For Pass-Through Businesses, Let the (Tax) Games Begin [WSJ]
For law, accounting, and other service-oriented pass-throughs feeling left out of all the tax cut fun, rest assured that some of your counterparts are already making plans to get in on the action by splitting their businesses in two. “[Tom] Wheelwright’s accounting firm is considering separating its educational-products business, to qualify for the lower pass-through rate, from its accounting services, which would face limitations from lower rates.” Oh, and then there’s potential for a beauty like this one:
The Senate plan also allows the pass-through tax break for individuals in law and accounting partnerships who make $250,000 or less when filing as singles or $500,000 when filing as married. To get more favorable treatment, law firms themselves might reorganize as corporations to get the 20% tax rate, said David Miller, a partner at Proskauer Rose LLP in New York. Then associates making under those thresholds would join sister partnerships that reward them with lower individual rates.
“This is a topsy-turvy world where the associates become partners and the partners become corporations,” Mr. Miller said.
In other words, the lifelong dream of becoming a partner has given way to the lifelong dream of becoming a corporation, all in the name of tax planning. I imagine some tax partners have been waiting their whole lives to seize this moment.
Elsewhere: Speaker of the House Paul Ryan appears to have put more thought into a poem about tax reform than actual tax reform.
SEC Appoints New Chairman and Board Members to PCAOB [SEC]
SEC Chairman Jay Clayton cleaned the PCAOB house, appointing an entirely new board. Along with William Duhnke as chairman, as expected, J. Robert Brown, Kathleen M. Hamm, James G. Kaiser, and Duane M. DesParte were named in an SEC press release yesterday. Brown is a law professor at the University of Denver and known investor advocate; Hamm comes from Promontory Financial Group after holding positions in government and at stock exchanges; Kaiser is 38-year veteran of PwC who has been its Global Assurance Methodology & Transformation Leader; DesParte has been the global controller at Exelon Corporation for the past 10 years. Before that, he had a brief stint at Deloitte and spent 17 years with Arthur Andersen.
On the surface, this looks like a very Big 4 friendly board, but who knows! Maybe Kaiser and DesParte have been waiting for just the right moment to morph into legendary hard-nosed regulators and public servants.
Elsewhere in SEC news: The Commission charged Tennessee-based biopharmaceutical Provectus with failing to disclose unauthorized perks and benefits for its executives that included “entertainment, clothing, cosmetic surgeries for female friends, large tips at Hooters and other restaurants, as well as personal travel.”
Facebook to pay taxes locally, instead of through Ireland [Bloomberg]
After several years of wildly successful tax avoidance, Facebook will shift its structure to “pay taxes in the country where sales are made, rather than funneling everything through its Irish subsidiary.” CFO Dave Wehner said that the move would “provide more transparency to governments and policy makers around the world who have called for greater visibility.”
Danbury city secretary accused of stealing $150,000 blames gambling problem [ABC13]
File to Accountants Behaving Badly: “Tell me if you’ve heard this one before.” A reader sent this one in, noting that a “City Secretary shouldn’t have had access to money.” Certainly not one with a gambling problem. Not to worry, though: “The mayor says the city bills are being paid, and the city has hired a CPA to restore financial order.”
Previously, on Going Concern…
Jason Bramwell wrote about how one company woke up from its nightmare of a month-end close. (This post was sponsored by our partner, FloQast. Read more about our partnership with them here.)
From me: A Working List of Things Accounting Firms Will Be Fretting About in 2018.
In Open Items, “I don’t know how to give my two weeks notice so that I can avoid a bad reference from this employer.”
In other news:
- Across the pond: Accounting firms urged to improve social mobility in the industry
- This Electric Truck Will Probably Beat Tesla’s to Market
- America’s healthiest and least healthy states
- Florida Fish and Wildlife Conservation charges 3 in connection to shark dragging video (Earlier)
- Fossil hunters find bones of human-sized penguin on New Zealand beach
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