May/June 2018

Though the TCJA law was signed in December 2017 and became effective as of January 1, 2018, new guidance has recently been provided by the IRS. If your organization offers qualified transportation benefits and/or on-site athletic facilities to your employees, you may be subject to unrelated business income taxes (UBIT). Qualified transportation benefits include buses, van pools, transit passes, and parking passes. Under the new IRS guidance, these benefits are taxable as UBIT if the organization pays the benefits directly on behalf of the employee or if the employee pays the benefits as a pre-tax reduction of their salary.

If your organization offers any of these benefits to your employees, please contact us so we can discuss your organization's situation further.

On June 21, 2018, the Financial Accounting Standards Board (FASB) released Accounting Standards Updated (ASU) 2018-08, which clarifies when a transfer of cash or other assets or the discharge of liabilities qualifies as a contribution or an exchange transaction. The ASU is expected to help clarify the accounting treatment for grants and contracts awarded by government agencies to nonprofits. In addition, the ASU provides clarification for determining if a contribution is conditional or unconditional and for differentiating a donor-imposed restriction from a donor-imposed condition. The new ASU will be effective for 2019 calendar year-end nonprofits and 2020 fiscal year-end nonprofits. Read the full ASU here.

The Internal Revenue Service (IRS) recently issued a new revenue procedure (Rev. Proc. 2018-32) which supersedes Rev. Proc. 81-6, Rev. Proc. 81-7, Rev. Proc. 89-23; and Rev. Proc. 2011-33 and combines them into one revenue procedure in order to simplify guidance to grantors and contributors to not-for-profit organizations on deductibility and reliance issues. The revenue procedure clarifies the extent to which grantors and contributors may rely on the listing of a tax-exempt organization in an IRS database of organizations eligible to receive tax-deductible contributions under § 170, provides safe harbors for ensuring that a grantor’s or contributor’s grant or contribution will not cause the grantor or contributor to be responsible for, or aware of, an act that results in the loss of a public charity’s tax-exempt status, and reflects the changes to IRS regulations eliminating the advance ruling process and changing the computation period for determining public support for 509(a)(1) and 509(a)(2) organizations. Rev. Proc. 2018-32 also provides guidance for determining when a grant or contribution is considered an unusual grant. Read the full IRS Revenue Procedure here.

Edelstein & Company, LLP will be hosting a training workshop in the coming months to facilitate the implementation of ASU 2016-14 Presentation of Financial Statements of Not-for-Profit Entities for our nonprofit clients. Please email Edelstein’s Front Office (frontoffice@edelsteincpa.com) if you are interested in attending this complimentary workshop. Seats will be limited so please don’t delay in registering for this important event. ASU 2016-14 can be found here.