstrate that seven out of 16 specialized factors are met in order to qualify.

I think most people — accountants, certainly — would suffer through a soul-crushing commute to avoid double taxation. But maybe I’m wrong about that.

Insider trading

Insider trading isn’t always directly relevant to our content here at Going Concern, but when it is, it does not disappoint. Anyway, this litigation release issued by the SEC yesterday is too good not to share:

The SEC’s complaint, filed on May 31, 2016, alleged that Steven V. McClatchey, an investment banker, had regular access to highly confidential nonpublic information about impending transactions being pursued for investment bank clients. From 2014 to 2015, McClatchey allegedly abused his fiduciary duty and tipped this confidential nonpublic information to his close friend Gary J. Pusey. Pusey then allegedly used the information to trade in advance of ten mergers and acquisitions deals, generating approximately $76,000 in illegal profits. In return, Pusey, who worked as a plumber, allegedly gave McClatchey a few thousand dollars in cash and also renovated a bathroom in McClatchey’s home.

Look, I’m not suggesting that any of you should share material, non-public information with a contractor in exchange for a new bathroom. But if you did, most people wouldn’t blame you.

Accountants behaving badly

Accountants who behave badly usually do so intentionally. The accountant is either living beyond their means or has a gambling problem or is greedy or whatever. For the first time that I can remember, I came across a story that involves an accountant behaving badly unintentionally, without even knowing she was running afoul of the law:

When Tammy Duryea checked her mail at her Bluffton home last Saturday, she found a letter asking that a speeding ticket older than her nearly 19-year-old marriage be paid to the Hilton Head Magistrate Court.

“I’m planning to contest this,” Duryea said on Friday. “It’s only $55, but it’s just the principle of the thing. First of all, I don’t think I would ever have a ticket and not have paid for it. I’m an accountant by trade. I’m not delinquent with my bills. And do you know how many times I’ve renewed my driver’s license? They would have said I owed this or had a warrant out.”

An accountant would say “I’m not delinquent with my bills,” though, wouldn’t she? It seems like the perfect excuse for avoiding a speeding ticket for 24 years.

Previously, on Going Concern…

We kicked off a new series of videos featuring CPA review legend Tim Gearty talking about the new revenue recognition rules. In Open Items, someone wants to know if they need to re-take their ethics exam.

In other news:

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