The CPA Desk

A Thought Leader Production by PKFTexas

Accounting Rules for Leases

Jen:  This is the PKF Texas Entrepreneur’s Playbook.  I’m Jen Lemanski, this week’s guest host, and I’m here today with Chip Schweiger, an Audit Director and a member of the PKF Texas SEC team.  Chip welcome back to the Playbook.

Chip:  Thanks Jen, good to be here.

Jen:  So I’ve heard there’s new accounting rules for leases, tell me about that.
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Hot Topics from the SEC

Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, this week’s host, and I’m here today with Ryan Istre, an Audit Director and a member of the PKF Texas SEC team. Welcome to the Playbook Ryan.

Ryan: Thanks Jen, glad to be here.

Jen: So Ryan what are the hot topics that the SEC staff are looking into these days?

Ryan: That’s a good question Jen. So there are a lot of new accounting pronouncements that are coming up in the very near future but one of the hot topics that the SEC staff are looking into right now are non GAAP financial measures. Some of the items that have come out in recent comment letters relate to the prominence of which non GAAP measures are being displayed over GAAP measures, which we all know is a no-no per Regulation G.
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How Technology Impacts a Joint Venture Audit

Russ:  This is the PKF Texas Entrepreneur’s Playbook.  I’m Russ Capper, this week’s guest host, and I’m here today with Brian Baumler, a Senior Vice President, and Kirsten Strieck, shareholder and Director of Operations and Client Services at Joint Venture Strategic Advisors.  Welcome to the Playbook.

Kirsten:  Thank you.

Brian:  Thanks for having us Russ.

Russ:  So you’ve both sort of been in this space, this joint venture mostly for oil and gas companies, for a few years right?

Brian:  That’s correct.  I’ve been in the oil and gas industry working in the oil and gas industry for CPA firms and also within industry for over 30 years.  So lots of experience which is a very powerful tool that we need to perform the services that we do.

Russ:  And I guess they’ve probably changed over the years how you do your joint venture consulting and auditing.

Brian:  Well obviously as you know technology over the last three decades has advanced the energy industry greatly in not only discovering oil and gas, but also in collaborating and sharing data.  And one of the secrets to providing a very efficient joint venture audit is also having access to that data.  So large cubes of data are the benchmark of information that we use to perform a lot of data analytics that help us focus in on core areas of the audit or operations that may have significant red flags and we can focus on those and not spend as much time on those areas that aren’t as important.

Russ:  Wow, so how do you do that?

Kirsten:  Well one of the areas that we use is a remote desktop server.  It allows us to A, audit wherever we are in the world and receive data from our clients anywhere.  We’re also using secure portals to receive this information from our clients so volumes of data come through the internet daily.

Russ:  I guess that also kind of lowers the expense completely doesn’t it if you’re not having to travel everywhere, right?

Kirsten:  That’s exactly right.

Russ:  Do you ever actually advise joint ventures without ever going there?

Kirsten:  Yes we do and it’s very beneficial to both our client and the operators.

Russ:  Wow, very interesting.

Brian:  It also helps too for the fact that we have two office locations so we can have multiple teams jointly working on a similar project together, sharing and collaborating information.

Russ:  And the two office locations Houston and Calgary, is that right?

Brian:  Correct.

Kirsten:  That’s correct.

Russ:  That’s really cool.  Well thanks a lot for bringing us up to date on Joint Ventures.

Brian:  Yep, thank you.

Kirsten:  Thank you.

Russ:  You bet.  For more information about JVSA visit  This has been another Thought Leader production brought to you by PKF Texas Entrepreneur’s Playbook.  Tune in next week for another chapter.

Christmas Came Early for Some Fiscal Year Taxpayers

As we are all aware, the most comprehensive tax reform in over 30 years was signed into law December 22, 2017. Most of the new tax provisions are “effective” for taxable years beginning after December 31, 2017. Tax professionals are still awaiting guidance on how many of these provisions’ will actually be applied.

Arguably one of the biggest revisions resulting from the new tax bill was the reduction in the corporate tax rate to a flat 21%. This new law, as with most of the new provisions, per the new bill’s language is effective for taxable years beginning after December 31, 2017. How this law applies to fiscal year taxpayers, however, was unclear or unaddressed.

The new law, however, does not change IRC Section 15 which calls for the use of a “blended rate” for tax years in which there is a rate change. This calculation is performed by dividing the year end taxable income into two components; a pre rate change component and post rate change component based on a pro rata portion of the number of days in each period. Each component percentage is then multiplied by the total taxable income for the full fiscal year multiplied by the rate for that period. The components are added together to determine the taxpayer’s total tax liability for the full tax year.

What does this mean? Fiscal year taxpayers with tax years ending in 2018 will see a decrease in estimated tax payments and their overall tax liability for the 2017 tax filing! Consult your tax advisor for questions and further guidance.

What to Know About the SEC’s Revenue Recognition Rules

Jen:  This is the PKF Texas Entrepreneur’s Playbook.  I’m Jen Lemanski, this week’s guest host, and I’m here today with Ryan Istre, an audit director and a member of the PKF Texas SEC team.  Ryan, welcome back to the Playbook.

Ryan:  Thanks for having me here Jen.

Jen:  So I know there’s new revenue recognition rules coming, what are the SEC’s views on this for registrants?

Ryan:  That’s a very good question Jen.  The new revenue recognition rules – or ASC 606 – are going to be effective for most registrants beginning January 1st of 2018.

Jen:  So this year?

Ryan:  This year, that’s correct.  What this is intended to do is bring into congruence the SEC’s rules with the new revenue recognition standards.  Some of the topics that are being discussed are the potentially outdated Regulation SX rules.  Other topics which may be of a little more importance are the effect of what happens with retrospective application of these new pronouncements when there are predecessor financial statements followed alongside successive financial statements.
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Who Benefits from Working with JVSA?

Russ: The is the PKF Texas Entrepreneur’s Playbook. I’m Russ Capper, this week’s guest host and I’m here with Kirsten Strieck, a shareholder and Director of Operations & Client Services at Joint Venture Strategic Advisors. Welcome to the Playbook, Kirsten.

Kirsten: Thank you for having me.

Russ: You bet. So, you talk about this company a lot as JVSA, right?

Kirsten: That’s right.

Russ: Ok, tell us about JVSA.
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TCJA temporarily lowers medical expense deduction threshold

With rising health care costs, claiming whatever tax breaks related to health care that you can is more important than ever. But there’s a threshold for deducting medical expenses that may be hard to meet. Fortunately, the Tax Cuts and Jobs Act (TCJA) has temporarily reduced the threshold.

What expenses are eligible?

Medical expenses may be deductible if they’re “qualified.” Qualified medical expenses involve the costs of diagnosis, cure, mitigation, treatment or prevention of disease, and the costs for treatments affecting any part or function of the body. Examples include payments to physicians, dentists and other medical practitioners, as well as equipment, supplies, diagnostic devices and prescription drugs.

Mileage driven for health-care-related purposes is also deductible at a rate of 17 cents per mile for 2017 and 18 cents per mile for 2018. Health insurance and long-term care insurance premiums can also qualify, with certain limits.

Expenses reimbursed by insurance or paid with funds from a tax-advantaged account such as a Health Savings Account or Flexible Spending Account can’t be deducted. Likewise, health insurance premiums aren’t deductible if they’re taken out of your paycheck pretax.
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What to Know About Staff Accounting Bulletin (SAB) 118

Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, this week’s host, and I’m here with Chip Schweiger, and audit director and a member of the PKF Texas SEC team. Chip welcome back to the Playbook.

Chip: Thanks Jen, good to be here.

Jen: So President Trump signed into law the Tax Act on December 21, 21017, it’s got a lot in it; what do SEC companies need to know that’s going to affect them?
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Tax credits just for small businesses may impact your 2017 and 2018 tax bills

Tax credits reduce tax liability dollar-for-dollar, potentially making them more valuable than deductions, which reduce only the amount of income subject to tax. Maximizing available credits is especially important now that the Tax Cuts and Jobs Act has reduced or eliminated some tax breaks for businesses. Two still-available tax credits are especially for small businesses that provide certain employee benefits.

1. Credit for paying health care coverage premiums

The Affordable Care Act (ACA) offers a credit to certain small employers that provide employees with health coverage. Despite various congressional attempts to repeal the ACA in 2017, nearly all of its provisions remain intact, including this potentially valuable tax credit.

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Can you deduct home office expenses?

Working from home has become commonplace. But just because you have a home office space doesn’t mean you can deduct expenses associated with it. And for 2018, even fewer taxpayers will be eligible for a home office deduction.

Changes under the TCJA

For employees, home office expenses are a miscellaneous itemized deduction. For 2017, this means you’ll enjoy a tax benefit only if these expenses plus your other miscellaneous itemized expenses (such as unreimbursed work-related travel, certain professional fees and investment expenses) exceed 2% of your adjusted gross income.

For 2018 through 2025, this means that, if you’re an employee, you won’t be able to deduct any home office expenses. Why? The Tax Cuts and Jobs Act (TCJA) suspends miscellaneous itemized deductions subject to the 2% floor for this period.
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