Accounting News Roundup: Apple’s Taxes; Even More Accounting Firm M&A; ‘Almost as stressful as tax season’ | 01.15.16

Apple May Be on Hook for $8 Billion in Taxes After Europe Probe [Bloomberg]
On more than one occasion, Apple CEO Tim Cook has said of the company's taxes that it "pays every dollar we owe," and the notion that it avoids taxes is "political crap." In a legal sense, the former statement is probably true and in a practical sense the latter is probably true but the European Commission seems to have a difference of opinion:

The European Commission contends that Apple’s corporate arrangement in Ireland allows it to calculate profits using more favorable accounting methods. Apple calculates its tax bill using low operating costs, a move that dramatically decreases what the company pays to the Irish government. While Apple generates about 55 percent of its revenue outside the U.S., its foreign tax rate is about 1.8 percent, according to the analysis. If the Commission decides to enforce a tougher accounting standard, Apple may owe taxes at a 12.5 percent rate, on $64.1 billion in profit generated from 2004 to 2012.

This investigation started in 2014 and Apple seems to have resigned itself to a negative outcome. Here's how they discuss in their most recent 10-K:

Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change. The Company’s effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation, including in the U.S. and Ireland.

[…]

If the Company’s effective tax rates were to increase, particularly in the U.S. or Ireland, or if the ultimate determination of the Company’s taxes owed is for an amount in excess of amounts previously accrued, the Company’s financial condition, operating results and cash flows could be adversely affected.

Steve Jobs is probably relieved he's not around for this.

Even More M&A
Yesterday I mentioned briefly that there is lots of merger and acquisition news going around and today there's even more of it. EY took in Family Office Metrics as part of Family Office Advisory group which is part of their Private Client Services practice. BDO acquired Feeley & Driscoll, which will nearly double its Boston office.

And now, your New York Knicks/PwC tree planting update:

In other news:

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