Crowe Financial Services Tax Insights – Aug. 24, 2016
Permissible Program-Related Investments
The IRS has issued new final regulations updating and expanding the examples of permissible program-related investments (PRIs) for private foundations. The regulations, already in effect, should be welcomed by the foundation community, including banks that finance PRIs, operate private foundations that make PRIs, or have high net worth customers with private foundations.
FASB Changes Accounting for Share-Based Compensation
The Financial Accounting Standards Board’s new standard for reporting on employee share-based compensation makes some notable changes to the treatment of excess tax benefits and tax deficiencies. While these changes will simplify the reporting process for financial services companies that pay such compensation, changes in the treatment of certain forfeitures also could increase income statement volatility for some. In addition, the new standard also affects the statement of cash flows and the computation of diluted earnings per share. Early adoption of the new standard is permitted, but banks should carefully consider the implications of early adoption.
South Carolina Guidance on Economic Nexus
This article provides an overview of the new ruling from the South Carolina Department of Revenue that addresses the application of “economic nexus” for income tax purposes in the state. It considers whether a variety of banking activities may, on their own, establish nexus.
Tax Treatment of Retained Servicing Rights
Many banks and financial services companies have expanded their sales of originated mortgages while retaining the servicing rights. Some banks’ tax treatment of such fees might be improper, and they could be sacrificing tax benefits. This article covers how banks should treat originated retained servicing fees for tax purposes.