Your McCarthy Update
Marty McCarthy, CPA, CCIFP
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Focused on You. Dedicated to Your Success.
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May 10, 2021
McCarthy Thought Leadership
(Utility Transportation Contractor) Rich Higgins’ article entitled “Your Line of Credit Can Affect Bonding & Banking Relationships” was published in the April issue of Utility Transportation Contractor. Learn more.
Accounting & Tax News
(Accounting Today) IRS to fix its confusing tax ‘error’ on new 10-year rule for inherited retirement plans. Congress dealt investors a blow on the eve of the pandemic when it sharply reined in the benefits of a lucrative tool for passing on wealth to heirs, sometimes tax-free. Then the IRS tightened the screws, shocking advisors, and estate planners in March when it suggested that the new “10-year rule” for inheritors of so-called stretch IRAs and 401(k)s could create immediate tax hits for some beneficiaries. Now the IRS is reversing course. After quietly publishing guidance that said non-spousal heirs would have to take annual minimum distributions from inherited plans before cashing them out after 10 years, the agency admits — not officially, yet — that it made a whopper of a mistake. Read more.
(Journal of Accountancy) FASB clarifies accounting for certain call option modifications. FASB issued Accounting Standards Update (ASU 2021-04) to clarify an issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options that remain equity-classified after modification or exchange. The ASU provides guidance on how an issuer would measure and recognize the effects of these transactions. The standard provides a principles-based framework to determine whether an issuer should recognize the modification or exchange as an adjustment to equity or an expense. The new rules take effect for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Entities are required to apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted for all entities, as is adoption during an interim period. Learn more.
(U.S. News & World Report) 6 Common Misconceptions About 529 Plans. Learn the facts about 529 to better prepare for college education costs. Read more.
Business News
(ABC News) U.S. wages and benefits jump as economy reopens. Wages and benefits grew quickly for U.S. workers in the first three months of the year, a sign that businesses are starting to offer higher pay to fill newly opened jobs. Learn more.
(Entrepreneur) 5 truths about employee engagement that no one wants to hear. Accept these truths to create a culture of sustainable success. Learn how.
(MSN) Hiring struggles slow US job growth in April. America's employers added 266,000 jobs last month, sharply lower than in March and a sign that some businesses are struggling to find enough workers as the economic recovery rapidly strengthens. Learn why.
(Reuters) Banks eased standards for business, household loans in Q1, Fed survey shows. Loan officers at U.S. banks reported easing standards on most business and household loans in the first three months of the year as more of the country reopened amid accelerating vaccination rates. Standards on commercial real estate loans remained basically unchanged, while banks reported tighter standards for construction and land development loans, according to loan officers responding to the Federal Reserve survey. Learn more.
(Reuters) U.S. Treasury increases second-quarter borrowing estimate due to COVID-19 response. The U.S. Treasury said it plans to borrow $463 billion in the second quarter, more than the February estimate of $95 billion, as it increases spending in response to COVID-19. Read more.
(U.S. Department of Labor) U.S. Department of Labor withdrew the Independent Contractor Rule. The Effective May 6 the “Independent Contractor Rule,” has been withdrawn to maintain workers’ rights to the minimum wage and overtime compensation protections of the Fair Labor Standards Act. Read more.
Construction & Real Estate News
(Bankrate) Why are house prices going up, and how long will it last? If you’re looking to buy a home in the months ahead, get ready for stiff competition and relatively high prices in much of the country. An unprecedented shortage of available homes for sale means many properties often see multiple offers, and low mortgage rates have been pushing prices up. Read more.
(Construction Executive) Nonresidential construction spending decreases 1.1% in March, says ABC. The Associated Builders and Contractors (ABC) analysis of data published by the U.S. Census Bureau showed that on a seasonally adjusted annualized basis, nonresidential spending totaled $778.5 billion for the month. Spending was down on a monthly basis in 11 of the 16 nonresidential subcategories. Private nonresidential spending was down 0.9%, while public nonresidential construction spending fell 1.5% in March. Read more.
(NAHB Now) Skyrocketing lumber prices add nearly $36,000 to the price of a new home. Soaring lumber prices that have tripled over the past 12 months has caused the price of an average new single-family home to increase by $35,872, according to new analysis by the NAHB Economics team. This lumber price hike has also added nearly $13,000 to the market value of an average new multifamily home, which translates into households paying $119 a month more to rent a new apartment. Furthermore, building material prices have been steadily rising since 2020 and were up across the board in March. Read more.
COVID-19 Related News
(CPA Practice Advisor) Small business jobs grew significantly in April. The Small Business Jobs Index increased 4.33% from March to 98.34 in April, a positive indicator of job growth returning to pre-pandemic levels. Learn more.
(IRS.gov) Under the American Rescue Plan (ARP), employers are entitled to tax credits for providing paid leave to employees who take time off related to COVID-19 vaccinations. Employers can claim refundable tax credits that reimburse them for the cost of providing paid sick and family leave to their employees due to COVID-19, including leave taken by employees to receive or recover from COVID-19 vaccinations. ARP tax credits are available to eligible employers that pay sick and family leave for leave from April 1, 2021, through September 30, 2021. Read about the eligibility requirements and how employers may claim the credit.
(Journal of Accountancy) SBA stops accepting new PPP applications from most lenders as general funds run out. The SBA informed lenders that the PPP general fund was out of money and that the only remaining funds available for new applications are $8 billion set aside for community financial institutions (CFIs), which typically work with businesses in underserved communities. The agency also has set aside $6 billion for PPP applications still in review status or needing more information due to error codes. Read more.
(New Jersey Business) $275M in relief for small businesses, individuals impacted by COVID-19. Gov. Phil Murphy announced an additional $235 million in funding for small business relief and $40 million in funding for an excluded residents fund to assist individuals negatively impacted by the COVID-19 pandemic. Learn more.
(Philadelphia Business Journal) Pennsylvania will end Covid-19 business restrictions on May 31. The state also laid out a path to ending its mask mandate, saying it will cease requiring face coverings to be worn once 70% of Pennsylvania adults are fully vaccinated. Just over half of adults in the state have now received at least one dose of the Covid-19 vaccine, the state reported. Read more.
(Philadelphia Business Journal) New Jersey lifting all capacity restrictions on restaurants, outdoor events. New Jersey will end many of its Covid-19 capacity restrictions on May 19. Gov. Phil Murphy is set to lift capacity limits on businesses, allowing for any establishment to have maximum capacity if they can maintain six feet of social distancing between patrons. That means retailers, restaurants, theaters and more will be able to have as many guests as they can accommodate with social distancing implemented. Read more.
Feel free to contact any member of our team at (610) 828-1900 (PA) or (732) 341-3893 (NJ) with questions. Rich Higgins, CPA, managing principal – New Jersey office can be contacted at Richard.Higgins@McCarthy.CPA. I can be reached at Marty.McCarthy@McCarthy.CPA As always, we are happy to help.
Stay safe,
Marty McCarthy, CPA, CCIFP
Managing Partner
McCarthy & Company
Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).
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