The horse activity question: for fun or for profit?

Article Abstract:

The Tax Reform Act of 1986 (TRA '86) limits the losses and credits taxpayers can take from passive business activities such as horse breeding and racing. If breeders and racers do not materially participate in business activities, they have a passive activity in those business and cannot deduct losses. TRA '86 defines material participation as involvement on a regular, continuous, and substantial basis. If breeding and racing businesses show a profit in two of seven consecutive years, they are presumed to be a legitimate business; the IRS must then prove they are not in business. The factors horse breeders and racers should satisfy to have their activities considered a business and validly claim deductions for losses include: the manner in which they carry on the business; the taxpayers' expertise; and expectations of asset appreciation.

Analysis, Taxation, Passive activity (Taxation), Horse racing, Horse-racing, Horse breeding

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Professional ethics and values of certified public accountants: are CPAs characteristic of today's society?

Article Abstract:

The accounting profession is undergoing a crisis of confidence. Public opinion polls indicate that business ethics have not kept pace with public expectations. A survey of 224 certified public accountants (CPAs) asked them what values are important to them; how accepting they and other CPAs are of questionable behavior; and the rationale they use in making ethical judgments. Survey results indicate that CPAs are motivated more by personally-oriented values such a family security than by socially-oriented values. CPAs tend to see themselves as being more ethical than other practitioners. Their ethical judgments are based on costs, benefits, and consequences, rather than on moral acceptability.

Surveys, Ethical aspects, Professional ethics

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Church accounting: is there only one way?

Article Abstract:

The three most commonly used accounting methods for churches are cash, accrual, and modified accrual basis. The degree of simplicity or sophistication depends upon the local church. Small churches usually have accounting work done by volunteers. The financial reporting should provide comprehensible information that is useful to members in making rational decisions about the allocation of resources. The end product of the revenue generated are the services offered by the church. Financial reports should therefore help members assess these services.

Research, Finance, Charitable trusts, Churches, Church buildings

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