GLG News by Tax Professionals (US)

Gil ManzonAssociate ProfessorTRUSTEES OF BOSTON COLLEGE

If you make me account for it I won’t do it: Consideration of the change in pension accounting

October 16, 2006

Analysis of:FASB Statement 158 | www.fasb.org

What to be ready for given that publicly traded firms will have to adjust their balance sheets for underfunded / overfunded pension plans ending for years after 12/15/06?  Look into the footnotes of the 05 financial statements.  For some companies, the adjustment will be big and net equity on the balance sheet will be reduced commensurately (that said, the markets doing well will likely mitigate negative adjustments that would have been much larger in recent years). Also, look for companies to begin discussing changes in existing pension plans (just as they did with other post retirement benefits in the early 90s when the accounting for these liabilities was changed along similar lines to those for pensions).

Gil ManzonAssociate ProfessorTRUSTEES OF BOSTON COLLEGE

What are you doing with my money?

October 16, 2006

Analysis of:Stock Buybacks at 'Unprecedented Level' | www.cfo.com

One of the critical issues you need to be clear on with stock buybacks is why is it happening.  The article suggests an attempt to increase EPS.  Maybe.  My first question would be what alternative uses for my money (shareholder talking) do you have? If you're not making me money near term, give me my money back (repurchase shares).

Gil ManzonAssociate ProfessorTRUSTEES OF BOSTON COLLEGE

FIN 48: New tax(ing) accounting: Overview and some likely effects

September 13, 2006

Analysis of:FASB Interpretation Number 48 | www.fasb.org

Overview

FIN 48 provides guidance for tax reporting for firm years starting after 12/15/06. It will result in the deferred recognition of tax benefits associated with tax positions that are viewed as aggressive (not “more likely than not” to be sustained or sustained at amounts sought following (presumed) review by tax authorities).

FIN 48 specifies a two-step process for evaluating tax positions for recognition and measurement. First, firms must determine whether it is more likely than not that a given tax position will be sustained upon examination. Second, for those tax positions determined to be more likely than not to be sustained, firms must estimate the amount of the tax benefit that is more than 50% likely to be realized. A liability has to be recorded for tax positions that are not viewed as sufficiently likely to be sustained so as to be recognized and those positions are that are not expected to be sustained at the levels filed for tax purposes. As well, a table must be prepared and reported in the footnotes to the financial statements summarizing the aggregate value of “unrecognized tax benefits.”

Thomas KleinManaging MemberKleinCPA PLLC

Impending Homebuilder Impairment Charges Make Bad Situation Worse

August 2, 2006

Analysis of:Builders get caught in squeeze on land values | www.azstarnet.com

The softening housing market is putting a strain on homebuilder earnings.  To make matters worse, many homebuilders are poised to record impairment charges on their recent land purchases, which will further strain earnings.  These charges are required when the expected return on these land investments is less than the current recorded value on the company's balance sheet.  Therefore, homebuilders with significant land purchases over the past 12 to 24 months will be impacted the most.

Thomas KleinManaging MemberKleinCPA PLLC

How Stock Repurchase Programs Create Economic Value for Shareholders

August 2, 2006

Analysis of:Microsoft Reports Fourth Quarter Results and Announces Share Repurchase Program | biz.yahoo.com

The initiation of a stock repurchase program suggests that the company believes its shares are undervalued. Furthermore, it is, in effect, a tax efficient way of purchasing company stock on behalf of its shareholders.

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