Tagged: Accounting

With the 2017 Primary Over, It’s Murphy versus Guadagno for Governor

On Tuesday, June 6, 2017, New Jersey voters went to the polls to select their party’s nominees for Governor and all 120 seats in the Legislature. After a 2016 election cycle full of surprises, New Jersey’s 2017 primary resulted in wins for the gubernatorial front-runners, Democrat Phil Murphy and Republican Kim Guadagno. Those legislative districts with contested primaries also resulted in no major upsets and saw the expected candidates emerge with victories. Governor’s Race Former Ambassador Phil Murphy won the Democratic primary with 48 percent of the vote (241,353). His next closest competitor, former U.S. Treasury official Jim Johnson, garnered 22 percent (109,260), followed by Assemblyman John Wisniewski who also received 22 percent (107,872). Senator Raymond Lesniak came in fourth with 5 percent (24,136). Lt. Governor Kim Guadagno won the Republican primary with 47 percent of the vote (113,404). Assemblyman Jack Ciattarelli tallied 31 percent (75,275). In both contests, turnout was low. About one-quarter of Democratic voters, and only 20 percent of Republicans, participated in the primary. With New Jersey and Virginia being only states to hold a gubernatorial election in 2017, national groups are expected to make these two elections a referendum on President Trump and his agenda. Legislative Races Of the 40 legislative districts, only a handful saw competitive primary contests. In Legislative...

Federal Tax Reform and the Potential Repeal of the Cash Method of Accounting

In the wake of the introduction by President Trump of his Tax Reform proposal on April 26, 2017, Congress, especially the U.S. House of Representatives Committee on Ways and Means, will be considering various methods to fund tax rate reductions. The White House formally delivered the President’s proposed budget to Congress on May 23, 2017. One proposal likely to be under consideration is the repeal of the cash method of tax accounting for service businesses, though many experts dispute whether many of the budget’s finer details will ever pass both houses of Congress. Under current law, the cash method of accounting cannot be used for income tax purposes by (i) businesses that sell goods and therefore must keep inventories, and (ii) C corporations with average annual gross receipts of $5,000,000 or more. A taxpayer-favorable exception from the C corporation rule is available for qualified personal service corporations, consisting of personal service corporations (PSCs) in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting, when at least 95% of the stock of such PSCs is owned directly or indirectly by employees performing services in one of such fields. To oversimplify things, this means that law firms pay federal tax based on actual cash receipts, not based upon billings or upon what...