Thomson Reuters CheckPoint Learning   CPE COURSES  |  SALES & SUPPORT  |  LOGIN
graphic placeholder
News for Corporate Professionals from Checkpoint Learning
graphic placeholder
graphic placeholder
April 2016
In This Issue   SUBSCRIBE
Knowledge is power! Stay informed and be prepared with critical and timely corporate tax and accounting news. Click below to subscribe and continue to receive this free bimonthly newsletter.
Sign up for the Newsletter...
Spreadsheet Best Practices: Roadmap to Reduced Risk

Spreadsheet Best Practices: Roadmap to Reduced Risk Transformation of Data into Information

Information is a powerful asset. While accurate and timely information can lead to success, the opposite is true as well. It is imperative that businesses manage this valuable asset to guide their decision-making activities.

Spreadsheet applications—like Microsoft Excel®—are powerful tools used to transform and organize raw data into usable information. With the help of spreadsheets, management is able to gleam analytical insight in their business. This keeps them informed and supports them in their decision-making process. Spreadsheets provide extraordinary versatility that enables their use across most functional areas—for a wide variety of business analytics. Powerful formulas, pivot tables, and “what-if” analysis help managers create business cases, merger valuations, product development, breakeven analysis, etc.

Integrity of Spreadsheets

Because managers have come to rely on the spreadsheet as a tool to help manage their businesses, it is imperative that these powerful tools are protected, safeguarded, controlled, monitored, and periodically tested and assessed as to their accuracy and truthfulness.

The integrity of a spreadsheet is embedded in its structural design, its formulas, and the preciseness of the data entered into the spreadsheet. If one of these integrity links are missing or broken, the spreadsheet can give inaccurate and false results. Testing its design and formulas is imperative—prior to inputting live data and relying on the spreadsheet for accurate results. Also, periodic risk assessment is needed to maintain the spreadsheet’s integrity.


The creation and testing process should be documented, so those using and maintaining the spreadsheet understand the inner workings of the spreadsheet. Once created, periodic updates and maintenance must be made to assure its relevance and reliability. These changes should be documented, to keep the continuity and usability of the spreadsheet active and robust.

Best Practices in Managing Spreadsheet Risk

To help with the integrity of the spreadsheet, there are a number of “best practices” used to manage spreadsheet risk. These controls include system/technical controls; people/administrative controls; and process/organizational controls. Each has its specific function to reduce spreadsheet risk.

System or technical controls focus on access, administrative, physical access, and logical controls. Password controls prevent unauthorized parties from accessing the network or folders. Passwords can also be added to individual workbooks and files. For additional protection, one can manually protect specific cells—or parts of the spreadsheet—by locking them before protecting the entire spreadsheet.

Field format restrictions can control the type of information allowed in the cell. Special number formats, custom format codes, and functions to format text are used to enhance the accuracy and consistency of the spreadsheet. The transpose data feature helps the placement of data into the proper location. Data validation rules added to the spreadsheet strengthens the authenticity of the data entered in a field.

Periodic risk assessments would include spreadsheet validation checks. Such checks would include: field format and data validation; formula and range checks; proofing; save and sharing authorizations; and document inspection.


As spreadsheets become more intricate and important to the managing of organizations, more attention must be given to their creation, protection, maintenance, and risk assessment. Company policies should include policies for spreadsheets’ creation, storage, retention, and maintenance. These policies should be reviewed and updated to keep up with the organization’s confidentiality, integrity, and security needs.

Key Takeaway

Knowledge is a key to success; and information is knowledge. While accurate and timely information can lead to success, the opposite is true as well.

For more information and continuing professional education on accounting and tax strategies related to intellectual property, see the Checkpoint Learning course, Spreadsheet Best Practices: Roadmap to Reduced Risk.
The Tax and Business Aspects of an Aging Workforce

The Tax and Business Aspects of an Aging WorkforceBy Charles R. Goulding, Michael Wilshere, and J. David Roberson Discuss the Impact of a Rapidly Aging U.S. Workforce

As the baby boomer generation nears a collective retirement age, many employers are beginning to prepare for the consequences of a rapidly aging workforce in the U.S. On average, over sixteen (16) percent of employed Americans in 2015 were between the ages of fifty-five (55) and sixty-four (64). Moreover, approximately five (5) percent of the workforce was at least sixty-five (65) years old. These two demographics combined results in a workforce where over twenty (20) percent of the total participants are over the age of fifty-five (55). Additionally, over ten thousand (10,000) baby boomers in the United States will reach the age of sixty-five (65) on a daily basis until 2030, according to the U.S. Census Bureau.

To make matters worse, many of these older workers cannot afford to retire. A 2013 Retirement Confidence Survey sponsored by the Employee Benefit Research Institute found that only twenty-four (24%) percent of workers at least fifty-five (55) years old have saved more than two hundred fifty thousand ($250,000) dollars for retirement. That amount will not sufficiently support a comfortable lifestyle for the average life expectancy of Americans.

According to the Bureau of Labor Statistics, over thirty (30%) percent of those workers aged sixty-five (65) to seventy-four (74) will continue to be actively working, as compared to just over twenty (20%) percent of the same age bracket in the workforce in 2002, and approximately twenty-seven (27%) in the workforce during 2012.

Taking all these statistics together, not only will there be a much larger pool of older people overall, but they will also comprise a larger percentage of the workforce. The chart below shows the increasing percentage of workers aged fifty-five (55) and up by 2020.

The Tax and Business Aspects of an Aging Workforce Source: U.S. BLS

As many older workers retire, there will be a shortage of workers across most industries. Many employers therefore should take positive steps to retain older workers. One way to do this is with catch up payments, which are available in some retirement plans for employees who are over fifty (50) years old. Congress recently added a new catch-up contribution option to retirement plans out of concern that baby boomers have not saved enough funds to allow for a normal standard of living during retirement. The option allows workers over age 50 to increase contributions towards retirement. According to the Plan Sponsor Council of America, nearly all (97.1%) of 401k plans permit catch-up contributions, and more than a third (36%) of those plans match the contributions. The option works by allowing the participant to make an additional six thousand ($6,000) pretax contribution to their 401k plan in 2015, on top of their regular pretax contribution limit. The catch-up limit is not subject to any other federal and/or plan contribution limits. Catch-ups are made on top of, and in addition to, the current limits. After the maximum regular amount allowed is contributed ($18,000 for 2015) for the year, the participant may make an additional catch-up contribution.

Another available incentive that employers can utilize to benefit the older employee population is to offer phased-in retirement plans. Phased retirement is a human resources tool that allows full-time employees to work part-time schedules while beginning to draw retirement benefits.

As workers age, most of them will be enthused by a lightened schedule that allows them some autonomy and freedom but still offers them a means to earn income and retirement benefits as well. Also, employers should consider implementing and improving health and wellness programs to offset the costs of higher health insurance premiums. A recent study by the International Journal of Workplace Health Management determined that an opt-in program encompassing biometric testing and a personal wellness profile to guide individualized telephonic health coaching combined with financial incentives led to improved health parameters, improved health age and reduced health care costs. These incentives benefit both the employee and the employer, who will have added confidence should he/she have to request that the employee retire down the road.
Structuring Intellectual Property Transactions

Structuring Intellectual Property Transactions Intellectual property starts simply with a good idea. Tax treatment of this idea is based on the appropriate form of legal protection. Under U.S. tax law, there are four categories of intellectual property protection (each subject to distinctive and unique tax rules):
  • Patent
  • Trademark
  • Copyright
  • Trade secret
A party holding a patent has an absolute right to make, use, and sell the products and services protected by the patent during the entire period of the patent monopoly, which is currently 20 years from the date of the patent application under U.S. law.

Likewise, the holder of a valuable trademark, or owner of a copyright, can choose whether to license or not license those rights and can intentionally exclude competitors from using a valuable economic asset.

In the case of a trade secret, the nature of legal protection is based on refraining from making public the “secret” including contractually binding anyone who knows about the idea (e.g., employees or customers) to a pact of secrecy, otherwise known as a non-disclosure and non-competition agreement.

Intellectual property can be very valuable because the intellectual property holder has a huge aberrational pricing advantage in an otherwise relentlessly competitive marketplace. Intellectual property, in its most fundamental nature, is the celebration of monopoly over competition, and is highly profitable precisely because it badly distorts what would otherwise be the competitive marketplace to the immense economic benefit to the intellectual property holder.

Structuring intellectual property transactions includes choosing the business entity and jurisdiction in which to create, own, and/or hold intellectual property.

The extraordinary mobility of intellectual property, coupled with typical tax treaty provisions that allow royalty and licensing income to be received and transferred between sovereign countries at relatively low (or zero) withholding rates, means that there are important opportunities to reduce the tax associated with worldwide income by acquiring, developing, locating, and exploiting intellectual property using careful tax-structuring strategies.

Important areas of knowledge in the field of intellectual property include:
  • Tax-planning strategies including U.S. multi-state as well as international strategies specific to intellectual property;
  • Acquiring or creating intellectual property within the optimal jurisdiction; and
  • Recognizing the advantages of U.S. tax incentives to create intellectual property, such as Code Section 41 and 174.
Strategies for locating intellectual property include recognizing the right jurisdiction from the outset, whether by purchase, or by creating the intellectual property, including under or through a cost sharing arrangement under Code Section 482 and the regulations, 1.482-7.

In addition to taking advantage of low tax jurisdictions, a tax practitioner should understand how to set up and structure intellectual holding subsidiaries so that they work both for successful and unsuccessful intellectual property ventures as well as assuring the best approach for taking advantage of U.S. losses for investments in a foreign subsidiary.

For more information and continuing professional education on accounting and tax strategies related to intellectual property, see the Checkpoint Learning course, Structuring Intellectual Property Transactions.
The Business and Tax Aspects of Acqui Hires

The Business and Tax Aspects of Acqui Hires Charles R. Goulding and Michael Wilshere provide advice for professionals considering an “Acqui Hire” style acquisition

Acqui Hires is the term used to describe a business acquisition strategy of acquiring another firm primarily for the skills and expertise of their staff.   Although Aqui Hire is mostly associated with Silicon Valley tech firm acquisitions, many accountants and lawyers are familiar with Aqui Hire concepts as they see their own firms and competitors effectuate mergers to access specialized talent. 

Acqui Hires require careful consideration and planning since the principal asset is highly skilled people. Skilled worker based firms can have markedly different cultures which may not mix well despite each firm being successful on a stand alone basis. Many acquiring businesses, however, have good reason for integration, such as achieving economies of scale or developing a more interactive work force culture. These type of integrations should be addressed carefully.

New Due Diligence Tools 

Linkedin the professional net working application enables acquirers to preview the technical backgrounds of the acquirees team even before approaching the company. Instantly accessible connection patterns can quickly present diagrams of individuals’ networks and contacts so it becomes more apparent what the specific backgrounds are of the acquires staff. However, deeper due diligence and in person meetings are critical to determine if the firms potentially fit.  Standard due diligence templates are a good start but managers should not overly rely on them. Ultimately, any successful due diligence plan will be narrowly tailored toward the people of the business and industry.

Implementation Plan

Another potential problem is retention of talented employees. Since a true acqui hire is really a purchase of the talented employees, retaining those employees is often key to a successful investment. Acquirers should have a well thought out plan to retain employees. Monetary incentives are always helpful but there are additional ways to discourage departure as well. Managers should interview employees to determine their concerns and reservations. Those issues should be discussed and creative solutions should be considered. Positive reinforcement can significantly boost morale and inject confidence into the workforce as well.

Tax Credit Opportunities

Tech based firm acquiree's present multiple new opportunities based on recent changes in the Research & Development (R&D) tax credit legislation enacted in the Protecting Americans for Tax Hikes (PATH) Act of 2015. The R & D tax credit is now permanent tax legislation which for the first time enables an acquirer to include multi-year estimated tax benefits of the R & D tax credit in their financial acquisition ROI models.  Acquirees that have experienced tax net operating losses may have trapped R & D tax credit carryovers that can be monetized by the acquirer. Moreover, effective January 1, 2016, R & D tax credits can now be used to offset the alternative minimum tax which previously presented a barrier to utilizing the credit for many growing companies.

Aqui Hires Owners Nearing Retirement

Many companies become available to potential acquirers because the owners are nearing retirement age and there is no alternative succession plan in place. An acqui-hire can be attractive to a founder who is mostly concerned with retirement planning. These companies may be available at favorable purchase prices if the selling owners are interested in receiving payments of unfunded retirement benefits or a comparable way to provide retirement earnings. 

Aqui Hires present an excellent opportunity for many acquirors. With a less than 5% employment environment and shortage of certain skilled workers we should expect to see more Acqui Hires in the near future.
U.S. and Canada Cross Border Tax Issues

U.S. and Canada Cross Border Tax Issues Spanning 5,525 miles (8,893 km), the United States and Canada share the longest border between two nations. It is common for U.S. residents to do business in Canada as well as Canadian residents to do business in the United States. Canada has generally been the number one trading partner with the United States, making up approximately 16% of the total trade.

Under the U.S. federal tax system, nonresident aliens are subject to U.S. income tax depending on whether or not they are effectively connected with a U.S. trade or business. Furthermore, in addition to being taxed at a federal level, a nonresident alien may be subject to tax in one or more states.

The Canadian tax system consists of a two tier income tax system where taxes are assessed at both the federal and provincial levels, similar to the state and federal system in the United States. Canadian residents and corporations pay taxes on their worldwide income.

A significant difference form the U.S. tax system is that a nonresident Canadian citizen can petition the Canadian Revenue Agency (CRA) to change their status so that income from outside of Canada is not taxed.

A nonresident of Canada is taxable on income form Canadian activities and investments, including gains on the sale of certain Canadian investment property. In general, Canada imposes a 25% withholding tax on non-residents who receive dividends, certain interest payments, rents, royalties, or management fees from Canada. However, this withholding may be reduced if a tax treaty is in place. If the withholding fully covers tax liabilities, a nonresident of Canada may not have a filing requirement on certain passive income.

The United States and Canada have signed the United States-Canada Income Tax Convention (Treaty), a largely bilateral tax treaty. Since the Treaty was signed, it has been amended by five Protocols. One of the main goals of the Treaty is to prevent double taxation of taxpayers who have income in both the United States and Canada.

Among the key provisions of the Treaty is a reduction of withholding rates on interest and social security payments, dividends, pension payments, patent and copyright royalties, and film royalties.

Whether or not a Canadian taxpayer will be subject to U.S. income tax is largely dependent on if the person has a permanent establishment in the United States. If permanent establishment exists, the Canadian resident will be subject to U.S. tax at graduated rates on the income attributed to the permanent establishment.

Under the Treaty, a U.S. corporation or individual U.S. resident is taxed by Canada on Canadian income if the income is attributable to a permanent establishment (PE) in Canada. Providing services in Canada may constitute a permanent establishment in Canada which is called a “services PE.”

Canadian businesses operating in the U.S. have similar issues faced by U.S. businesses operating in Canada in that a Canadian business entity that operates directly can be subject to eh U.S. branch profits tax. As a result, most Canadian corporations generally operate in the U.S. through a U.S. corporate subsidiary.

Areas of expertise that may be helpful when considering U.S. and Canada cross-border tax issues include transfer pricing and outbound transactions. For more information and continuing professional education on these tax issues, refer to the Checkpoint Learning courses:

An Introduction to U.S. and Canada Cross Border Tax Issues

Transfer Pricing Fundamentals

International Taxation: Outbound Transactions
Business, Tax and Accounting Planning for a Post War Middle East Region

Business, Tax and Accounting Planning for a Post War Middle East Region Charles R. Goulding and Michael Wilshere discuss the economic consequences of tensions easing in the middle east

Although the war with ISIS rages on, all wars eventually end. With the retaking of Ramadi, Iraq and pending retaking of Mosul, Syria , the ISIS capital, the war with ISIS is hopefully at the beginning of the end. The 17 country market made up of the Mideast and Northern Africa has a large population approaching 400 million. This market size is comparable to the regional populations of   Europe, North America and South America.   The long standing Mid East conflict has had a chilling effect on travel to adjoining popular tourist spots such as Egypt and Turkey.

If the region stabilizes, travel and  trade will increase and eventually direct investment will resume. The region has two of the world’s leading modern airports in the Emirates and Turkey. U.S. multinationals are world leading suppliers of oil field equipment, personal security systems, water technology, electrical technology and commercial airplanes.  In addition to demand for aircraft for airlines in the Emirates and Turkey, Iran has indicated that it will be making some large commercial aircraft purchases. 

Massive Rebuilding

The sustained coalition pinpoint bombing has destroyed oil fields, bridges, roadways and demolished large Urban areas. In Ramadi alone, 6,000 buildings need to be replaced along with basic support infrastructure including electric utilities, water systems, and sanitary systems.  By many accounts, the Mosul dam is compromised and requires rebuilding to protect 500,000 people at risk from a breech.  China has a strong appetite for large construction infra structure projects so the U.S will have to commence business planning now in order to be competitive. 

Accounting and Tax 

The two largest countries by population are Iran and Turkey, each with 80 million person populations. Turkey has a strong industrial economy.   Turkey follows Turkish GAP accounting and provides R & D tax incentives and technology focused economic development zones.  Iran has emerged as a center of influence in the region. Iranian accounting is harmonized with International Accounting Standards (IAS) and the business income tax rate is 25%. 

The recent relaxing of trade restrictions in Iran may also suggest coming economic prosperity in the region. Hopefully the possibility of improved Mid East economy will support peace in the Middle East.
Thomson Reuters ONESOURCE

Whether it's corporate income tax, tax provision, indirect tax, trust tax, tax information reporting, transfer pricing, data management, your internal processes or more—Thomson Reuters ONESOURCE provides leading technology and services that can help tax departments achieve greatness. Find out more here.

Heard about the latest tax developments? Managing Director Joe Harpaz is a regular contributor on Forbes. Explore his timely discussion around policy proposals and changes, breaking down complex issues. Find the blog hosted on Forbes at
Course Details...
9 Must-Have Skills for Every CFO
Learn what you need to manage and succeed in the 21st century!
6 CPE credits
Learn more
Expand Your Knowledge, Advance Your Career...
Checkpoint Learning Corporate Advancement Package
All-in-one subscription saves you time and money
Learn more
New Forensic Accounting Certificate Program...
New Forensic Accounting Certificate Program
Expand your fraud and forensic accounting services, earn 30+ CPE credits
Learn more 800.231.1860  
Follow Us! Facebook Twitter YouTube Pinterest Blog Thomson Reuters